BUILDING A BUSINESS.
I magine for one moment you have saved diligently for a long time and are on the cusp of having your dream home built. You've found the plot, had the designs agreed with the planning department and your builders are about to lay the first bricks. When suddenly, there is a wave of fear and panic looming large over you. The builders are laying the first bricks of your dream home, you should be happy. But you realise they have omitted to put in any foundations first.
If that sounds ridiculous, I suggest you take a critical review of the business you've worked hard for and examine the many known and unknowns that lurk within it--any one of which can trip you up and create a potential disaster, akin to building a house without foundations.
It is important to review your recruitment and retention strategy.
Ask what the staff turnover is like as a percentage of the workforce and if it is in line with the market average, or higher than your competitors. Also, consider the incentives offered to retain staff. These are not only financial, but also include recognition of achievements. The second step is looking at how effective your employee engagement strategy is, assuming you have one, and checking when it was last reviewed. Ensure your HR functions have adequate capabilities and if not, hire an external expert to oversee any changes.
Next, revisit partnership agreements with cross options. Determine which resources are in place to ensure the surviving partner has the means to buy your spouse /family out, in the event of your untimely death.
Define your exit strategy. Consider the impact of the End of Service Benefit (EoSB) liability on your company's value.
A potential purchaser will have a very different view on how much the EoSB liability impacts the value of your business.
Take some time out to review your business and if necessary, hire an independent consultant. Depending on the size of your business, this could be one of the big four accountancy firms, or perhaps your auditors can recommend someone. Find a consultant with a successful track record in working with owners and developing businesses for sale resulting in a higher value for them upon selling. This does take time but is a worthwhile investment of time and resources.
Consider hiring a specialist HR company that focuses on bringing the benefit of an impartial review to your business with a focus on compensation and benefits. Find firms with sufficient experience that have worked with SMEs and international companies. When looking at your business, they may evaluate whether your staff turnover could be improved by investing in a range of benefits that fits both the company's budget and the needs of the staff. They could suggest a revamp of the employee handbook so there is better engagement of the staff meaning they feel more valued. Evidence suggests that engaged staff who value their contribution to the company are highly beneficial to the overall business. That has got to be good for everyone and the bottom line. If this sounds a bit too impractical then perhaps you should consider how much it costs you in recruitment fees (typically 25 per cent of the first year's salary) and how many staff would need to remain for a review to be cost effective.
There is strong evidence to suggest that the biggest form of absenteeism is from stress, of which financial stress is a major contributing factor. Whilst it may be unspoken, since people lack the confidence to share their struggles with school fees, credit card bills or the rental payments with their family, let alone their employer. Yet it has a profound effect on their health. Many progressive employers, particularly in developed countries recognise this and provide a combination of workplace health assessments and financial advice surgeries, where employees can drop in during their lunchtime and have a confidential conversation with a professionally qualified person. Some insurance companies will even incentivise them to regularly visit the gym or adopt a healthier lifestyle.
Finally, conduct a SWOT (strengths, weaknesses, opportunities and threat) analysis, whereby you, as the business owner, review from start to finish how the competition fares in terms of their complete business. This is not only how much they charge for the same goods, but their staff turnover, and how the businesses are run--in other words, a complete analysis from the ground up. 'I do not have time' or 'we are the best anyway' are excuses and will often lead to failure.
What systems are in place for the imminent introduction of VAT, which staff members are specifically trained in cross- border applications of VAT charging and reclamation? Do you have the appropriate software? Medical insurance recently became government mandated in the UAE, but how prepared is the business for the time when a proper pension replacing the EoSB comes into effect? Leaving these things to the last minute gives your forward-thinking, progressive competitors the edge.
The above is not an exhaustive list, but merely an example highlighting some of the elements you need to consider when running a business. As with the opening property analogy, a business, like a house, needs regular maintenance and upkeep.
Evidence suggests that engaged staff who value their contribution to the company are highly beneficial to the overall business."
--Andrew Prince, Financial Advisor, DeVere Acuma
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