“It will never happen!”
Four steps to restructuring your business
“You think something like this will never happen,but it did.” Donna Dynna became the president of MuniSoft after her husband Glenn tragically passed away in 2009. We are grateful that Donna has allowed us to share her story so others may learn from her experience and take steps to avoid some of the issues she had to overcome.
What if you had a medical emergency and could not work in your business for a month, or ever again? How would your key customers, bankers suppliers and employees react? How would you protect or increase your business value and family’s wealth? Who would control your business and what would they do with it?
Restructuring your business for improved performance and profit can begin with discussions at the kitchen table, the boardroom table, in the emergency room or at the funeral home. Obviously, two of these are not very good. The key to restructuring is to be proactive and make decisions while you can.
Proactive restructuring is like going to the gym before you are in the hospital and is useful for contingency planning, succession planning and wealth planning. Donna was in both a reactive mode when she became president and a proactive mode to position the company for the future. If you are in a highly reactive mode, restructuring focuses around preserving and generating cash flow, maintaining key customers and employees, obtaining financing support, and shedding excess costs that don’t drive value. When you have time to be proactive, the four steps to restructurin which we call The Four Ps, are Purpose, Process, Performance and Perspective.
For Donna Dynna and MuniSoft, the restructuring began with a quick assessment of Purpose. We define Purpose as the personal and business objectives for owning your business and the value you provide to your customers, best described as your strategic position. MuniSoft’s purpose did not and would not change: to provide high quality software, service and support to its customer base in Saskatchewan and across Canada. The strategic process identified extensive talent and resources within the company to provide even morevalue to their customers.
A major step for MuniSoft was in the Process phase. Process relates to how a business is structured and how it plans and operates. With the founder, Glenn, no longer present as a driving force linking all the people around a common direction, clarification of roles, responsibilities and expectations was formalized and communicated in regular meetings. The process phase is usually the most boring of all the phases that entrepreneurs face because they fear becoming bureaucratic and constraining their free will. The opposite actually happens for the benefit of everyone involved. When the direction and parameters (roles and responsibilities) are clearly communicated, everyone has more freedom to exert themselves in a common direction, resulting in greater speed and momentum and significantly less time wasted fixing problems.
For Munisoft, we set up organizational charts for the short term and long term that would best reflect the talent needed for the long-term strategic positioning. Legal and organizational structures now reflect the family-owned business’s long-term objectives. Business plans and budgets are being developed by the managers to guide operational performance. The third phase is Performance. This is where entrepreneurs and business owners spend the majority of their time. Performance includeyour people, operations, marketing, and customers. With the Purpose and Process clearly identified, maximizing Munisoft’s performance is easier because it now knows how to best leverage its talented and loyal workforce to maximize client value.
Keeping it all together and focused is the ongoing fourth phase, Perspective. MuniSoft is just entering this phase. We will use dashboards that create leading and lagging indicators that are both financial and non-financial in nature. Employees at different levels can have different metrics but all metrics support the business Purpose. This provides the entire management team with a dashboard on how the business is doing to identify critical trends and to make decisions in real-time. Non-financial metrics can be tracked easily within most accounting systems and this avoids error-prone, labour-intensive spreadsheets. Critical non-financial metrics for just about any business include customer satisfaction, employee satisfaction, productivity, speed, quality and work or sales pipeline. Critical financial metrics include net income as a percentage of revenues, revenue and profit per customer and per employeegross profit by product or service line, days to cash and leverage.
MuniSoft, and Donna, are set for the future.
Don’t wait for tragedy that forces you to restructure your business. You can start today using the Four Ps: Purpose, Process, Performance and Perspective.
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