Business Development Tips from Matt Crawley
Matt Crawley is Corporate Finance Partner at accountants, business advisers and financial planners Lovewell Blake, one of the leading independent firms in East Anglia. He works closely with business owners across the region to help them develop and realise strategic aspirations, managing both the process and specialist advisers and lawyers. This month, Finance Monthly reached […]
Matt Crawley is Corporate Finance Partner at accountants, business advisers and financial planners Lovewell Blake, one of the leading independent firms in East Anglia. He works closely with business owners across the region to help them develop and realise strategic aspirations, managing both the process and specialist advisers and lawyers. This month, Finance Monthly reached out to Matt to hear about his business development tips.
What would you say are the three key points for businesses to address when developing their businesses?
The Right People
Particularly for owner-managers, developing the second-tier management team, as well as attracting and retaining key talent, is a big challenge. Often, entrepreneurs baulk at paying for someone to run their business, something they may have been doing for some time, but recognising the necessity of this is a big factor in allowing the business to develop and grow.
Businesses can be successful, but in order to continue to grow, it is important that the management team is developed. If this does not happen, the leader cannot effectively lead the business and strategically plan for growth. It also means that the routes to an exit plan are blocked: a business with a strong management team is a more attractive prospect to a trade buyer when the founder wants to retire, and if that doesn’t happen, it also opens up the opportunity for an MBO.
The need to retain key talent outside the senior management team is also a big factor, particularly in those sectors where IP is a big issue. Losing a key individual at the wrong time can effectively put the brakes on growth, so it is important to have the right structures in place to incentivise and retain key talent – for example putting in place an EMI scheme so that key people will themselves benefit from business growth.
Making sure you have the right people is just as important as finding new customers when it comes to business development. Often, the most successful growing companies are the ones where the entrepreneur has less to do – so that they can concentrate on driving that growth.
Managing Cash flow
It may seem obvious, but having robust financial systems in place is crucial for business development. Growth, and in particular rapid growth, can drain a business of cash, and many developing businesses under-estimate the amount of funding required to achieve that growth.
The big challenge here is to ensure that you have robust financial projections, which accurately reflect the needs of the business as it grows. Not only will doing so remove many surprises, it will also make it easier to find funding, as lenders and other funders will take a business more seriously if it can demonstrate that it understands the financial challenges inherent in developing itself.
It is important to stress test the assumptions you make in creating these projections, as well as the projections themselves, through scenario planning. Developing a business seldom goes entirely according to plan, and the trajectory for growth can be knocked off course by any number of external and internal factors.
Of course, sourcing the funding for growth is a challenge in itself. Whilst traditional lenders are now more open to proposals than they were five years ago, there are also now more routes than ever to finance, and it is important to explore them all in order to find the one which is right for a particular business.
It is clear that attitudes are changing: for example, younger entrepreneurs are open to the concept of using a discount facility – borrowing against invoices – in a way that an older generation of business owner might not be. Whereas in the past this would be viewed as debt factoring, something which might look as if a business was in trouble, now it is accepted as a legitimate way to raise funding for growth (and in any case is much more discreet than it used to be).
The Right Infrastructure
One of the main challenges in developing a business is to ensure that the infrastructure of the business is suitable for the particular stage of its growth. We often see firms which retain a start-up mindset even as they grow into multi-million businesses.
There are all sorts of infrastructure issues to think about to facilitate business development, from the expertise required to manage that growth; making sure that the business’s premises are suitable to accommodate growth (and finding both the right premises and the funding to move if they are not); a suitable legal framework; and ensuring that the brand is strong enough to be credible with the type of larger customers which growth often brings with it.
Perhaps the two major infrastructure challenges are finance and HR. It’s not just a question of compliance: getting these two right can make a big difference both in the company’s ability to deliver growth – and to do so profitably.
You work with clients from a variety of sectors; are there ways in which their business development needs differ?
Very definitely. All of the above challenges will apply to most growing businesses, but some will be more important than others in any individual sector.
- Energy – oil, gas and renewables: this is an industry in which external factors, in particular the price of oil can have a huge impact, turning a hugely profitable business into a marginal one, and vice-versa. So when working with businesses in this sector, we emphasise the need for monthly projections, to enable business owners to plan on the basis of the latest environmental factors.
- Tech sector: In East Anglia, the Tech sector is very important, with Cambridge being a well-established tech hub, and Norwich following hot on its heels. Here, the two main challenges are talent retention and funding. Many tech start-ups are dependent on intellectual property, and key individuals can be central to a company’s development. Likewise, funding is often not available via traditional routes, because it’s not about borrowing against pieces of kit. Investors often want to take equity, which needs to be done in a way which will benefit both the business and its founder. The right investors don’t just bring funding, but expertise, structure and ideas as well.
- Food and farming: this is a sector where regular review of KPIs is vital, because small changes made regularly can have a big effect on the ability to grow – and if those changes are not made quickly, they can become major barriers to growth.
What are the main barriers to business development?
Often tackling the challenges I have outlined can be seen by smaller businesses simply as a cost, which can be avoided. But our most successful clients are the ones which are prepared to engage with us and invest in the support needed to make growth happen.
Development support can only come from advisers who genuinely understand the business, who take the time to measure what needs doing – and their own progress towards achieving those goals – and who provide structured advice and a challenge to the entrepreneur.