14 Oct 2015
As your company grows, hiring people to oversee specific departments or to manage certain areas, particularly when you can’t be on-site or in the office, is essential. Deciding which positions will best benefit your company is just one piece of the hiring puzzle. You also want to make sure you find the best people to fill those positions. Whether you are looking to hire a general manager or to fill a higher, executive level position, there are a few things you can do to avoid making a hiring mistake and to make sure the person you hire is a great fit for your company.
Don’t Rush the Process
Running a company that has a gap where a manager should be can be a challenge. But, it’s even more challenging to run a company when the manager you’ve hired isn’t a good match or isn’t able to live up to the requirements of the job. For that reason, it’s best to take things slowly during hiring, in terms of how long you accept and review applications and the care you take in interviewing and investigating potential employees. When hiring, make sure you exhaust all of your options when it comes to spreading the word about the opening. Reach out to headhunters and recruiters and place an ad on a jobs listing site. You can also advertise on your company’s website and in journals that are specific to your industry.
Look at Potential
When hiring managers, there’s often a focus on a candidate’s competency. While being competent and able to perform the tasks of a position is important, executive search consultant Claudio Fernández-Aráoz argues in the Harvard Business Review that a candidate’s potential is often a better indicator of his or her potential for success than competency. Potential implies that a candidate has the ability to grow with the company and with the position. It usually suggests that a person will be able to thrive rather than give up when challenges arise. Fernández-Aráoz recommends looking for a few qualities when gauging a candidate’s potential. Find out how curious the person is, how insightful he or she is, how connected he or she is to others, and how determined he or she is.
Ask the Right Questions
You can get a fair sense of a person’s potential as a manager by asking the right questions. Behavioral questions, or questions that require a bit of reflection on the part of the candidate, instead of a basic “yes” or “no” answer, are often a good way to judge potential. A simple behavioral question might be “how do you respond to criticism?” or, “what did you do the last time someone criticized you?” As a follow-up, you can ask if the candidate would handle a similar situation in the same way or if he or she has learned from that experience and would handle it differently.
When you are hiring for top-level positions, it’s often a given that you will check references. You want to confirm that the candidate has the experience he or she claims to have and that there are no skeletons in the closet. Along with verifying your candidate’s abilities, you can also find out more about the candidate’s potential and magnetism when you check in with his or her references. You want to hire a leader or manager with whom people want to work. A good question to ask a reference is “would you work with him or her again?” Even if a reference otherwise speaks highly of a person, if that reference balks at the idea of working with or under the candidate again, you have a pretty good idea of how well the candidate works with or attracts others.
A virtual CFO can help you map out a strategic plan for your company, including creating a plan for hiring the best talent. Finding the right employees is a crucial step on the path to growth. If you need help determining what will best help your business, reach out to the team at New Direction Capital for customized guidance today.
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02 Oct 2015
Although your business might face different daily challenges than a business in a completely unrelated industry, your company shares more in common with other businesses than you might think. Even if two companies have considerably different organizational structures or management styles, they are likely to face similar challenges and concerns if they are at similar stages in their growth and development. For example, two companies are just starting up might encounter the same problems, even if one is a technology-based company and the other an entertainment business. The Harvard Business Review outlined five basic stages of business growth back in 1983 and there have been many articles highlighting the specific challenges of each stage ever since. Even though it’s been decades since the article was published and there have been considerable changes in the world since then, most small businesses today still move through the same stages.
A business in the existence phase, sometimes also called the inception or new start-up phase, is just getting going. At this stage, the focus is usually on making sure the business is able to find and keep customers and able to continue to provide its main product or service. Financial considerations at this point in time usually focus on making sure there is enough cash to keep the business going until it can reach the next stage. Some companies never leave the start-up or existence phase. An owner might quickly realize that being in business is more demanding than anticipated, or the company’s product or service might never catch on with customers.
If a business does end up having a product or service people want to buy, it eventually moves to the survival stage. Now that it exists, the company needs to begin to focus on maintaining its existence, or surviving. This second stage of business often involves a focus on maintaining and expanding cash flow. At this point, a company wants not only to break even or to have enough cash to cover costs, it also wants to start thinking of ways to use that cash to move to the next step. Although many companies do move on to the next stage, there are a considerable number who remain in the survival stage for years or decades, essentially treading water until the business is shut down or sold off.
By the time a business has reached the success stage, which can also be called the growth stage, it has started to be profitable. It’s possible for a company to remain in this third stage for the rest of its life, although many owners usually end up taking their businesses in a new direction at this point. Often, an owner might begin to disengage from the business during this stage, and new managers or executives might be brought in to head up the day to day operations of the company. Another option is for the owner to start planning for the company’s growth during this stage. This is usually the point at which a company starts working with a virtual CFO and planning out a roadmap for the continued success and growth of the business.
Take-Off or Expansion
During the take-off or expansion stage, a business begins to follow its plan for growth. Expansion is often a delicate stage for businesses, as the slightest upset can make or break a company at this stage. Financial concerns typically bubble up during this phase, as companies need to work to find new sources of income or financing to accommodate their growth. The question of whether it’s worthwhile to sell the company might also crop up during the take-off stage and an owner might wonder if selling for a profit is the best option for the business.
Once a business reaches the maturity stage, it has several things going for it, namely a strong management team, stable finances, and a developed strategic plan. Although it might seem like the ideal stage for sitting back, it’s important that managers and executives not get to complacent at this point. Mature companies should continue to look ahead to the future, to develop plans for continued growth and to aim to stay ahead of the curve.
What stage is your company in? No matter where you are in terms of your business growth, the team at New Direction Capital can help you plan for the next phase. Contact us today for more information.
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A business can’t be static. In order for it to continue to be successful, it needs to grow and evolve over time. But, a business can’t grow without some sense of direction or purpose. Taking your company to the next level involves careful planning and assessment. Whether you plan on introducing a new service or product or want to break into a new market, it can help to ask your company some questions first.
What is the Competition?
When assessing a new business opportunity, it helps to examine the current market and any current competitors. Are there companies out there who are doing the same thing you plan on doing or who are targeting the same customer base you plan on targeting? Take a close look at those potential competitors. Are they offering the same exact product or service you plan on introducing? Are their customers found locally, nationally, or globally? How loyal and committed are their customers? Do your competitors have any clear weaknesses or strengths? Are their companies performing well financially?
Has the Product/Service Been Tested?
The business world is full of products that seemed great on paper, but failed once introduced to the market. When assessing a potential growth opportunity, it’s important to see how the public and your customers react to the new product or service. You can test products in several ways. One option is to survey your current customer base. Ask them if they have interest in the new product, if they feel they have a need for it, and if they would buy or use it. Another option, which should come after you survey your customers, is to produce a test product or a trial run of the service. Called a minimum viable product, it’s the most bare-bones version of what you’re planning on offering. The goal of introducing a minimum viable product is to gauge the feedback from early adopters or early users. Are people willing to pay for the new product or service, even when it’s at the most basic level? When they use the service or product, does it meet their needs or perform as expected or is there considerable room for improvement? Would they purchase the product once all the intended bells and whistles are added?
Will it Make Money?
You also want to look at how profitable a new business direction, new product or new acquisition will be. How much do you expect to be able to sell the product for and how did you arrive at that figure? How much does producing the item or introducing a service cost your company and how much does it cost your business to promote, advertise for, and market the new product or service? How do you know that customers will be willing to pay $XX for the product?
Does Someone From Your Business Have Experience With the Product?
If you are branching out into a new area, it helps to have someone with some experience in that area on your team. Is anyone on your current team familiar with the product or service you plan on introducing? If you need to hire a new person who does have experience in that area, is he or she a good fit for your team? If you are expanding your company by acquiring a similar business or a competitor, will it be beneficial to keep the current management team at the company or bring in an entirely new team?
Asking the questions above is the just the first step to assessing an opportunity for growth or for new business. Working with New Direction Capital and a virtual chief financial officer can help you plan the next steps for your company. For strategic planning guidance and assistance taking your business to the next level, contact us today.
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17 Sep 2015
Why do people go into business? One of the answers is to make money. When you own a for-profit business, you are continually looking for ways to increase your profits. But, increasing the amount of money your company makes is just one part of the equation. If you are able to cut expenses and reduce the amount your business spends, you’ll also be able to make your company more profitable. There are several, out-of-the-box ways you can trim your business’ expenses.
One way to reduce your company’s advertising and marketing costs is to partner up with another business in your area. For example, if you run a real estate agency, you might reach out to a mortgage company and see if it would be interested in sharing mailing lists or running a joint promotion with you. If you own a store in a shopping plaza, see if the stores that neighbor yours would be interested in distributing flyers for your store to their customers. You can offer to distribute coupons or flyers for their stores to your own customers.
Make the Most of Mailings
If you send your customers or potential customers physical mail from time to time, such as catalogs and brochures, trim your costs by making sure your mailings are working for you. Have someone from your company review your mailing list, weeding out any customers who haven’t responded for a certain amount of time. The US Postal Service also has a number of tools that will help you maximize your mailing list and avoid sending mail to incorrect addresses or to addresses that people have left years ago. Look into bulk mail procedures to further reduce your postage costs.
Go Online When You Can
Web-based companies are often able to offer the same services for a much lower price than brick and mortar companies. For example, you can usually get business cards, brochures and other printed products for considerably less from an online company than you would from a print store. The basic rule to shop around before you commit to one vendor over another applies here. When you need supplies or a specific service, get a quote from a few online companies and compare it to a quote from a brick and mortar store, then choose the offer that will help you cut costs while meeting your needs.
Try to Go Green
Going green where and when you can doesn’t just help the planet. It also helps your bottom line. Remind employees to power down equipment before they leave the office for the evening, to cut your electrical costs. Switch to LED light bulbs, which cost more upfront, but last for much longer than other types of bulbs and use less energy. If you haven’t already, try to digitize as much as possible, from your files to your company’s communications. Ask employees to only print documents when absolutely necessary and to try to use two-sided printing whenever they can.
Outsource and Go Virtual
Your business might not need to fill certain positions on a full-time basis. Working with independent contractors reduces your company’s expenses as you aren’t responsible for paying FICA taxes or for providing benefits to contractors such as a retirement match or health insurance. Going the contract route can also mean that you are able to work with a more experienced professional for a lower rate.
For example, you might not be ready to hire a chief financial officer full time yet, but still need guidance when it comes to managing your company’s finances or putting together a strategic plan for growth. Hiring a virtual CFO allows you to work with a professional in the field, for much less than the cost of hiring someone with equivalent experience. Another option for cutting employee costs is to lease your staff from a staffing agency or hire temporary workers to boost your team during busy periods, without the expense of going through a lengthy hiring process.
Saving your business money doesn’t just mean looking for the lowest rates when it comes to financing and finding the banks that offer you the best deal. It also means finding ways to creative cut costs during the every day operations of your company.
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06 Aug 2015
When you first started your company, there wasn’t much room in the budget to hire someone to handle all of the financial details on a full-time basis. You might have taken on the responsibility of researching financing, keeping the books balanced, and making sure customers or clients paid. As your company grows, or hopes to grow, it might become infeasible for you to continue to handle the financials as you guide your business to its next phase in life, but you might still not have the budget to hire a professional to manage your business’ finances. In many instances, a virtual Chief Financial Officer can be an appropriate alternative to a full-time hire. There are a few ways you can tell if working with a virtual CFO is the right step for your company.
Your Attention is Divided
One of the first signs that it’s time to consider a virtual CFO is when your attention becomes divided so much that you aren’t able to see the big picture or focus on planning the next steps for your company. If you’ve taken on the tasks of keeping the books balanced or making sure you have enough cash flow to pay employees and vendors, those chores can fall to the wayside when a project that seems to be more important to the health of your company pops up. If you have to worry about all of the financial details, you might not have your head in the game enough to see when a potential, big client is showing interest in your company or when the market is starting to shift in your favor.
You’re Starting to Think of the Future
You know that your business needs to take steps towards growth or that it needs to evolve to keep up in a competitive field, but you aren’t sure how to get your company to the point where it can grow or how to develop a plan for its growth. A virtual CFO does much more than just manage the books and keep your company’s accounts in order. He can also work with your business to develop a strategic plan and create road maps so that your company can grow and thrive.
A virtual CFO gives personalized advice to the companies he works with, so that each plan is tailor made for a business. If you’re ready to take the next steps with your company, but need a plan that is more in-depth and personal that the advice you’d get online, that’s usually a sign that working with a virtual CFO is in your immediate future.
You Need Help with Financing
The ways you financed your business at the beginning are most likely different from the ways you will finance your business as it moves to a new phase or seeks to expand. A virtual CFO can help open the doors to new financing options for you or help you see if the mix you currently have makes the most sense for your business. For example, if you feel that you have too much debt, a CFO can help you work on restructuring that debt to reduce its cost to your company or can help you find other sources of funding that minimize your business’ debt burden. He can help you weigh the pros and cons of working with investors versus taking out loans and help you choose the mix that paves the way for the greatest amount of growth.
If you need the advice and guidance a CFO can provide, but aren’t yet ready to hire a person full-time, we can help! The team at New Direction Capital offers individualized virtual CFO services to small and mid-size companies. To find out more about what a virtual CFO can do for you, call us today.
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