Have you ever wondered what a Business Advisor can do for you and why working with a good one can be a game-changer? You are not alone; the professional role of a Business Advisor is not well understood.
In the third of five articles, I will talk about managing Turning Points and Sharing the Emotional Load of Being a Leader.
My thinking comes from my work with business advisory clients since 2005, mentoring other Business Advisors, and my knowledge of how Business Advisors operate and add value. They not only create business value but act as a conduit for the value provided by their networks.
Turning points – get the support you need and maintain your momentum
A large part of business advisory work is supporting a client through turning points.
I’ll use the analogy of taking a corner at speed. Most people think a corner has three or four parts. However, as motor-racing legend Sir Jackie Stewart explains – there are, in fact, eight parts in a corner. In addition, the driver must handle the car smoothly with the respect a highly tuned machine demands. It minimises effort and maximises momentum, the stuff that wins races. Watch on YouTube and visualise how the same applies to leadership in business. Business success is about precision and momentum. Speed builds momentum.
Sharing the emotional load of a leader
Business is rarely a straight line. It is almost always moving, often in multiple ways at once. Examples are:
- when it is in growth mode in a static market
- responding to industry change
- when additional business partners, new equity partners, joint venture partners or even new talent comes on board
- or downsizing when times are hard.
All generate an emotional load, most of all on the business leader. It can help to share this load with a trusted advisor. Sometimes this trust happens quickly or immediately. Sometimes it takes time – it all depends upon the advisor/client relationship.
4 examples of turning points
Below are some examples of the turning points where an advisor is often called in,
1. The pitstop
My Advantage Business colleagues and I assist many clients to improve their businesses. Usually, we are engaged when things aren’t going well. Watch this clip from the movie InterStellar to understand how it feels.
2. Accelerating at speed
We have assisted many other clients to further grow and improve their businesses. Usually, we are engaged when the growth curve has levelled out. The leader needs to plan the next increase in scale and ensure the current structure will support the current state and the desired increase in scale.
It requires significant mental agility from both the client and their advisor. Take a seat with Lewis Hamilton and watch as he completes a hair-raising lap in the 2011 Monaco F1 Grand Prix. I share this clip with you to explain how it feels to scale a business at speed.
3. Overtaking
Sometimes the best way for a business to achieve scale is to purchase another business. To make this work, the management team need:
- Access to debt or equity finance
- Scalable talent within the core business
- A good fit with the acquisition business
- A very realistic and pragmatic assessment of business risk, reward, and most importantly, fit with the business team of the acquired business.
A number of my clients are always on the lookout for acquisition opportunities; I help them:
- Select the business to acquire
- Assist with the initial approach to that business,
- Negotiate the terms of purchase and fund the purchase price, and
- Extract the maximum business value from the acquisition business.
4. Getting to the finish line
The final turn on the business race track is toward the finish line. It is one of the hardest for many of my clients.
There are two ways for a business leader to exit their business; either horizontally, or vertically. Vertically requires them to be fit and able and is far preferable and indeed profitable if well planned and executed. Horizontally is the unplanned option as a business sold following the death of its leader (because it cannot continue operating) sells at a discount of at least 35% as a rule.
Advantage Business advisors assist many clients to exit alive, well and profitably with planned succession, sell-down and exit. However, one size does not fit all – each business needs a tailored strategy.
Two we often recommend are succession planning or sell-down.
Succession offers the best value if well planned and executed. It is ideal to start implementing the plan 3-5 years prior to the planned exit date.
Sell-down as part of a planned exit involves selling down a portion of the equity in the business to either an internal or external party. It can also be excellent as a risk management and value realisation strategy.
These are just four examples of turning points a leader may experience in business but there are numerous ways in which a business advisor provides support and advice to their clients. Our work can be pivotal in determining the outcome of a turning point. If you’d like to know more, ask me to send you some case studies.
Read my next article in this series to understand the importance of Trusted Advisors and A Good fit for you.