Taking your family business to the next level
Successful SMEs face a myriad challenges as they expand and evolve and many business owners succumb to common pitfalls, their businesses falling by the wayside before they ever have the chance to achieve their potential. But it doesn't have to be that way... By Ken Matthews.
Like many entrepreneurs, I started out in a converted garage at the side of my home before taking on a partner – Geoff Steer – to assist with the workload. We knew all of our clients, did most of the work ourselves and our staff were just like family.
As we grew Geoff and I were inundated with extra administrative tasks like client and HR issues, and our monthly accounts, that we were forced to handle after-hours or on weekends because we had no time to complete them during the regular 9 to 5.
Our first step on the road to sustainable growth was realising we simply couldn’t do any more ourselves and engaging a semi-retired accountant to take over the preparation of our monthly financial statements, and starting to have structured finance meetings. This introduced a measure of urgency and financial accountability to our business.
It was around this time we realised our business needed focus and direction so, with the help of an external consultant, we put together our first strategic plan. Within two years following this plan we had achieved our four-year targets and had become bored with where we were going.
We engaged another, wonderful, consultant who knew our industry, rattled the cage, and helped us drive change and execute strategy that brought about significant change to our business. A wise old owl, he would respectfully ask the hard questions when they needed to be asked about our performance both operationally and financially. He was able to draw from his own firsthand commercial experience, which was invaluable when issues came up.
He helped us identify that one of our biggest problems was ourselves. We were trying to retain control over every aspect of our business, working ridiculous hours and every decision required co-sign-off. As a consequence it took significant time to make decisions or get anything done.
To tackle this challenge we established a formal corporate structure with a Managing Partner (me) and advisory committee, which was a major breakthrough. Our advisory committee consisted of two external professionals who brought a fresh and objective perspective to our meetings, and helped ensure we had good financial management and corporate governance.
Governance roles are often blurred in SMEs, but establishing a formal structure freed us up to concentrate on working on the business – building relationships, winning contracts and nurturing our young colleagues.
A couple of years later the advisory committee evolved into a Board of Directors and now, with more than 25 years in business, Matthews Steer has an independent Chairperson and one other non-executive director on our board.
Our Chairperson provides me, as Managing Partner, the sounding board I need to run an organisation of this size. Our bi-monthly catch-ups give me an opportunity to run ideas or concerns past him, especially delicate people-related issues which crop up frequently in small to medium business. Our Chairperson gives me the confidence to act, and tells me to pull my head in when I am not seeing a particular problem from both sides.
Their responsibilities under ASIC (and their personal reputational risk) mean our non-executive directors bring invaluable risk management focus to our business, keeping risk management constantly on the radar and helping protect our business.
These days our annual off-site strategic planning days are firmly entrenched in our business psyche, providing an opportunity to develop strategic intentions, actions, timelines and responsibilities. Reference to strategic plans forms an important part of our board meetings and, and in turn our board meetings keep us accountable to our strategic plan, week to week and month to month. Effective boards ensure things get done and good minute-taking is the gate keeper of accountability.
A good board can be invaluable for bringing a sense of realism and perspective to an organisation, particularly in cases where the owners and management may believe their own publicity a little too fervently. Boards bring an outside perspective and provide a forum through which to discuss the merits of opportunities that present themselves. You may not always agree with the outcome of board discussions, but you can take solace in the fact that they have been thoroughly discussed and due process has been followed, all of which will protect the organisation from rash and costly decisions.
Finally, board meetings provide a forum through which to raise difficult issues, enabling us to look at problems objectively and explore solutions from a commercial perspective without things getting personal. This can be an invaluable tool for family and closely-held businesses.
Matthews Steer has had an advisory committee and board in place now for more than 10 years. I write my Managing Partner’s report – which I try to keep brief and to the point – on a bi-monthly basis and this forms part of the board pack that we circulate five days before each board meeting. This report forces me to stop and reflect on how the business is progressing in relation to our strategic plan, examine any strategic challenges arising from the prevailing economic environment, recognise what we have achieved and identify where our focus needs to lie in coming months.
Today, I couldn’t imagine running our business without our board and the discipline it brings me as Managing Partner, and our executives. Matthews Steer brings these same principles, structures and disciplines to our clients’ businesses to support their sustainable growth.
This article has been provided by Ken Matthews, Managing Partner at Matthews Steer and FBA Accredited Adviser and the advice is designed to be general in nature. Ken works with family and entrepreneurial businesses, helping drive strategy, and he advises on financial management and corporate governance to unlock their potential and support sustainable growth.
To contact Ken please call 03 9325 6300 or on firstname.lastname@example.org