Global management & M&A consultancy SI Partners talk to us about the common habits of successful businesses.
Have you ever wondered about how your problems compare to other business owners? Or the steps you’d need to take to grow your business and sell it on for profit? Well, that’s exactly the kind of thing that global management consultancy SI Partners handles.
We spoke to Tristan Rice, Partner at SI Partners about what small businesses can take away from their proven techniques.
What are the main reasons that people approach you? What’s the first question that they ask?
One, there’s a problem that they don’t know how to fix. That could be an operational problem, an ownership one, i.e. taking one share out becomes confusing if that shareholder owns half of the business.
Two, they’ve reached some kind of threshold in the business where they feel like they don’t have the skills or experience to get to the next stage. That might be a result of having grown very fast; in a business of 30 to 40 people, the founder can’t touch all parts of the business like they used to. Suddenly, they need to change their structure and the way they operate. That can be very difficult for an owner manager to do because they’re used to controlling everything.
Three, they want to sell or have been approached by someone who wants to buy the business and they need help preparing for that.
You mentioned it can be difficult for business owners to reprioritise their role in a growing business. So, what’s the typical emotional state when they’re considering giving up their management responsibilities and/or selling their business on?
If you start a business from scratch, you’re doing everything from answering the phone to dealing with clients. And as you get bigger, you pass on those responsibilities to your team, but ultimately, in a business of 30 to 40 people, you can’t do it all by yourself.
Lots of things can go wrong when you start giving responsibilities for key areas in the business to your employees without the right preparation. So, there’s a lot of fear because they feel like [other people] can’t do it as well as they always have. It’s essential to recognise that there are people that can do those jobs better and, with the right preparation and structure, you can slowly relax into this new arrangement.
Everybody thinks that their business problems are unique. However, the issues they face are often very familiar and we have tried and tested solutions to solve them. Sometimes, people just need outside help to confront and address the issues.
What are the common habits of the businesses that go through sustained, successful growth?
You definitely get natural entrepreneurs and then you get accidental entrepreneurs. You need an element of the natural entrepreneur to continually grow a business and get it to 50+ people. It does require more than just relying on luck.
So, very often those sole entrepreneurs are very successful because they don’t do anything by committee, they just know their own mind, they know what to do and they crack on with it. But you need the people who are a safe pair of hands, who can tidy up after the entrepreneur who is charging ahead, taking risks and charming the client.
For the majority of business owners, who may not have that total, unwavering confidence in their approach, it is really important to get different perspectives. Those businesses, that seek the opinions and advice of others who have done if before, tend to gain a new lease of life and do better.
Also, I think that those who are passionate about what they do and about the culture of their business and not just the financial aspect tend to do better long-term. You need more than just a financial target to drive a business forward. If you can create something really special and a culture that people want to join and do their best work, and the passion for the work is coming down from the top, then that tends to sustain a business.
So, a big hurdle is that businesses focus too much on the financials without giving due respect to their people and culture?
A lot of people spend too much time looking at who’s been bought, for how much and thinking “How can we get that?” Saying; “Our plan is to make a million-pound profit and then sell and make x amount of money,” isn’t a business plan; it’s a personal financial objective, which is fine but it can’t be what drives the business.
You can’t just set yourself a financial target because all you’ll end up doing is scraping together work from wherever you can, which doesn’t build a business of great quality – it doesn’t tend to be very sustainable. Having a business plan based around something new and high value, being focused on the clients that you want and the staff, and ensuring that you’re attractive to those people are the fundamental drivers in a business.
Once you’ve got those in place then you can finally attach those financial metrics to the business engine and make the profit that will get you to your financial target.
Check out part 2 of our interview with SI Partners here, where we find out the truth about what it’s like to sell your business.