14 Jun 2018
Very few business owners hope that things will stay the same for their company year after year. For most owners, the goal is to grow a business, either by moving into new markets or offering new products or services.
But in some cases, growth can be difficult, as several obstacles can get in the way, such as competition from similar businesses, the cost of doing market research, and difficulties finding the right people to employ. One way to work around the challenges of growing a company is to acquire an existing business. There are a few times when buying another business makes the most sense.
You’re Looking to Move Into a New Market
One reason business owners often consider buying other businesses is to expand into a previously untapped market. A company might consider buying a business that offers a similar product or service but in a different geographic area. Or, a company might consider buying another business that offers a product similar to its own. In the latter case, acquiring a business wouldn’t only increase market share, it would also help to reduce competition.
You Want to Diversify What Your Business Offers
Another reason to consider buying another business is that you want to expand your company’s product offerings. For example, a hardware company might purchase a software company or a company that makes laptops might purchase a company that produces computer chips. If a company buys a business that produces a product or component the business needs to produce its own products, it’s known as vertical integration.
Buying the company that produces the materials your own needs to make its products can mean that it costs less for your business to manufacture its products. But it can also mean that your business ends up selling parts and components to your primary business’ competitors.
You Want to Improve Your Management Structure
In some instances, one company might buy another not because of the products or market share of the acquired company but because the company has a management structure or leadership that the purchasing company envies. If your own business has struggled with management or has had other internal staffing issues, acquiring a company that has an excellent track record can be a benefit to you.
It is worth pointing out that there are cases when differing management approaches cause culture clash when two businesses come together or when business A buys business B. Although you might envy the way business B operates, it’s important to keep the needs of your existing employees in mind as you work to integrate the two companies.
You Want to Reduce Costs
Buying a business can be a cost-cutting move in some cases. For example, if you end up buying a company that produces a key component of your own product, you no longer have to buy that product at wholesale prices. Buying an existing business can also minimize redundancies and allow you to streamline workflow and responsibilities.
You Have the Time for Due Diligence
One thing to consider before you decide to buy a company is whether your team has the time to do the research and due diligence needed to make sure the company is a good fit and that you’re getting a good value. When you purchase a company, the acquisition should make financial sense and it should also make strategic sense. That’s to say, you don’t want to buy a company for the sake of buying a company. Instead, you want to consider how the purchase will help your company on its path to growth.
When it comes to financial concerns, one thing to think about is whether the acquired business will help improve your bottom line. It’s not enough to look at the current revenue and income of the potential acquisition. You also want to look to the future to see whether that business is likely to continue to have the sales and income it has now or if there’s likely to be a drop-off.
Prepare for a Successful Acquisition
Buying another business isn’t something you want to attempt on your own. New Direction Capital offers virtual Chief Financial Officer services to help your company determine whether or not acquiring a business is the right next step for you and to help your company through every stage of the process. Contact us today to learn more.
11 Jun 2018
In business, it’s often not what you know, but who you know. And it’s not just who you know, but how strong the connection and relationships you have with certain people are. For example, if you need advice or an opinion, you would most likely write to or call someone whose opinion you trust.
Doing that is one case of networking. Yet, networking often gets a bad reputation and plenty of people think of it as something to dread or something that won’t really help them grow their businesses or advance in their careers. In large part, the negative view of networking stems from a few common misconceptions about what it is and what it involves. Adjusting your viewpoint on networking can help you forge new connections and move your business forward.
Misconception 1: If You’re Not a Natural Extrovert, Networking is Impossible
When most people hear the word “networking,” they picture wine and cheese filled after work events during which the naturally outgoing all congregate in the center of the room while the naturally shy or introverted hang around the edges, clinging to the snack table for dear life.
While your run-of-the-mill networking event does cater to the skill sets of extroverts, those events aren’t the only way to network and build connections with others. If you are naturally shy or don’t do well in large group settings, it’s better to change your approach to networking. Instead of going to big events, reach out to people you are interested in getting to know individually and ask them to meet up for a one-on-one conversation.
Misconception 2: It’s a Waste of Time
Like the first misconception, the belief that networking is a waste of time probably comes from the fact that people aren’t likely to form lasting connections when they go to big networking events. Handing your business card to a group of people and never following up isn’t going to lead to any significant relationships.
Instead, it helps to be proactive. If you do attend networking events, take the time to follow up with the people you thought were interesting or who you’d like to learn more about afterward. Send a friendly email, reintroducing yourself, saying that it was nice to meet them, and complimenting something about them. You can ask to meet them again if you’d like to further the relationship.
Misconception 3: It’s Selfish to Network
It’s not selfish to network and to meet new business connections. It is selfish to approach networking with a “me first” mindset. While you do want to think about how building relationships will help your business, it’s also important to think about how other businesses or individuals can benefit from getting to know you and what you have to offer. For example, you might be able to provide a company with a way to reduce expenses or with a time-saving device.
When you go into any networking event, large or small, always ask yourself what you can do to help others, not what they can do to help you.
Misconception 4: Networking Creates Fake Relationships
Sometimes, you have to reach to find and connect with people who are outside of your usual business circle. Making the effort to connect with people you wouldn’t ordinarily meet doesn’t mean that the relationships you build with them are fake or false. It simply means that you had to put a bit more effort into forming those relationships than you would have if you had stuck with your usual circle.
One way to connect with people who aren’t in your usual circle or who might have something to offer you (or you them) is to network and to find ways of building your network with deliberation. That can mean going out of your way to attend events that you would ordinarily avoid or it might mean reaching out to someone you don’t know but would like to and asking them their opinion on a subject.
Networking can help you find a solution to a problem you’re having and can help you build long-lasting connections with others by helping them solve their own problems. To learn more about the value of maintaining relationships in business, contact New Direction Capital today.
24 May 2018
What’s the next step that your company will take? For some businesses, going public, or starting the process of undertaking an initial public offering (IPO) is the top of the growth ladder. They’ve courted private investors, seen significant growth and increases in revenue. Now they’re ready for the next big thing — gaining access to capital from the market and getting the nod of approval from the general public.
But going public isn’t always the right decision, even if a company seems to be on the up and up. If you’re wondering if an IPO is the right next step for your business, asking yourself a few questions about your plans and your company’s health can help you make the right choice.
How Predictable is Your Company?
Some businesses are more stable and predictable than others. Before you go public, it’s worth taking a close look at where your next meal is coming from, so to speak. Can you look out at the next quarter, or even better, over the course of the next year, and have a general idea of what they will bring your company? Or are you uncertain of how much your business will bring in and whether it will be able to meet its targets or not?
Public investors aren’t necessarily as forgiving as private investors. If you expect to hit a certain target during a quarter, then miss it, even by a small percentage, your stock value can fall dramatically (after you go public).
While you can’t predict with 100 percent accuracy what the future will hold, it’s still important that your business has some level of stability before you begin an IPO.
What Are Your Plans for Future Growth?
Going public doesn’t mean your company is going to plateau. Instead, it should continue on a growth trajectory. That said, it’s important that you have an idea of what that growth trajectory will look like. For example, what plans do you have in place to help your business achieve $XXX in revenue? Although going public can seem like the end of the line for many business owners, it’s often the beginning of a new journey.
Is Your Company Established Enough for an IPO?
Do people know who your company is and what it does? While you don’t have to be a household name just yet, it’s imperative that people have some understanding of what your company is before you undertake an IPO.
Remember, when you go public, you are putting shares of your company up for sale on the public market. If the general public doesn’t know who you are or doesn’t understand the worth or value of your company, it will be difficult to convince them to buy shares. That can lead to the value of your company dropping, making it difficult for you to bring in capital from the IPO.
Along with knowing who you are, it’s essential that people can see the value of your business. Companies that have struggled with or failed at IPOs have often had a single product that didn’t have much use or value or that people didn’t much of a future in.
Do You Have Enough Staff to Handle the Additional Responsibilities Going Public Brings?
Going public can mean having to hire more people or outsource some responsibilities. You might want to hire someone who has experience with SEC reporting and a virtual chief financial officer to help answer larger financial questions your company might face.
If offering stock options to your employees is something you are considering doing after the IPO, it might be worth hiring a human resources team with experience putting together stock options benefit packages.
Are You Ready to Give Up Control of Your Company?
Depending on how many private investors you’ve worked with in the past and how much of a stake they’ve had in your company, you might already be used to not being fully in control of your business. But for owners who have previously been the sole owner of a business, going public can be a bit of a shock.
Is going public the next step for your business? The team at New Direction Capital can help you decide. Contact us today to learn more about our virtual CFO services.
18 May 2018
An episode of the series “Silicon Valley” found the CEO and employees of a start-up company on the search for office space. After finding what he thought was a great deal, the CEO took his team to view the space, a windowless room with buzzing fluorescent lights. While the CEO was delighted, the team was horrified at the idea of spending at least eight hours a day in such a space.
While it might seem like a small thing, where you set up shop and the layout and design of the office space you choose for your business can have a significant impact on productivity and your company’s ability to grow. Whether you’re investing in office space for the first time or are considering moving to a bigger workspace, here are a few things to keep in mind.
Open Layout vs. Cubicles
Whether an open layout, where employees all work together, often at the same table or workbench, or cubicles are better for productivity is a debate that goes back as far as the invention of the cubicle (in 1967). On the side of the open layout is the fact that cubicles can cut people off from each other, minimizing opportunities for collaboration.
On the side of the cubicle is the fact that people often struggle to focus and get their work done when there are a lot of distractions. In some cases, people feel more on the spot and exposed in an open layout setting, which might also have a negative effect on their overall productivity.
It might be that offering your employees a “best of both worlds” option is what works best for your business. You can set up private workspaces for people to use when they need to focus and think, as well as open areas where people are encouraged to gather and discuss ideas.
Another aspect of office design that can impede your company’s ability to grow is volume. When there are many people gathered in one room, working away, the noise level can get pretty high. One study from Oxford Economics found that more than half of all surveyed employees were less productive when there was ambient noise (such as phones ringing, co-workers chatting or noises from offices above or below your own).
There are a few ways you can reduce noise levels in the office to help minimize distractions. Carpeted workspaces more easily absorb sounds, for example. You might also install special panels on the ceiling to help bring down sound levels. Another option is to encourage people to take phone calls or to chat in areas that are closed off from or otherwise away from open spaces.
You don’t want your office to be too hot or too cold, as temperature extremes can affect employee performance. Getting the temperature right can be tricky, but it’s usually a good idea to aim for somewhere between 67 and 75 degrees. How warm or cold your office is can also depend on the clothing choices of the people who work there. Men who are stuck wearing long sleeve shirts and jackets might appreciate a colder space while women who wear sleeveless or short-sleeves blouses or dresses might be shivering in a 67-degree office space.
One option is to allow employees to adjust the temperature in their own workspaces, such as by having space heaters for people who are always cold or small fans for people who tend to run hot.
How tidy an office space is can also affect employee productivity. One way to improve office tidiness is to eliminate the causes of clutter. Try to go paper-free as much as possible, so that your team doesn’t have stacks of files or other paperwork piling up on their desks.
Cleanliness goes beyond managing paper clutter. Take a look at the common areas, such as the kitchen or lounge space, if your company has them. Do people leave things out or do they put them away after use? Are spills cleaned up quickly? Encouraging people to clean up after themselves can help to foster a sense of pride in the space they work in, and by extension, in the company they work for.
When it comes to business growth, even the small things can make a difference. To learn more about strategies you can use to help your company grow, contact the team at New Direction Capital today.
10 May 2018
Owning your own business or being a manager of a business can bring with it high levels of stress. When that stress gets to be too much, something known as burnout can occur. There’s conflicting data on how common burnout is, with some reports stating that just 7 percent of professionals have experienced it, according to the Harvard Business Review. Other surveys claim that more than 60 percent of workers have been affected by burnout.
Burnout is more than just stress. It can interfere not only with how you feel and your ability to work. It can also have an adverse effect on your business and on the productivity of your team and the people you manage. Learning to recognize the signs of burnout is one of the ways that you can attempt to keep it from happening.
What Are the Signs of Burnout?
Burnout can seem as if it comes on quickly, sneaking up on you when you least expect it. But the reality is that it actually builds slowly and usually has several recognizable signs. One of the most prominent signs of burnout is feeling exhausted, often both physically and emotionally. You might struggle to find the energy to do your work and might dread the idea of slogging through various tasks and responsibilities throughout the day. Other signs of burnout that are associated with exhaustion include feelings of anxiety, depression, a loss of appetite, and difficulty concentrating.
Another symptom of burnout is feeling cynical or disengaged about your work. Where you once felt a sense of accomplishment or a confidence in your work, you might now feel uncertain of the value of the things you or overly critical about the quality of your work. It might also seem that no matter how much work you do, it’s never enough.
Why Does Burnout Happen?
Burnout happens for a few reasons. A lack of work-life balance is a major cause of burnout and can often be the reason why business owners or managers experience it. In the case of employees who burnout, one of the reasons might be that they feel a lack of autonomy or control over their jobs or their day-to-day tasks. Having to work with a micromanager or a bully can also make an employee more likely to burnout.
In some cases, burnout can happen because a person isn’t a good fit for their current job. Not everyone has what it takes to be a business owner, for example, and some people might find themselves in positions that just aren’t a good match for their personalities or skill sets.
What You Can Do to Avoid Burnout
Although some workplace environments or the stress of running a business can make it seem as if burnout is inevitable, the reality is that you can take steps to avoid burning out and to help your team avoid burnout.
Perhaps one of the most important things you can do to avoid burning out is to give yourself some downtime or take a genuine break. For many over-extended business owners, the idea of taking a vacation and completely disconnecting, even for a few days, can seem terrifying. But a few days of rest and relaxation can be just what you need to come back refreshed and with a brighter outlook on your work and company.
Another way to avoid burnout is to try to change what you can. Usually, there are things behind the stress, exhaustion, and feelings of inadequacy. Figure out what they are and what you can do to correct them. For example, if you’re constantly feeling overworked, it’s likely that there are at least a few tasks you can assign to someone else. In some cases, outsourcing certain responsibilities, such as finding a virtual CFO to handle your business’ finances, can help lighten your burden and keep you from burnout.
Setting boundaries can also help you reduce the risk of burning out. Know your strengths and know when to say no to people who are asking you for favors or assistance. Depending on how your business is faring, it might be that learning to say no to certain things is what you need to grow and move to the next phase.
You can look at burnout, or the risk of burnout, as a growing pain experienced by many business owners. The team at New Direction Capital can help you take steps to reduce the risk of burning out. Contact us today to learn more.