Whether or not you choose to engage the services of a business advisor is really up to you and your preferred mode of operating your business.
Obviously I believe there is value in seeking independent business advice; I think we’re all better decision makers if we’re able to test our propositions with someone who isn’t directly related to the issue at hand, but has relevant expertise.
In the blog I’m using examples from our own clients to show how independent advice is adding value in their businesses.
The key is to seek that advice from an experienced advisor who is comfortable giving ‘frank and fearless’ counsel to you as a business owner.
How advisors can add value
Business advisors generally provide value in three main ways:
- Strategic advice
- ‘Sounding board’ support
- Business performance and risk management advice.
Below are some examples from our own clients, showing how a business advisor can add value.
Business advisors are often called on to help business owners map out their business’ strategic direction; this is indeed a key component of our business advice offering at JPAbusiness.
At its simplest, strategic planning typically involves:
- identifying the drivers of value in your business
- understanding your external market dynamics
- re-examining your own business offerings
- determining the direction and outcomes you wish to aim for.
Client example 1: A strategy for survival
JPAbusiness has a client in Victoria who has been operating a highly successful, very profitable, multi-store newsagency business for the past 15 years.
Over the past 10 years, as the newspaper industry has declined, this client has revised the offering in their three shops, driving margin and keeping it strong.
The tricky thing with this business is that it is delivering an EBITDA of $550,000 per annum – solid returns. However due to negative external market factors, the business would likely be very hard to sell on the open market for a solid result.
So, strategically, what should this owner do next? This is where we come in.
JPAbusiness has significant experience in the newsagency market and a good understanding of the external factors causing dramatic structural change in that market.
We presented our client with a number of strategies for securing value in the future, including: considering business sale options; continuing to run the business for a period of five years; and, a mix of the two, involving divestment of real property assets and business wind down.
In this instance, our role as business advisors was to provide some strategic (and creative) advice and options to help the business owner secure value and progress succession and exit.
‘Sounding board’ support
As business owners, we’re continuously looking at strategic opportunities to grow our businesses and ‘proving up’ whether they will work out or not.
Many business owners choose to test those strategic ideas with support from an independent ‘sounding board’ – an external party who is not conflicted by a personal relationship, and who is thus able to give an honest and impartial opinion of the risks, issues, opportunities, potential returns, and other factors that might be important to consider.
Client example 2: ‘I need to pick your brain’
The other night I had a call from one of our larger industrial services clients. This client runs a successful, multi-dimensional business and has been with us for nearly two decades.
He said: “James, could you have a look at your diary. I need to spend a day with you to pick your brain and get your views on x, y and z.
“It will probably be a full day, where I’m just listening to you present my ideas back to me. I’m pretty happy with where I’m headed on this, but I just want to hear you review these ideas to be sure I’m right.”
This guy is a self-made business person and a consummate risk manager. He looks at opportunities and then he examines all the associated risks very, very thoroughly. He knows his stuff.
But, ultimately, he was saying: “You will probably tell me what I already know, but I need some distance and impartiality to test my ideas and propositions.”
Business performance and risk management advice
Often, as business advisors, our role is to provide an ‘expert phone a friend-type service’ for our clients.
In these situations, the clients aren’t looking for high-level strategic advice, or a sounding board for their own ideas, but instead want regular (sometimes day-to-day) management advice, addressing a particular issue in their businesses.
Client example 3: Overcoming a ‘pain point’
I saw an example of this a few weeks ago when I met with the founders and owners of a successful IT company based in Melbourne.
This company is at the forefront of the digital economy, putting together practical applications to leverage what the internet and digitisation can provide businesses.
However, they’re having delivery and performance issues with some senior people in their team and it’s proving a real pain point for the business.
This pain point is making it impossible for them to focus on the big picture and take advantage of the opportunities before them.
In this instance, my role was to provide step-by-step management advice to resolve their personnel issue, so they could get back to focusing on the big picture.
What makes a good business advisor?
When choosing a business advisor, make sure they have:
- a good understanding of your business model
- a thorough understanding of your industry and the risks you face
- an inquiring mind
- good communication skills
- no hesitation about telling you things you may not want to hear – telling you how it is!
James Price has over 30 years' experience in providing strategic, commercial and financial advice to Australian and international business clients. James' blogs provide business advice for aspiring and current small to mid-sized business owners, operators and managers.