We are coming up to 5 years of being in business for ourselves – and the Bureau of Statistics will tell you that we are lucky to have survived this far. Key recent statistics:

• More than 15 per cent of Australian businesses failed in the past 12 months, the worst rate since the global financial crisis (GFC), over a decade ago.
• Half the businesses that started in 2019 were permanently closed by June 2023.

Looking back on the first post I wrote for the Advisory Collective back in 2019, “Growing Through Challenging Times”, it’s clearly time for the sequel, to reflect on what I’ve learned most of all over the past five years.

We Live and Work in Hard and Fast Times

As we advise all of our clients, surviving is not enough in this highly competitive and fast moving economy and society.

“The pace of change will never again be as slow as it is today.”

 – Mathew Bishop, Economist Innovation Forum.

The pressure on business founders to anticipate trends, manage cash flow, while still staying ahead of the competition with customer demands is more challenging than ever. In the last part of 2023, this meant we had a lot of people approaching us on ”Journey C” below. Founders were worn out from solving multiple problems with sales, profit, cashflow, systems and processes. Funds were limited and many were looking for an affordable “silver bullet” to take their pain away. However, as much as we wanted to take their pain away simply, we had to be realistic about our messaging to them. The odds that any simple solutions would change their fortunes were low, and we had to ask them: “are you prepared to do what is necessary to solve all of these problems, when things may get worse before they get better?”

Of course the other story that this graph shows is that, usually, “prevention is better and cheaper than a cure”. In many cases these clients would have been better off if they had asked for help earlier, when it was cheaper and easier to fix their problems, and they were more likely to create healthier and more profitable and valuable businesses. Businesses that are better equipped to navigate “hard and fast times” like these.

Five Years, Five Lessons

With the lessons of the pandemic and subsequent economic turmoil now clear, 2023 really helped us to learn where to position ourselves in our clients’ business journey, and how to manage our clients expectations based on our prior experience of turning around businesses. We didn’t win as much new business last year, but we would prefer to be honest and realistic with potential clients from the outset.

Reflecting on those lessons, we realised that we needed to  fundamentally change our business offering and approach to clients. When you read the top five lessons below, you will probably say “of course, that makes sense, what were they thinking!” Hindsight is a treasure!

1. Only 5% of business founders care directly about Business Health. This was a tricky pill to swallow for us. We had assumed that most business founders wanted a healthier business, when in fact, they were focused directly on profitability and business value. Most didn’t really understand how much good business health converts profits to “future maintainable earnings” that underpin high business valuations. We had to make a choice –  do we go hard and try and change the perception of business health in the market, or do we pivot and focus on services aimed directly at growing profits and business value, yet underpinned by business health. We are realists, so we tweaked our services and reduced our messaging about business health
2. In our experience, as many as 90% of founders we meet with have some form of neurodivergence, egADHD and Dyslexia. In some ways these conditions have even been superpowers that have made these founders more successful, however their higher tendencies to become easily frustrated and engage in impulsive behaviour  often worked against them as their businesses grew. Especially when dealing with staff and customers that may see the world quite differently. These behaviours affected our work too. We found that we would have great meetings with our clients and a lot of “nodding heads” on agreed actions. Then, when we followed up, the actions were not executed, and founders were being diverted into new problems, some of their own making. It is pointless to keep pushing the same approach and expect a different result – we clearly needed to adapt our approach to have a greater impact with these different profiles and behaviours. Later in this article I will explain how we had to add more structure, yet in a way that neurodiverse clients could work well with.
3. Data is not king! Rarely did our founders look at hard data – even if they said that they wanted it. Instead they relied heavily on “gut feelings” and the advice of people close to them, many of whom were not really experts in those fields, for a number of reasons. It was also clear that data in “hard and fast times” easily overwhelms. With soooooo much data now available, often from multiple systems, founders were often not looking at the most important metrics that were crucial for their businesses – or sure that the data was even accurate. It would take too much time for them to log into each platform and triage the data, before even trying to make meaningful decisions.
4. Deciding which problems to solve: Often our clients focused on what they experienced as surface level pain, rather than the root cause. And then they didn’t often know how to solve their problems in the best way, even when we showed them through data and functional relationships what they should be working on.
5. Systems that are not “fit for purpose”. They were selected by founders based on what others recommended, rather than through a proper scoping and selection process. And then these systems were often not properly integrated and utilised to produce the right data for their business.

Our Solution: Every Business & Founder is Unique – There Is No Silver Bullet!

I liken our approach to developing our revised services and meeting our clients’ complex needs to my new fitness regime. Although I am in the back half of my 40’s, I want to be able to keep up with my son in all of his outdoor activities and then some! However, I couldn’t apply the radical approaches like I did when I was in my 20’s or 30’s, e.g. with an extreme boot camp. Every time I tried to push myself too hard, I had an injury because I was still rebuilding my foundations of strength and mobility.

I had to learn to be more flexible with my approach, and play to my current strengths – not my old ones.  Just like the Advisory Collective has had to play to our founder clients’ strengths, rather than becoming frustrated that they didn’t want to work the way we might have originally expected or wanted.

Here are the practical ways that we have changed our approach, building on the big lessons of the past five years:

• Fast vs sustainable. While we have changed some of our approaches, we are not going to change everything on our website at once, only to have to update it again every few months with new information. Instead, we have developed an adjusted offering in a proposal format that we are road testing with carefully selected existing and new clients. We are asking for feedback from them to refine and learn. Only once we have the right offering, we will update our website – later this year, after around 12 months of testing and learning.
• Recognising our value. We have asked our clients again how they see the value we deliver – they increasingly saw us as an advisory board, with most of the advantages of having a trusted, formally appointed board but none of the risks that formal boards inherently bring. This is what we broadly now do, for those clients who have graduated to this enhanced model:

• Strategic Planning & Business Modelling + Business Intelligence Dashboard. We have further built out our existing, highly regarded strategic planning service by adding business modelling. Typically we would offer it after the strategic plan, but we had a distinct drop off of clients who would not proceed with this service because they didn’t understand the value in the offering.  This revised approach means that we can gather the data, visualise it and create an impact for the founder to have their “aha” moments while we have their attention for the strategic plan, at the beginning of our engagement.  That makes our strategic plans even more practical, and they can pay for themselves even sooner

• Monthly Advisory Board Meetings. We create a business intelligence dashboard that integrates data from all those systems into one overall dashboard with the right data and trends to help founders with their  decision making, rather than scare them away. Our Advisory Board meetings are like a board meeting, without the legal and financial complexity, risks and outlays of having a formal board of directors, where we can draw on the many talents of our Collective as and when required.

• Strategic Reviews. Depending on the client’s ambition and maturity or life cycle of the business, we plan these quarterly, biannually or annually. These provide the opportunity to update scenario models, in turn providing founders with more clarity and confidence.

My Final Thoughts on Silver Bullets, and Where We are Heading

The other day, a friend was telling me about the sales pitch of a business consultant they recently met. They were claiming that if you grow to $10-$20M turnover, then you will inherently have a secure business that will be successful and easier to run. All founders had to do was invest in growth, and everything else would fall into place.

Personally, I feel deeply conflicted by simplistic, “silver bullet” statements like this. I understand that this might help to get a new client across the line, but at what cost for the client and the industry of business consultants, when that simplistic thinking is eventually revealed to be unrealistic in a complex world like ours?

Sure, everybody would like a silver bullet, me included. But the reality is that each business, even within the same industry, will operate differently based on their founders’ individual strengths, weaknesses, current financial position and risk appetite. We know well from our Business Health Check experience that these are at least 30 business health principles that are critical for businesses to survive, let alone become highly profitable and valuable.

Yes, we do agree in part that gaining some altitude with revenue to support necessary investments in people, systems and structures may allow you to step back from being as involved in the day to day. But the reality is that as your business grows, it becomes more complex as well. There are more moving parts. We have seen businesses of this scale and size without the people, processes and systems that they need and they are inevitably “hollow”. Operating on usually skinny margins because they have discounted to grow, most of their corporate services outsourced, and with over 10% of their revenue (ie usually more than they earn as EBITDA) tied up with one large wholesale contract. We call it the iceberg effect. On the surface, everyone perceives the business is successful, until you go under the surface, and see how it is only one big customer loss away from losing money and potentially becoming worthless.

So yes, we are repositioning our services to be more aligned to founders’ self-perceived needs and sometimes neurodiverse behaviours – but we are not going to compromise on our Purpose and Values by introducing some “click bait”, silver bullet type marketing tricks. That’s like saying that anyone can lose enough weight and add fitness in 30 days to look like Chris Hemsworth or Elsa Pataky. Because despite our hopes and dreams that we could have physiques like they do, we also know that in reality they have dedicated a larger portion of their life to that mission, across all the different ways where they need to do that work.

Therefore, our original focus on the fundamental principles of good business health still exist, but maybe it’s more under the surface. In all of our conversations with clients, we continue to weave business health and business value generation concepts into how they could apply highly practical techniques to grow profits and business value. It’s part of our DNA and we know good sustainable businesses take time to build, and we want to work with great clients that get that too, in a way that meets their needs for the long return – long after those silver bullets are no longer shiny.