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Insight, news and updates from Alliott NZ Chartered Accountants, Auckland New Zealand. The views expressed here are the views of the author and should be discussed in further detail should an article be relevant to your individual circumstances.

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Getting bigger?

Written by Vanessa Williams on August 7th, 2015.      0 comments

Most businesses get bigger by osmosis. It just happens.


hand-533They grow by people numbers, customer numbers, business premises and the turnover certainly grows. But the profit does not necessarily grow in line with turnover. It frequently goes backwards – or stays around the same. 

If you decide to get bigger by headcount and shareholders then the critical thing you need to remember is leverage. There is no point bringing on another shareholder if you are not planning on growing your turnover and profit dramatically. Don’t end up with too many chiefs and not enough profitability.

In our view the leverage of people needs to be carefully scrutinised before you entertain another shareholder or business partner. You can certainly have employee shareholders who buy a small percentage of your business but full business partners – proceed with caution.

As you grow one of the critical ‘hires’ that you need as you get larger is a General Manager. Someone who is running the day-to-day operations. This person will allow the leadership team to focus on customers. The right time to hire a General Manager is when you are ready to grow. We have seen sole traders with very small teams (under 10) have a full time General Manager. We have also seen businesses with seen 40+ people who do not have one (the directors share the load) and they do not grow.

And there is another option. And that is the ability to use freelancer marketplaces to fill many non-core responsibilities with part-time team members who are experts in each domain. It can give a micro business with a very small team the leverage to work as if they were a much larger operation, but at a much more efficient cost.

Outsourcing is now much more efficient and automated than ever before. Following are the steps we would recommend to help your business grow, using "virtual assistants":
 
  1. Determine which tasks are outsource-able
  2. Hire with a clear mandate and post clear job descriptions or project specifications
  3. Rally to find great talent and set effective vetting criteria
  4. Provide consistent onboarding and communication – enhance connectivity with Skype or Facetime
  5. Put successful freelancers on autopilot
  6. Challenge your team members to outsource their own work
You can grow your business to whatever size you want. As you do make sure you focus on growing the turnover per person, the profit per person and the profit per customer. Call Alliotts in Auckland if you’d like to bounce around a few ideas first on 09 520 9200.

© Rob Nixon. Rob Nixon is the global leader in helping Accounting and CPA firms become Real Time. He has been advising Accountants around the world since 1994. He is the founder and CEO of PANALITIX (www.panalitix.com) and the author of ‘Accounting Practices Don’t Add Up’ and his most recent book ‘Remaining Relevant’. You can follow him on twitter – @therobnixon – or via his blog – www.robnixon.com
 

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