2. WHAT WILL WE COVER?
• The entrepreneur
• Common personality traits
• Strengths
• Weaknesses
• Needs
• High-growth enterprises
• Challenges
• Cash Flow
• Processes
• Relationships
3. WHAT WILL WE COVER?
• Partnering with high-growth enterprises
• Pitching
• Services
• Pricing
• Reporting
• Q&A
4. INTRODUCTION
PART 1: THE ENTREPRENEUR
• Most high-growth enterprises are founded and managed by entrepreneurial
businesspeople
• Their peculiar personalities include certain strengths and weaknesses that must be taken
into account when providing advisory services
PART 2 – HIGH-GROWTH ENTERPRISES
• As high-growth enterprises develop, they will generally have to deal with three major
challenges:
1. Cash flow: understanding cash inflows and outflows; how to ensure that a balance is
maintained; and how to secure funding for any forecast shortfall
2. Processes: getting knowledge of how the business is run out of the entrepreneur’s head and
on paper; building and co-ordinating a team to work together to achieve the firm’s goals;
ensuring the growing business is run efficiently
3. Relationships: collaborating with stakeholders and staff to reach mutually beneficial
outcomes.
5. INTRODUCTION
PART 3: WORKING WITH HIGH-GROWTH ENTERPRISES
• Pitching: how to pitch successfully to high-growth enterprises and their
owners
• Services: what they generally need, and how to provide it to them
• Pricing: pricing alternatives, advantages and disadvantages of each
• Reporting: what owners of high-growth enterprises need to keep track of
6. WHO ARE WE?
• Dirigo Group: Management consultants providing services across three main
categories:
• Advisory & coaching
• Business finance
• Sales & marketing
• Dirigo specialises in providing advice to the following types of businesses:
• Startup
• High-growth
• Decline / distress
See www.dirigogroup.com.au for more information
7. PART 1: THE ENTREPRENEUR
Anatomy of a risk-taker
9. 1. VISION
To be able to conceive, articulate and realise a vision is the
essence of entrepreneurialism. It’s this skill, more than any other,
which sets entrepreneurs apart from other people.
A great entrepreneur makes you think ‘wow’ when they speak
about their vision. They have the ability to see things that other
people can’t; to challenge conventional wisdom; to find
improvements and solutions to problems people didn’t know
existed. Their passion, zeal and clarity of thought is often astonishing,
and their ideas incredibly compelling. When speaking to a true
entrepreneur, you find yourself becoming excited at the possibilities
they are articulating. Daniel Flynn, founder of Thankyou Group
10. 2. PERSEVERANCE
When someone’s life is built around creating and trying new things,
they will almost always encounter difficulties and sometimes failure
along the way. An entrepreneur is able to push through these
difficult times, to see them for what they are: a learning experience
to be used further down the track.
Entrepreneurs will often have tried a number of different ventures
and failed before coming across something that can be built into a
long-term commercial success.
Runner from ‘Badwater’, the hardest footrace
in the world (135 miles)
11. 3. RISK-SEEKING
Generally speaking, entrepreneurs are risk-seekers. They have an
unusual ability to tolerate uncertainty and to overcome the fear of
failure.
If the average people went into business, they would be driven to
distraction by worries about missing payroll, missing loan payments,
or simply not having enough cash to live. Entrepreneurs, however,
will often refuse to even acknowledge that these concerns exist.
They revel in the thrill of ambiguity, of challenge, of ‘living on the
edge’.
12. 4. SELF-CONFIDENCE
Every entrepreneur has their fair share of doubters, particularly in
the initial phases of their business, before they have a proven
product or service offering. It takes a certain personality to
overcome these naysayers, who will habitually deride what the
market is yet to validate.
The true entrepreneur will not give these criticisms a second
thought. Rather than listening to detractors and wondering “Am I
wrong?”, they will think with absolute certainty “You are wrong!”.
13. 5. REBELLIOUSNESS
Most entrepreneurs have a strong rebellious streak.
They take pride in defying conventional wisdom and will often
openly deride those who advocate for avoiding or minimizing risk.
They usually have a blatant disregard for rules and regulations,
particularly those they see as illogical or standing in the way of
progress.
Combined with their high self-confidence and risk-seeking
tendency, this often manifests in a belief that “the rules don’t apply
to them”.
15. 1. WORK ETHIC
Almost every entrepreneur prides themselves on having a very
strong work ethic – one that most people think is bordering on
crazy.
In what is often a conscious repudiation of the “9-5” mentality,
entrepreneurs’ lives will often be totally consumed with their work.
They see growing their business as fulfillment of their life’s purpose
and would not even think of slowing down.
As such, a true entrepreneur can often achieve much more in a
given period of time than the average person would in their
situation.
Mark Cuban – known for his insane work ethic.
16. 2. LATERAL THINKING
In the entrepreneur’s journey, they will regularly encounter
problems for which there is no obvious solution.
The average person, when faced with a similar quandary, will
generally be unable to visualise a way out. The entrepreneur,
however, will apply their energy to turning the problem over in their
mind until a solution presents – often one that is way ‘outside the 9
dots’.
These solutions are often astounding in their elegant simplicity, and
in hindsight will seem obvious.
The‘nine dots’ puzzle, famously used by the
Walt Disney Company in the 1970’s to test
lateral thinking.
17. 3. CULT-BUILDING
A great entrepreneur will create a ‘cult’ around their business,
founded on a shared belief in the ‘destiny’ of the company and the
abilities of its founder.
They will engender an environment of strong commitment and
shared desire for success; staff will prioritise and make sacrifices for
the business, suppliers will give excellent service and preferential
treatment, and everyone will push hard to ensure they are
contributing to the wellbeing of the business.
19. 1. EXCESSIVE OPTIMISM
Some of an entrepreneur’s personality traits, particularly their self-
confidence and risk-seeking, can sometimes result in a state of
excessive optimism, which can have a harmful effect on their
business.
One of the keys to developing a young business is to be honest and
open about actual and potential problems. In doing so the business
can create solutions to lessen the chance of these problems
occurring, and minimise fallout if they do.
Entrepreneurs, however, can sometimes be blind to these potential
issues, or fail to objectively appraise their seriousness.
Richard Branson – once famously tried to take
on Coke and Pepsi. That did not end well.
20. 2. LACK OF FOCUS
Entrepreneurs build their lives around seeing and solving problems.
They have innate ability to perceive improvements or solutions that
the average person doesn’t.
What is more difficult for them, is to settle down and focus on one
problem at a time. They will often look to pursue multiple projects
at once, which can be detrimental.
Steve Jobs identified this when he said “People think focus means
saying yes to the thing you've got to focus on. But that's not what it
means at all. It means saying no to the hundred other good ideas
that there are.”
21. 3. UNREALISTIC EXPECTATIONS
One of the most common complaints about working for an
entrepreneur is that they expect too much.
For many entrepreneurs the barrier between work and personal life
is blurred or non-existent. They tend to assume that their employees
carry the same fervour that they do, and as such will often expect
long hours, extremely high productivity and enormous sacrifice.
This can lead to a poor culture, lower productivity and high staff
turnover, all of which can threaten the viability of a young business. Horrible Bosses’ Dave Harken: “Don’t you go
walking around here thinking you have free
will, because you don’t”
23. 1. TECHNICAL ADVICE
Entrepreneurs are inquisitive and fast learners, and can generally get
their heads around most issues of an operational nature in their business.
What they often struggle with is the more technical aspects that can’t
be learned on the fly, particularly in the areas of accounting and law.
Entrepreneurs will generally need a business advisor to provide technical
advice on matters such as:
1. Margin analysis
2. Benchmarking
3. Cash flow (particularly for businesses that require high capital
investment or that carry inventory)
4. Funding
24. 2. STRATEGIC ADVICE
Entrepreneurs have no trouble conceiving great ideas. Their minds
brim with endless creative possibilities for new businesses.
What many do struggle with, however, is taking one of those ideas
and creating and implementing a thorough strategic plan to bring
it to market. This level of attention to detail is something that their
personalities generally do not lend themselves to.
A good adviser will help to create the detail around the
entrepreneur’s ideas, particularly in the areas the entrepreneur will
consider ‘mundane’ such as systems, processes and staffing.
25. 3. SOUNDING BOARD
Sometimes, an entrepreneur will just want to have someone around
to share their ideas with.
This can be a double-edged sword for the business adviser;
entrepreneurs often don’t take well to criticism of their ideas (even
valid criticism), but blind agreement means the adviser isn’t doing
their job.
A sufficient level of trust must be built between the entrepreneur
and adviser before an adviser can become a truly useful sounding-
board. But once that trust is built, the entrepreneur and adviser can
become a formidable team.
26. 4. CONNECTIONS
Entrepreneurs will often rely on their advisers to connect them to
other useful professionals such as bankers, insurance brokers and
lawyers.
In this role the adviser can introduce people from their network to
help ensure the entrepreneur is surrounding themselves with
professionals who will provide good, cost-effective services. The
entrepreneur will not necessarily have the required knowledge or
background to find and engage these people themselves.
27. PART 2: THE HIGH-GROWTH ENTERPRISE
Keys to stability and sustainability
29. 1. CASH FLOW
Understanding cash inflows and outflows
• Profit ≠ cash!
• The working capital equation: how debtors, creditors, stock, prepayments
etc. affect free cash
Maintaining balance
• Cash flow forecasting
• Trade credit policies and processes
• Stock management
Funding solutions
• Debtor finance
• Equipment finance
• Private equity
30. 2. PROCESSES
Get it on paper
• Create and implement a strategic plan which is tied to desired
financial outcomes
• Understand and document how the business ‘works’
• Take the time to produce written procedure manuals for all key
areas
Building a team
• Ensure all employees are aware of their roles and responsibilities
• Remove as much ambiguity or double-up in job roles as possible
• Create a rigorous hiring process to attract the right staff
• Ensure your team collaborates
• Make the staff accountable, but remember they are human
31. 2. PROCESSES (continued)
Efficiency is key
• The business will change rapidly as it matures
• Just because something has been done a certain way in the past,
does not mean it shouldn’t be changed
• Regular, accurate reporting of financial and non-financial data is
vital
• Expenditure should be examined regularly to ensure that every dollar
spent is generating an appropriate return to the business
32. 3. RELATIONSHIPS
External
• The single most important relationship for a high-growth business is
with its past, current and potential customers.
• Key customer-related challenges and strategies:
1. Order fulfilment. Rapid growth and tight cash flow can lead to difficulty
in fulfilling orders if not carefully managed, whether that be for products
(manufacturing/wholesale/retail) or services (transport/professional/
trades etc).
2. Communication.
a. Enquiries/complaints/warranty: High-growth businesses need to establish and
maintain appropriate channels for customers to make contact and resolve
issues.
b. Key accounts: The high-growth enterprise must keep in close contact with key
account customers to encourage prompt payment and repeat orders.
3. Brand and marketing. Branding and marketing must present a
professional image, create ‘buzz’ around the product or service and be
appropriate to the business’s scale.
33. 3. RELATIONSHIPS
Other key external relationships
• Lenders
• The high-growth enterprise must communicate with its lenders in a timely and
professional manner.
• Financial statements, business plans etc must be accurate and thorough to give
the lenders confidence.
• Problems must be identified and communicated to the lender (with a well-
conceived solution) as soon as possible.
• Suppliers
• Particularly important if the business is involved with manufacture, wholesaling or
retailing of product.
• Must ensure that supplier is aware of future growth and is geared up to supply
the required quantities.
• Any cash flow shortages or other reasons for delayed supplier payment must be
discussed and negotiated.
• Warranty issues or cancelled orders due to product defects or delays must be
openly and proactively discussed and solutions developed.
34. 3. RELATIONSHIPS
Internal
• Key internal relationship is between the business and its staff. Usually
the most expensive item on the P&L, so must be managed carefully.
• Vitally important that the staff are aware of the goals of the
company and are working in harmony towards achieving them.
• The owner should actively solicit feedback from their employees as
to current issues in the business – even in larger organisations.
• Culture is critical – there is no excuse for a poor culture in an
organisation. Bad owners/managers make excuses for poor culture
but it is rarely the fault of the employees (save the occasional true
bad egg). More often than not it is a breakdown in communication.
35. PART 3: WORKING WITH HIGH-GROWTH
ENTERPRISES
Building long-term, profitable partnerships
37. 1. PITCHING
• Highlight your track record and past successes: This is the most
critical part of the pitch. Most entrepreneurs will be acutely
aware of their lack of general business knowledge, and will want
to know that their advisers have had relevant experience and
will be able to provide the right guidance.
• Lead the conversation: Don’t leave it to the entrepreneur to tell
you what they need. Most entrepreneurs can’t articulate what
they require, but will ‘know it when they hear it’.
• Do your research: An entrepreneur will expect you to be as
excited and as knowledgeable about their industry as they are.
38. 2. SERVICES
Each case will be different, however high-growth enterprises and their
owners generally have some common requirements, many of which we
have highlighted previously:
1. Cash flow forecasting – breaking down this sometimes complex
concept into something the entrepreneur can understand is a key
skill an adviser will need.
2. Business planning – creating, documenting and assisting in the
implementation of strategy is important to ensuring the business
develops sustainably.
3. Business ‘design’ – may include helping the entrepreneur get ‘out of
the bedroom’ and into appropriate premises; building a team;
developing systems and processes to ensure efficient workflow.
39. 2. SERVICES (continued)
4. Mentoring – helping the business owner develop their own skills
and understanding of the business environment;
5. Finance – assisting in the identification of financing
requirements, preparation of information relevant to the
application, and connecting the business owner with good
bankers or brokers.
40. 3. PRICING
• Most high-growth enterprises will have constantly tight cash flow,
particularly those that hold inventory or require substantial capital
investment.
• The owner may be price-sensitive, but at the same time the business
will sometimes be slow at paying for your services.
• Can be difficult to price advisory work to high-growth enterprises
appropriately, particularly if the above factors are in play.
• However, many advisory relationships with high-growth enterprises
turn into regular, long-term engagements that increase in value
every year.
• Provided you share the owner’s positive outlook for the business and
believe in the management team, it’s worth taking on the
engagement even if the return isn’t attractive at first.
41. 3. PRICING
How do we price? What works and what doesn’t?
• Generally, we look to get agreement from the owner to provide a
certain set of services over a full year, in return for a specified
monthly retainer.
• The advantage here is that you get the client accustomed to paying
you monthly, and can slowly ratchet the fee up over time if
appropriate.
• The disadvantage is that often the owner will phone or email for ad-
hoc advice, which is difficult to price for
• Alternative is to price on a per-hour basis, however:
• Can lead to ‘sticker shock’ when they receive the monthly invoice
• Will often make the owner more reluctant to call, and thus harder for the
adviser to become a true ‘trusted adviser’
42. 4. REPORTING
• As previously mentioned, reporting to high-growth enterprises and
their owners is not just a matter of providing management accounts.
• Terminology and financial concepts will often need to be broken
down to facilitate understanding.
• Remember to collect and report non-financial data as well as
financial data, and to include a cash flow statement as well as P&L
and Balance Sheet.
• Whenever reporting financial results, write a management report in
plain English explaining the key figures and why they are important.
• Be forward-looking: deal primarily with the future (with reference to
past events and potential impacts), not purely on what has
happened in the previous period.
43. SUMMARY & CLOSE
Entrepreneurs
• Five key personality traits: vision,
perseverance, risk-seeking, self-
confidence, rebelliousness
• Strengths: work ethic, lateral
thinking, cult-building
• Weaknesses: excessive optimism,
lack of focus, unrealistic
expectations
• Needs: technical advice,
strategic advice, sounding board,
connections
High-growth enterprises
Key challenges:
• Cash flow
• Understanding inflows and
outflows
• Maintaining balance
• Funding solutions
• Processes
• Get it on paper
• Build a team
• Efficiency is key
• Relationships
• External: Customers, lenders,
suppliers
• Internal: staff
Working together
Pitching:
• Emphasise track record, lead the
conversation, do your research
Services:
• Cash flow forecasting, business
planning, business ‘design’, mentoring,
finance
Pricing:
• May be slow paying or price sensitive
initially
• Look to develop long-term relationship
• Fixed price per month or per hour –
advantages and disadvantages both
ways
Reporting:
• Keep it simple, be forward-looking
