Productivity: Uncovering Hidden Opportunities for Growth

/in , , /by

In today’s dynamic economic environment, business owners constantly seek ways to enhance efficiency and drive growth. One of the most effective approaches to achieving these goals is through the strategic use of performance metrics. Among these, ‘Revenue Per Hour Paid’ is a potent tool. Originally from the realm of professional services, this simple yet profound metric reveals hidden productivity insights that are applicable across various industries. This blog explores how implementing this key metric can improve business productivity, providing owners with actionable insights into optimising their operations.

“What gets measured gets managed.”  Peter Drucker

The Metric: Revenue Per Hour Paid

‘Revenue Per Hour Paid’ calculates the revenue generated per paid working hour, offering a clear view of how effectively a company utilises its human resources in relation to its revenue generation. It’s a straightforward calculation: divide top-line revenue by the total hours paid to employees. This approach highlights the direct relationship between workforce efficiency and revenue output.

Broadening the Metric’s Horizons: A Recent Case Study

The metric ‘Revenue Per Hour Paid’ is highly adaptable across various industries and provides crucial insights into operational efficiency. One Advisory Board client experienced financial discrepancies where there was an increase in top-line revenue but a declining cash bank balance. Initially, this was attributed to the need for increased working capital to fund growth. However, further analysis of ‘Revenue Per Hour Paid’ revealed that there were deeper issues at play. The metric showed a significant drop in revenue per hour, from $350 to $270 over time, indicating that rising revenues were masking a decline in productivity. This insight was instrumental in addressing the inefficiencies that were inflating operational costs and depleting cash reserves. It highlighted the metric’s value beyond traditional productivity assessment.

How to Calculate Productivity

Consider “ConstructCo,” a hypothetical company, which reported an annual revenue of $27,600,000. The company employs 50 workers, each working 40 hours a week.

  1. Calculate Total Hours Worked Annually:
    • Total hours worked annually = 50 employees x 40 hours/week x 52 weeks = 104,000 hours
  2. Calculate Revenue Per Hour Paid:
    • Revenue per hour paid = $27,600,000 / 104,000 hours = approximately $265.38 per hour

This calculation shows that for every hour worked at ConstructCo, the company earns about $265.38, providing a clear measure of workforce productivity.

Expanding the Calculation to Capital Investments:

For industries reliant on heavy machinery or plant equipment, the same formula can be applied to assess the productivity of these investments. For example, if ConstructCo also wants to measure the productivity of a specific piece of machinery:

  1. Calculate Total Operating Hours for the Machinery:
    • Total operating hours annually = 30 hours/week x 52 weeks = 1,560 hours
  2. Attribute Revenue to this Machinery:
    • Revenue per operating hour = $5,500,000 / 1,560 hours = approximately $3,525.64 per hour

This helps ConstructCo determine how effectively their capital investments are contributing to the company’s revenue.

Conclusion

The ‘Revenue Per Hour Paid’ metric extends beyond traditional financial metrics by offering a clear, actionable indicator of how effectively revenue is being earned. It provides businesses not only with a method to measure success accurately but also drives them towards it more effectively. By integrating this metric into their strategic review, companies can diagnose the underlying issues, steering towards more sustainable profitability and operational efficiency.

Guide to Strategic Planning: Part 3 – Defining Strategic Imperatives

/in /by

Unlocking Strategic Success: The Role of Strategic Imperatives

Strategic imperatives are the cornerstone of any robust strategic plan, acting as the fulcrum around which all strategic efforts pivot. Identifying these imperatives is not just a step in the strategic planning process; it’s the very heart of it, providing the clarity needed to focus on what truly matters for your business.

“A goal without a plan is just a wish.”  Antoine de Saint-Exupéry

The Seesaw of Strategic Planning

Imagine strategic planning as a seesaw, with your vision, mission, and purpose on one end and the key jobs that need to be done to realise that vision on the other. Strategic imperatives are the pivot point—the fulcrum—of this seesaw. They represent the critical tasks and initiatives that, if executed, will naturally unlock significant value and propel your business towards its goals.

Identifying Strategic Imperatives: Best Practices

  1. External and Internal Assessments: Utilise tools like PESTEL analysis for an external viewpoint or SWOT analysis to understand your strengths, weaknesses, opportunities, and threats. This holistic perspective helps float strategic imperatives to the surface.
  2. Capabilities Gap Analysis: Identify the essential capabilities your business needs to achieve its vision but currently lacks. This gap analysis highlights areas for development that are imperative for strategic success.
  3. Synthesising Insights: Rather than transcribing every output of your analyses into a to-do list, aim to distil them into a concise set of four to six strategic imperatives. These should be the transformative tasks that will drive the most significant impact.

The Power of Clarity

With a clear set of strategic imperatives, your business gains razor-sharp focus on what needs to be accomplished. This clarity enables you to direct resources and efforts towards these pivotal areas effectively, ensuring that every action taken is aligned with your strategic goals.

Starting with Sophistication

Strategic imperatives can begin at any level of sophistication. Often, business owners instinctively know the key tasks for the year. However, the challenge lies in elevating this understanding from immediate, known issues to a broader, opportunity-centric view that unlocks growth and transformation.

Beyond the Imperatives: Implementation

Once your strategic imperatives are defined, the planning process shifts to implementation: who will do it, how it will be done, and when. Understanding your strategic imperatives simplifies these subsequent steps, making the path to achieving your goals clearer and more straightforward.

Conclusion: The Fulcrum of Strategic Planning

By centring your strategic planning around identifying strategic imperatives, you position your business to navigate the next three to five years with confidence and purpose. This approach simplifies the strategic planning process and ensures that every effort is aligned with your ultimate vision for success.

Join the Conversation

Board Associates is committed to education and fostering a dialogue around strategic planning so we invite you to join us in this conversation. Monthly, from February to April, we will host a lunch & learn session dedicated to discussing strategic planning in an informal setting. This is an opportunity to delve deeper into strategic planning, ask questions, and share insights with peers. If you’d like to participate, you can register for one of the upcoming lunch & learn sessions here:

Guide to Strategic Planning: Part 2 – Setting a Vision

/in , , /by

Setting a Clear Direction: The Foundation of Strategic Planning Success

In the landscape of business strategy, the importance of a clear direction cannot be overstressed. It’s the compass that guides every decision, action, and investment in your business. Yet, establishing this direction is often where many stumble, not for lack of ambition, but due to the overwhelming pressure to define a grand vision.

“Effort and courage are not enough without purpose and direction.”
John F Kennedy

The Myth of the Moonshot

Many leaders feel the pressure to articulate a “big, hairy, audacious goal” or a moonshot vision for their business. While having such a goal can be inspiring, it’s not the only path to success. The reality is, not every business is aiming to redefine an industry or capture a global market. For many, the ambition to improve incrementally—to be slightly better this year than the last—is a perfectly valid and admirable goal.

Embracing Your Business’s True Intent

The core of strategic planning lies in understanding your business’s intent. What role does it play in the market, the community, or in the lives of your customers? If defining a long-term vision feels daunting, narrow your focus. Concentrate on what you can achieve now or in the near future. This approach doesn’t diminish your aspirations; it clarifies them, making your goals more attainable and relevant – from small things, big things grow!

Avoiding the Common Pitfall: Misaligned Goals

A critical error in setting business direction is adopting goals that don’t resonate with your values or the essence of your business. Claims of wanting to be a “market leader” abound, but if such a position doesn’t align with what you genuinely care about, then it’s a hollow aim. Your strategic plan should reflect your business’s authentic aspirations, not just what you think should be your goals.

The Value of Every Vision

For those who see their business primarily as a means to provide for themselves, their families, or their employees, your reason for being is clear and as significant as any. Whether your business was chosen or inherited, it holds the potential for impact. The value you create, the jobs you provide, and the community you serve—all of these are critical contributions.

Join the Conversation

I am committed to education and fostering a dialogue around strategic planning so I invite you to join me in this conversation. Monthly, from February to April, I will host a lunch & learn session dedicated to discussing strategic planning in an informal setting. This is an opportunity to delve deeper into strategic planning, ask questions, and share insights with peers. If you’d like to participate, you can register for one of the upcoming lunch & learn sessions here:

Conclusion: Finding Your Strategic North Star

Setting a clear direction for your business doesn’t require an earth-shattering vision. It requires honesty about what you want to achieve and why. Whether your goals are monumental or modest, they are yours to define and pursue. As we continue to explore strategic planning, remember that the journey is as unique as your business. Stay tuned for more insights on navigating this path effectively.

Guide to Strategic Planning: Part 1

/in /by

The art of strategic planning is not just about forecasting the future but creating a roadmap that navigates through uncertainties to achieve sustainable growth.  But unfortunately for most, strategic planning rarely delivers on the promise.  At best, it provides some general direction and guidance.  At worst, it’s an expensive and unproductive day that could have been spent better serving customers.

My journey in strategic planning began in 1992, and since then, I’ve had the privilege of crafting over one hundred strategic plans. This experience spans my tenure as an employee responsible for strategic planning, later evolving into roles at PwC, and culminating as the principal of Board Associates. Throughout these roles, I’ve created good plans and bad plans, concise plans, voluminous plans and even plans in posters and murals.  In the spirit of giving back to the business community, I offer this series of articles on strategic planning with the aim of educating and sharing my experiences and mistakes so that we can all learn together.

“The essence of strategy is choosing what not to do” Michael Porter

The Foundation of Strategic Excellence

As we approach the time of year when businesses start to think about their strategic direction, I want to share resources that have significantly influenced my approach to strategic planning.  In the first instance, I want to refer you to two cornerstone books that provide both foundational knowledge and actionable steps for crafting effective strategic plans.

Great by Choice by Jim Collins is an indispensable resource that delves into the essence of successful business strategy. This book is my favourite and a must-read for business owners, offering insights into creating environments where businesses not only survive but thrive. It’s an entertaining read, backed by rigorous research comparing businesses that have outperformed their peers by leaps and bounds. “Great by Choice” is an essential read for those seeking to understand the ingredients that underpin exceptional performance and best practice.

Playing to Win by A.G. Lafley provides a pragmatic approach to strategic planning. Having used and been trained in numerous methodologies over the years, I regard this book as a distillation of the strategic planning process to its most effective elements. It serves as a guide that demystifies the strategic planning process, making it accessible to all. This book is particularly beneficial for those looking to create strategic plans that are both impactful and straightforward.

Moving Forward with Strategic Planning

This post essentially directs you to my favourite “primers” for strategic planning. In future posts, I will delve deeper into the nuances of strategic planning, sharing my insights and best practices honed from decades of experience (and mistakes!). Expect to explore tips and strategies that will help you craft strategic plans that are both concise and potent, enabling you to avoid common pitfalls and inefficiencies that the majority of owners suffer from.

Join the Conversation

I am committed to education and fostering a dialogue around strategic planning so I invite you to join me in this conversation. Monthly, from February to April, I will host a lunch & learn session dedicated to discussing strategic planning in an informal setting. This is an opportunity to delve deeper into strategic planning, ask questions, and share insights with peers. If you’d like to participate, you can register for one of the upcoming lunch & learn sessions here:

Final Thoughts

Strategic planning is more than a task; it’s a journey of discovery and adaptation. As you embark on or continue this journey, “Great by Choice” and “Playing to Win” are invaluable companions that offer wisdom and guidance. I look forward to sharing more insights and engaging with the business community to enhance our collective understanding of this important ‘guide rail’ for business success.

Reflecting on our Advisory Board Meetings: Insights and Actions for Q1

/in , , , , /by

At Board Associates, we believe in the transformative power of strategic advisory boards. Our first-quarter advisory board meetings have yielded valuable insights in key areas such as corporate governance, financial management, leadership development, and strategic planning workshops. This piece aims to share these insights and provide actionable steps for business owners and leaders to enhance their performance.

Corporate Governance in Family Businesses: Rethinking Traditional Models

Matthew Dunstan, our founder and a respected scholar at QUT’s Australian Centre for Entrepreneurship Research, has uncovered surprising findings in corporate governance within family firms. His research, focusing on optimising governance for financial excellence, suggests that different family businesses may require distinct governance models. Key takeaways include:

  1. The Advantage of Informal Governance in Mature Firms: Mature family firms might benefit more from informal governance structures, challenging the usual push for formalisation.
  2. The Role of Corporate Governance in Young Firms: Younger firms appear to thrive under small, informal governance setups.
  3. CEO and Board Dynamics: A balance between CEO involvement and board independence is crucial for financial success in family-run businesses.

Action for Owners: Family business owners are encouraged to reassess their governance structures in light of these findings. For further guidance, explore our articles on family business and governance, and consider participating in our ongoing research. You can register your interest by contacting info@boardassociates.org


Financial Management and Hidden Cash Reserves

In one of our portfolio companies, we’ve driven a remarkable six-fold growth over the last few years. Last quarter, however, we encountered an unexpected financial challenge. Despite intentionally moderating growth to allow profits to flow into the cash reserves, the company’s cash balance unexpectedly declined. The causes of the problem were not evident in standard financial reports, so we undertook an in-depth financial analysis working with one of our partners.

The analysis went beyond the typical data of profit & loss statements and cash flow forecasts. Instead, we focused on three additional but seldom used financial metrics that proved pivotal in diagnosing the root causes affecting the company’s cash flow dynamics. These were the working capital absorption rate, the movement of working capital and the movement of debt on the balance sheet. This analysis revealed that subtle changes in the balance between profits, cash, working capital, equity and debt compounded to create a situation where the company was profit-rich but cash-poor.

This case serves as an essential lesson for business owners, particularly highlighting the need for a comprehensive financial health check during periods of growth or turbulence. It underscores the importance of looking beyond surface-level financial reports and considering a broader spectrum of financial metrics.

Action for Owners:  If your cash at bank balance is declining, you should consider undertaking a more detailed financial analysis of the causes and, more importantly, create a new set of financial management guidelines to protect the business. Our team at Board Associates can help.


A Team-Led Approach to Setting Strategy

At Board Associates, we have pioneered a transformative approach called ‘Quick Wins’ workshops, expertly guided by our People and Culture Specialist, Belinda Straughn Winks. These workshops engage all staff members in focused discussions, applying qualitative research methods such as thematic analysis to transform direct feedback into actionable data.

This bottom-up approach to strategy uniquely uncovers critical business issues and solutions as perceived by the team. It’s a novel way of shaping strategic imperatives, enhancing workplace culture, productivity, and staff retention, while uncovering hidden management blind spots.  (Read more)

Action for Owners: Leaders have an opportunity to define and deliver new, tangible benefits for the business and to do so in a way that brings staff together and empowers them.  If you feel there is more potential in your team, a Quick Wins workshop is a fast and affordable way to create immediate value.


The Importance of Depth in the “Senior Management Bench”

It’s not uncommon for business owners to find themselves rolling up their sleeves and diving back into day-to-day operations to support their management team. While such involvement can offer immediate operational support, it often comes at the cost of neglecting the strategic work essential for long-term growth. Owners frequently find themselves caught in a cycle of ‘two steps forward, one step backward’, where progress is hampered by the constant need to put out fires.

This year, we have observed several instances where businesses struggled to maintain momentum due to the owners’ frequent need to step into operational roles. In these cases, lacking a solid and capable management team meant critical strategic initiatives were sidelined.

Forward-Thinking Solution: Building depth on the senior management bench is vital. This not only alleviates the burden on the business owner, allowing them to focus on strategic growth but also ensures the business is equipped to handle challenges effectively without always relying on the owner.

Long-Term Benefits: Building your bench of senior management talent might seem difficult or expensive, but the long-term gains in efficiency and strategic growth are invaluable. It is also critical for the future valuation of your business.

Action for Owners:  Ask yourself this question:  If I stepped away from the business now, could the team continue to run it as I would? If the answer is no, you must implement actions to build your senior management bench. Board Associates has experience in executive coaching, mentoring and leadership development programs that may be able to assist.


Strategic Planning Clarity: Focusing on What Truly Matters

In business strategy, clarity and focus are not only vital, they are liberating. A prime example is one of our client companies, currently valued at $7 million. The owner has set a bold aspiration to elevate the business’s value to $40 million within a few years. Achieving such an ambitious goal is no small feat and requires a razor-sharp focus on key growth drivers. Through several rounds of strategic planning, we have identified the four critical imperatives essential to realise this objective.

These four imperatives have become our cornerstone and helped elevate the conversations around the advisory board. With this clarity, every advisory board meeting is now centred around these “four jobs to be done”. Furthermore, this clarity extends to the incentivisation of the CEO – their reward structures are tailored to drive performance specifically in these four areas. This alignment ensures that the CEO’s efforts directly contribute to the business’s strategic objectives.

This experience raises important questions for all business leaders:

  • Do you have a clearly defined intent for your business?
  • Have you identified the critical “jobs to get done”?
  • Is your team aligned around these objectives?

A clear strategic focus and aligning your team around specific goals is fundamental to driving substantial growth. It simplifies decision-making and streamlines efforts across the organisation, setting the stage for accelerated growth and achievement of ambitious targets.

Action for Owners:  What are the three or four things your company must deliver to drive strategic growth? If you can’t answer this question, don’t worry – most leaders can’t, but that’s the opportunity. Board Associates’ Strategic Planning Workshops may be able to assist.


In conclusion, these insights from our Q1 advisory board meetings underscore the breadth of expertise and support available at Board Associates. For more detailed exploration of these topics or to engage with our advisory services, contact us at info@boardassociates.org for tailored advice and solutions.

Resetting Culture to Reignite Your Team: A Deep Dive into Sustainable Workplace Practices

/in , , , , /by
Read more
Image of arrows showing two paths showing pivoting business after q1 review can have a major impact on full year

How to Pivot After Q1: Assessing and Adjusting Your Business Trajectory

/in /by

With the end of Q1 upon us, businesses should pause and reflect, asking: “Are we on the right path for the year?”

Here’s why this assessment is critical and some best practices for doing so: 

  1. Gauge Your Trajectory First and foremost, measure your current trajectory against your annual goals, budget, and shareholder expectations. Are you on track? Behind? Ahead? This initial assessment sets the stage for all subsequent decisions.
  2. Celebrate or Calibrate If you’re ahead or on target, that’s fantastic! But don’t rest on your laurels. Always look for areas to optimize. On the other hand, if you’re off track, it’s crucial to recalibrate. A shaky Q1 can significantly impact the rest of the year.
  3. Diagnose the Divergence Before making changes, understand why Q1 might be underperforming:
    • Is it a continuation of trends from the previous year’s last quarter? 
    • Are there new challenges that have arisen this quarter? 
    • Has there been a change in market demand or your cost structure that wasn’t accounted for? 
  1. Speed is Key Time is of the essence. The longer you take to adjust, the harder it becomes to recover from a difficult Q1. It’s not just about damage control; it’s about capitalizing on newfound insights.
  2. Seek External Insights While internal data is indispensable, looking outward can offer valuable perspectives. What are industry peers experiencing? Are there macroeconomic trends affecting your sector?
  3. Re-Evaluate Strategies, Not Just Tactics While tactical changes can help, sometimes the issue lies in the broader strategy. Ensure your business model and offerings still align with the market’s needs.
  4. Engage Your Team Remember, you’re not in this alone. Engage with your team, seek their insights, and involve them in the solution. Collective intelligence often yields the best results.
  5. Continuous Monitoring Finally, don’t wait for the end of Q2 to reassess. With the pace of today’s business, continuous monitoring allows for agile adjustments.

 In conclusion, the end of Q1 isn’t just a time for reflection; it’s a call to action. It’s a quarter of the way through the year, and the steps you take now can greatly influence the outcome of the remaining quarters. 

How An Advisory Board may help; 

Moreover, this is where an advisory board can be a game-changer. Advisory boards bring in a wealth of external knowledge, diverse perspectives, and expertise that can shed light on blind spots and opportunities you might miss.  They can: 

Provide Objective Assessment: Being somewhat removed from day-to-day operations, an advisory board can give unbiased feedback on performance, ensuring that your assessments are rooted in reality and not clouded by internal biases. 

Leverage Industry Insights: Members often come with vast industry experience and can provide insights on broader trends and best practices that your business can adopt or be wary of. 

Expand Networks: The connections that advisory board members bring can open doors to partnerships, collaborations, or even new markets. 

Offer Strategic Guidance: In situations where you need to pivot or reassess strategies, a seasoned advisory board can guide decision-making, ensuring that changes align with long-term goals and industry realities. 

(Wondering “what is an advisory board” or “when are they the right next step?”
Learn more about why and how business leaders benefit from Advisory Boards here.) 

About Board Associates;

We help business leaders embrace change, be agile, and remember – it’s all about forward momentum. And with the right advisory board by your side, you can navigate the complexities of the business landscape with increased confidence and foresight. 

Board associates is experienced at creating and running advisory boards for companies across a broad array of industries. If you’d like to explore how an Advisory Board can drive strategic growth for assist business, please contact us to schedule a call with one of our experienced Advisory Board Chairs.

Business Advisory Board

What is an Advisory Board?

/in /by

Increasingly, business owners are starting to hear more about an “advisory board”, but what is an advisory board? At its core, an advisory board is a group of external experts assembled to provide informed guidance, diverse insights, and strategic advice to an organisation’s leadership. Unlike a legal board of directors, which typically has direct governance responsibilities, an advisory board doesn’t have official authority over company affairs or formal legal obligations. Instead, it acts as a reservoir of expertise and perspective to support the company’s mission and vision.

There are several reasons a company might opt to establish an advisory board:

  1. Expertise and Knowledge: No matter how seasoned an entrepreneur or executive team is, they can’t be experts in everything. An advisory board fills those gaps by providing knowledge in areas that supplement the executive team. This often includes technology, financial management, people management, international markets, and specific industry experience.
  2. Networking and Opportunities: Members of an advisory board often come with an extensive professional network. Their introductions can lead to new partnerships, customer relationships, or even potential investors. This is also particularly valuable if you’re considering exiting your business.
  3. Credibility and Validation: Having recognized industry leaders or subject matter experts on an advisory board can significantly bolster a company’s standing in its industry or market. It also supports the sale process if you’re exiting your business and can lead to higher business valuations.
  4. Objective Perspective: Because advisory board members aren’t typically involved in day-to-day operations, they can provide an outsider’s perspective, helping companies identify blind spots and areas of opportunity. We know we should make time to work on the business rather than in the business – an advisory board provides that opportunity.
  5. Accountability: While the primary function of an advisory board is guidance rather than governance, its mere presence can instil a sense of accountability in owners and top executives. Regularly presenting company progress, challenges, and plans to a group of seasoned professionals can encourage better preparation, deeper reflection, and more strategic thinking, knowing that these will be discussed and dissected by the advisory board.

(You can read more about the benefits and the business case for an advisory board here.)

In summary, when considering “what is an advisory board?”, think of it as a strategic tool that offers guidance, broadens horizons, and propels growth. Whether a company is navigating rapid growth, looking to penetrate new markets, or facing complex challenges, an advisory board can be a valuable asset to ensure informed decisions and long-term success. If you’re contemplating strengthening your company’s strategic arsenal, perhaps it’s time to think about setting up your own advisory board.

Board associates is experienced at creating and running advisory boards for companies across a broad array of industries. If you’d like to explore how an Advisory Board can drive strategic growth for assist business, please contact us to schedule a call with one of our experienced Advisory Board Chairs.

Succession Planning for Family-Owned Businesses

/in /by

Succession planning is a fundamental strategy that ensures the continuity and sustainability of family-owned businesses. It involves preparing for a smooth transition of leadership and ownership to the next generation or successor. Given the personal and emotional ties interwoven within these businesses, succession planning can be more intricate and sensitive, making it that much more important to get right.

Why is it crucial?

For many family businesses, their brand isn’t just a logo—it’s a legacy. The aspiration is often to hand over a thriving enterprise to the next generation. Without a robust succession strategy, the risk of disputes, financial challenges, and even the demise of the business becomes alarmingly high. Remember, a significant portion of family businesses do not make it to the second generation, so it takes careful planning to get it right.

Key Elements of Succession Planning:

  1. Identification and Training: Begin by identifying potential successors from within the family. These individuals should be nurtured, trained, and exposed to various aspects of the business, ensuring they are equipped with the necessary skills and experience.
  2. Open Communication: Transparent and regular communication with all family members is vital. Everyone should be clear on the business’s future direction and their role within it.
  3. Estate Planning: This ensures that wealth and assets are distributed as intended. It also helps in minimizing potential tax implications and ensures that the business remains financially stable.
  4. Legal and Financial Preparations: Engaging legal and financial experts to draft necessary documents like buy-sell agreements, trusts, or wills is crucial.
  5. Advisory Board: Consider establishing an advisory board. Comprising experienced non-family members, they can offer unbiased insights, mediate disputes, and help in key decision-making. The chair can also provide valuable coaching and mentoring for the incoming CEO or Managing Director.

Embracing Change and Adaptability

It’s essential to remember that succession planning is not a one-size-fits-all model. As the business environment and family dynamics change, the plan should be revisited and revised accordingly.

Transitions are inevitable, the success of such changes is not. Effective succession planning not only safeguards a family’s legacy but also ensures that the business continues to thrive for generations to come. For family-owned enterprises, the stakes are personal, and the rewards of meticulous planning are enduring.

When your family-owned business is need of help during these changes, or ideally before, we have specialist programs and experts to assist. Let’s talk about how we can help. The earlier we are engaged, the better.

You can read more about succession planning here on our site.

Business Governance in Private Firms: An Essential Guide

/in /by

When people hear the term “business governance,” it often evokes images of large, publicly traded corporations with boardrooms, stockholders, and layers of regulatory oversight. However, the principles of business governance are equally important, if not more so, for private firms. So, what does business governance mean for a private firm?

At its core, business governance refers to the system of rules, practices, and processes by which a company is directed and controlled. It encompasses the balance among an organisation’s many stakeholders, such as shareholders, management, customers, suppliers, financiers, government, and the community. For private firms, which often lack the external checks and balances of public entities, strong governance can be the compass that keeps the business on its intended course.

Here are some reasons why private firms should care about business governance:

  1. Transparency and Trust: Strong governance mechanisms ensure transparency in operations, fostering trust among investors, stakeholders, and employees. This trust can be especially crucial for private firms seeking to attract external investment or contemplating succession or a future exit (read more about exit planning here).
  2. Succession Planning: Many private firms are family-owned. Effective governance structures help in smooth succession planning, ensuring that the company’s legacy is secured for future generations (read our article on Succession Planning for more information).
  3. Risk Management: Robust governance practices help in identifying, addressing, and managing potential risks that could derail a company’s objectives.
  4. Performance Monitoring: With clear governance structures, performance metrics and benchmarks can be set. This allows management to measure growth, analyze profitability, and ensure that the firm remains competitive and delivers adequate returns to shareholders.
  5. Stakeholder Relations: For a private firm, relationships with stakeholders, be it suppliers, customers, or financiers, are vital. Clear governance can lead to better contract management, dispute resolution, and stakeholder communication.
  6. Owner Accountability: Private firm owners, much like in the public sphere, need to be accountable for their decisions. Business governance provides a framework that ensures decisions align with the firm’s vision, values, and long-term goals.

Incorporating effective business governance is not about adding bureaucratic layers or hindering agility. It’s about creating a solid foundation that ensures a private firm can thrive in a competitive landscape, adapt to changes, and achieve its vision while maintaining the trust of its stakeholders. Whether it’s through an advisory board, regular audits, or clear internal policies, embracing robust governance practices is a forward-thinking move for any private firm.

The Board Associates team specialises in right-sized governance for small and medium business.  To discuss how an Advisory Board can help you put the right governance practises in place to fuel strategic growth, contact us here.

 

What Our Clients Say

We would like to take a moment to say thanks.

The knowledge and advice provided by Board Associates provided clarity for our business strategy and allowed us to navigate a successful exit via trade sale.

The time and information provided to us was invaluable to reaching the goals and outcomes that were set out.
We would strongly recommend your services to other companies as it provided information that we hadn’t even thought of.

Challenged us to think of the business in new ways and helped bring our growth strategy into focus

Our Advisory Board challenges our thinking, provides the confidence to grow and the brains around the table to do it responsibly.

Their work brought clarity and insight to our strategic planning workshops and advisory board meetings. They were particularly adept at navigating tricky issues with tact and sensitivity. I’d have no hesitation in recommending Board Associates in this capacity… they were well suited to unraveling issues back to their core.

The knowledge and connections we were were able to access through the Growing 100 program have contributed to new partnerships and clarity in our business’ direction. Board Associates insight to the business world and in particular, start-ups, has been incredibly helpful. Not only did they give us strategic guidance on how to grow the business, but they also gave us the reassurance and encouragement we needed to know that we are on the right track.

Get In Touch

Join our Community of interest

Providing real world ideas, examples and thought leadership for values-centric organisations.