So Powerpoint is pointless! How amusing that research by Professor Sweller, of University of New South Wales, has confirmed what business people have always known.
Apparently when confronted with the same information coming from different sources at the same time, such as verbally and on a screen, the human brain shuts one of then off. This explains why so many people nod off at conferences.
Or at Board meetings. There is a serious point about the way Directors convey complex information to each other. Talking the Board through reports that are still warm from the photocopier is a definite turn-off. Now we know why.
Sadly, in my experience the worst offenders tend to be finance people, who read a set of results in a dull monotone, then wonder why they are marginalised.
Perhaps this explains why the most popular business courses are "finance for non-financial managers". Prof Wellers has now shown that what's really needed is "communication for non-communicating managers"
Relevant Links
http://www.unsw.edu.au/news/pad/articles/2007/mar/Cognitive_load_theory.html
Friday 27 July 2007
Private Equity - Come on Guys!
It’s been interesting to see how some of the cleverest and most entrepreneurial people in the land, who are hugely adept at making money, have proved utterly inept at PR in the face of the ill-informed and largely irrelevant comments from the trades union leaders.
I think the debate also exposes the uneasy relationship the British people have with success.
Damon Buffini of Permeira made an excellent point before his House of Commons grilling, which was that his company is a business that he started with his own money 23 years ago. I’m pretty sure that if he was a retailer, or manufacturer of electronic goods we’d all be saluting him now. Because his business has the title “private equity” he’s branded this decade’s unacceptable face of capitalism. “Arise Sir Alan, Sir Tom, Sir Philip etc” – what are the odds on “arise Sir Damon?”
In fact Sir Tom Hunter, or “billionaire Sir Tom” as he is styled in the press, now runs West Coast Capital, which is of course a private equity company founded with the money he made in retailing. It’s doing battle with the big bad ogre Tesco right now as Sir Tom tries to consolidate the garden centre industry. And consolidating fragmented industries is a typical private equity strategy. When someone popular like Sir Tom does it, he’s a good egg. When a far-too successful outfit like Tesco does it then it’s just too much.
Mandelson, when he was Industry Secretary, and Brown as Chancellor made it very clear that they wanted to encourage entrepreneurship and risk-taking. They did this by de-stigmatising failure and through some generous tax breaks, for people who sell business assets they have held for more than two years.
We simply have to face the fact that if you encourage entrepreneurs they will go for it. And if they are successful they will get rich. If they are not successful they will lose. Get over it!
Looking through the private equity companies’ investment portfolios, it’s very hard to spot any PR agencies amongst them. Far too nebulous and intangible. My bet is that the smarter guys will be having another look at exactly what that industry does right now. Who knows - maybe it’s ripe for consolidation?
I think the debate also exposes the uneasy relationship the British people have with success.
Damon Buffini of Permeira made an excellent point before his House of Commons grilling, which was that his company is a business that he started with his own money 23 years ago. I’m pretty sure that if he was a retailer, or manufacturer of electronic goods we’d all be saluting him now. Because his business has the title “private equity” he’s branded this decade’s unacceptable face of capitalism. “Arise Sir Alan, Sir Tom, Sir Philip etc” – what are the odds on “arise Sir Damon?”
In fact Sir Tom Hunter, or “billionaire Sir Tom” as he is styled in the press, now runs West Coast Capital, which is of course a private equity company founded with the money he made in retailing. It’s doing battle with the big bad ogre Tesco right now as Sir Tom tries to consolidate the garden centre industry. And consolidating fragmented industries is a typical private equity strategy. When someone popular like Sir Tom does it, he’s a good egg. When a far-too successful outfit like Tesco does it then it’s just too much.
Mandelson, when he was Industry Secretary, and Brown as Chancellor made it very clear that they wanted to encourage entrepreneurship and risk-taking. They did this by de-stigmatising failure and through some generous tax breaks, for people who sell business assets they have held for more than two years.
We simply have to face the fact that if you encourage entrepreneurs they will go for it. And if they are successful they will get rich. If they are not successful they will lose. Get over it!
Looking through the private equity companies’ investment portfolios, it’s very hard to spot any PR agencies amongst them. Far too nebulous and intangible. My bet is that the smarter guys will be having another look at exactly what that industry does right now. Who knows - maybe it’s ripe for consolidation?
Thoughts on Success
As Jimmy, Reginald Perrin's brother-in-law used to say, "funny customers, customers"
They come in many shapes and sizes, some talk a great story, some achieve incredible things.
I've been very privileged to work directly and indirectly with about 60 smaller businesses over the last few years and I've started to notice some patterns. In particular, what characterises successful businesses.
My "decompression chamber" between large companies and smaller ones was our very first customer, AMT Coffee. The work I and my colleagues did there was instrumental in helping us understand what makes entrepreneurs tick. And boy were they entrepreneurial.
They operate those neat gold/brown coffee bars in railway stations and the like and have about 40 of them now.
Run by three brothers (Angus, Allan, Alistair) who had an English Dad and Mexican Mum, they could barely agree on anything - who started the business, whether to offer customers bags, who used the company most to buy personal things.
But you know it was immediately clear to me that there were certain things they regarded as fundamental that they really did agree on and on which they would not compromise at all. Quality of coffee, value for money, speed of service, training of baristas, cleanliness of the bars, opening on time...
In their head office they even set up a dummy bar so all new baristas would get 3 days training on making coffee and selling food. They also had a chap called Brian, about 55, who audits the bar and woe betide any bar getting less than 10/10.
Brian was one of those apparently browbeaten individuals yet had incredible loyalty to the brothers. He'd be checking the opening time in Bristol at 5am then Allan would send him to check the handover routine in Glasgow in the afternoon.
So despite the internicine warfare, the business grew from about £3 million when I first met them, to around £20 million now.
And I truly believe that the key challenge to any new or ambitious business is to be absolutely on top of what it is that the customers value and never ever compromise on them.
AMT is now a fully fledged business with a full management team and I am very proud of the part we played in its development. Alistair is a good friend now.
Very sadly, Angus died of cancer in late 2006 still only in his early forties. For all the "interesting" times we had, and there were many, he was a decent chap and his legacy is the strong business that has outlived him.
I wish them well and am truly grateful for the insight they gave me into entrepreneurship. And Angus, you're often in my thoughts.
Relevant Links
http://www.amtcoffee.co.uk/
They come in many shapes and sizes, some talk a great story, some achieve incredible things.
I've been very privileged to work directly and indirectly with about 60 smaller businesses over the last few years and I've started to notice some patterns. In particular, what characterises successful businesses.
My "decompression chamber" between large companies and smaller ones was our very first customer, AMT Coffee. The work I and my colleagues did there was instrumental in helping us understand what makes entrepreneurs tick. And boy were they entrepreneurial.
They operate those neat gold/brown coffee bars in railway stations and the like and have about 40 of them now.
Run by three brothers (Angus, Allan, Alistair) who had an English Dad and Mexican Mum, they could barely agree on anything - who started the business, whether to offer customers bags, who used the company most to buy personal things.
But you know it was immediately clear to me that there were certain things they regarded as fundamental that they really did agree on and on which they would not compromise at all. Quality of coffee, value for money, speed of service, training of baristas, cleanliness of the bars, opening on time...
In their head office they even set up a dummy bar so all new baristas would get 3 days training on making coffee and selling food. They also had a chap called Brian, about 55, who audits the bar and woe betide any bar getting less than 10/10.
Brian was one of those apparently browbeaten individuals yet had incredible loyalty to the brothers. He'd be checking the opening time in Bristol at 5am then Allan would send him to check the handover routine in Glasgow in the afternoon.
Funny how these fundamentals happen to be all the things that matter most to their customers.
So despite the internicine warfare, the business grew from about £3 million when I first met them, to around £20 million now.
And I truly believe that the key challenge to any new or ambitious business is to be absolutely on top of what it is that the customers value and never ever compromise on them.
AMT is now a fully fledged business with a full management team and I am very proud of the part we played in its development. Alistair is a good friend now.
Very sadly, Angus died of cancer in late 2006 still only in his early forties. For all the "interesting" times we had, and there were many, he was a decent chap and his legacy is the strong business that has outlived him.
I wish them well and am truly grateful for the insight they gave me into entrepreneurship. And Angus, you're often in my thoughts.
Relevant Links
http://www.amtcoffee.co.uk/
Thursday 26 July 2007
Get rich with myFD
Hey we're holding an event with our good friends at the IoD; it's in Taplow on October 16th 2007. We helped an extremely good bloke sell his business for £14 million. And he's agreed to come and share some secrets.
If you're an owner-manager, come along - we'd love to meet you.
If you're a bank manager, bring an owner-manager or two!
Click here immediately!
http://www.iod.com/intershoproot/eCS/Store/en/pdfs/berks_bookingform_mudguards.pdf
Fred Edwards
July 2007
What myFD is all about
There's a big problem at the heart of smaller businesses and whilst there is a cottage industry developing around it, no-one yet has made a real noise about it.
What's the problem? Finance people - boring, negative, risk-averse, backward-looking, retentive, repressed, accountants. The trouble is that's all a smaller company can afford. Or so they thought until now.........
And I reckon it's costing millions and creating heartache for owners of small businesses all over the place.
How do I come to this conclusion? Well I was a finance director in very large company and because I'm an entrepreneurial sort of chap I used to go and see customers - much better than adding up numbers all day. I was looking to increase credit limits and sell more stuff. And after I'd seen 30 or 40, I could see that although they were dead keen to share information and tell me what was going on, their financials were utter rubbish! I frequently found myself wondering, "how the hell do these guys make decisions?"
One chap running a shopfitting company in Manchester had gone bust once before and ran a £5 million business based on a list of customers who owed him money and suppliers who he owed money to. If the total on the left was bigger he slept, if the one on the right was bigger he went and got another contract quick. How daft is that? I recently came across a £4 million contracting company that has no idea which contracts are profitable.
It wasn't what I was used to in big companies, where proper information, with balance sheets and cashflows and forecasts were done by day 5 of the month, and we talked about the future and how to make more money or new products and markets. The businesses I was meeting (and they were anything from a million £ up to £30 or 40 million in size) were just existing and said that their auditors "did the depreciation so we only have a balance sheet once a year", that they struggled to get invoices out and didn't really know what was going on.
There was a pattern - I could see that businesses go through a seemingly inevitable cycle - they get set up, need some basic stuff like invoicing and paying suppliers done, so they go to some local accountant with a beard and a copy of Sage.
And it goes haywire from then on. The numbers bit of the business is set up for the benefit of Mr Beard -he gets the VAT done and the PAYE paid on time, but nothing of any commercial use comes out. A friend of mine suffered from a local Beard who was so slow in "writing up" (whatever that means) the sales ledger that my friend was not aware that it was taking on average 90 days for customers to pay. So his profitable business was running out of cash.
How about making sure that products and services are priced properly so you make a decent margin? Making sure everything you deliver gets invoiced? Avoiding entering the same information twice? Getting decent reports off the system without resorting to spreadsheets (don't get me started..)
No- businesses have to struggle on until they can afford the holy grail - a finance director (or FD). But, and it's a big but, most FDs who want to work in smaller businesses are basically Mr Beards with a shiny suit and a slightly posher accent. Useless, and get turfed out after a couple of years of sitting in the office not speaking to anyone.
So, a couple of years back, having done a buyout and exited, I thought, "there has to be a better way".
What is needed, went my thinking, is a way of making the smaller company role attractive to senior, experienced finance execs who want a bit of variety and to get closer to the coalface. People who don't go jungly after a week and start to agree that it really is difficult to get invoices done on time after all.
So with some help from a couple of people I set up myFD, to do exactly that. It's a service based around key features that deal with the main issues that arise from the traditional solutions. We replicate the big company environment in miniature. So we
What's the problem? Finance people - boring, negative, risk-averse, backward-looking, retentive, repressed, accountants. The trouble is that's all a smaller company can afford. Or so they thought until now.........
And I reckon it's costing millions and creating heartache for owners of small businesses all over the place.
How do I come to this conclusion? Well I was a finance director in very large company and because I'm an entrepreneurial sort of chap I used to go and see customers - much better than adding up numbers all day. I was looking to increase credit limits and sell more stuff. And after I'd seen 30 or 40, I could see that although they were dead keen to share information and tell me what was going on, their financials were utter rubbish! I frequently found myself wondering, "how the hell do these guys make decisions?"
One chap running a shopfitting company in Manchester had gone bust once before and ran a £5 million business based on a list of customers who owed him money and suppliers who he owed money to. If the total on the left was bigger he slept, if the one on the right was bigger he went and got another contract quick. How daft is that? I recently came across a £4 million contracting company that has no idea which contracts are profitable.
It wasn't what I was used to in big companies, where proper information, with balance sheets and cashflows and forecasts were done by day 5 of the month, and we talked about the future and how to make more money or new products and markets. The businesses I was meeting (and they were anything from a million £ up to £30 or 40 million in size) were just existing and said that their auditors "did the depreciation so we only have a balance sheet once a year", that they struggled to get invoices out and didn't really know what was going on.
There was a pattern - I could see that businesses go through a seemingly inevitable cycle - they get set up, need some basic stuff like invoicing and paying suppliers done, so they go to some local accountant with a beard and a copy of Sage.
And it goes haywire from then on. The numbers bit of the business is set up for the benefit of Mr Beard -he gets the VAT done and the PAYE paid on time, but nothing of any commercial use comes out. A friend of mine suffered from a local Beard who was so slow in "writing up" (whatever that means) the sales ledger that my friend was not aware that it was taking on average 90 days for customers to pay. So his profitable business was running out of cash.
How about making sure that products and services are priced properly so you make a decent margin? Making sure everything you deliver gets invoiced? Avoiding entering the same information twice? Getting decent reports off the system without resorting to spreadsheets (don't get me started..)
No- businesses have to struggle on until they can afford the holy grail - a finance director (or FD). But, and it's a big but, most FDs who want to work in smaller businesses are basically Mr Beards with a shiny suit and a slightly posher accent. Useless, and get turfed out after a couple of years of sitting in the office not speaking to anyone.
So, a couple of years back, having done a buyout and exited, I thought, "there has to be a better way".
What is needed, went my thinking, is a way of making the smaller company role attractive to senior, experienced finance execs who want a bit of variety and to get closer to the coalface. People who don't go jungly after a week and start to agree that it really is difficult to get invoices done on time after all.
So with some help from a couple of people I set up myFD, to do exactly that. It's a service based around key features that deal with the main issues that arise from the traditional solutions. We replicate the big company environment in miniature. So we
- manage the service delivery closely at company level rather than rely on the individuals' party pieces
- work as a team to support each other and share knowledge
- have tools and methodologies so we don't reinvent wheels all the time
- get the right resource on the job - financial controllers and finance directors
- call customers customers (why? - well I could go into esoteric arguments about service but it's basically so we act differently to the accountancy brigade)
- are as entrepreneurial as our customers (but scrub up nicely when we meet the bank managers)
Like it? Run a business between £3m and £30 million turnover? Or just very ambitious and looking to get moving? see our website http://www.myfd.co.uk/
One of the people who has helped is a chap called Robert Craven. We realised that one of the main issues for finance folk is that they speak another language - we needed to express ourselves in ways that our customers would relate to and Robert was supremely helpful.
We also do a lot of work with the Institute of Directors (IoD) - if you're running a smaller company I'd recommend joining, if nothing else for the free use of the premises. Hey and if you decide to join give them my membership number E134488 - I'll split a case of champagne with you.
Cheers
Fred Edwards
July 2007
Relevant Links
Robert Craven - see http://www.thedc.co.uk/
IoD: http://www.iod.com/
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