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" The fear of risk paralyses one's ability to act.
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Consulting.
Strategy. Value. Growth.
Solutions.

CONSULTING Vertical |


allo sbt | Consulting provides Corporate Advisory Services & develop Strategic Business Plans, Financial Models and Investor Presentations for Start-Ups and Established Ventures.

    Dynamic Modelling for Sustainability, Growth and Value

    Key Considerations for Dynamic Modelling:
  • Strategic Business Modelling
  • ADD (Ambition, Drive, Determination) Modelling
  • Impact Modelling

    How do you set up scenarios?
    What are the mitigating risk factors to be considered?
    What are the underlying valuation perspectives?
    What are the financial projections?

    Rudimentary Thinking:
    Each business unit (enterprise) consists of sub units (human capital/employees). The components of these sub-units lie in the mindset of each sub-unit. Indicatively, the real value driver in any business unit is the human capital.

    Effectively harnessing the true value needs motivational restructuring of the different mindsets to have a unified focus (achieving the set out objective of the enterprise).
    It is important to capture the exact operational nature of the whole enterprise to effectively impact a congruent mindset.

    QUANTUM Zero:

    Everything you need to know about anything in business and management

    About Relative Performance:
    Relative Performance is the degree to which a facility or system fulfills the purposes for which it was built or acquired, or which it is now expected to fulfill; it is a function of effectiveness, reliability, and cost. It can also be regarded as a measure of the success of an investment.

    Generically, relative performance can be described as the work involved in and the results or products that accrue from conducting a process or activity. Hence the following: (1) Human performance describes the manner in which individuals perform a task and the outcome of such tasks; (2) System performance describes how systems execute a task and the result of such tasks, (3) Organisational performance describes what an organisation does and the impact of such activities.

    Relative Performance in business is specifically focussed on the need to set standards, assess the performance of individuals and units, and intervene where necessary to improve performance. Intervention could be in different forms. For instance, it could be by replacing managers, selling off businesses or ensuring turnaround of poorly performing divisions or businesses.

    It is important not only to measure relative performance, but to also manage performance. The reason being that the starting point of successful strategies is acquiring, retaining and developing resources of a threshold that is at least, sustainable.

    As a result, the relative performance of an organisation can be assessed based on its ability to meet its performance targets.

    Performance targets relate to the outputs of an organisation such as product, qualities, prices, or outcomes such as profit. The performance of an organisation can be judged either internally or externally, on its ability to meet these targets. However, within specified boundaries, the organisation remains free on how targets should be achieved.

    This approach can be particularly appropriate in certain situations. A typical example is an organisation that has a corporate centre which controls the strategies and performance of business units in order to ensure that corporate objectives are achieved. In such an organisation (usually a large establishment), performance targets will be set through divisions, business units and functions. These will be translated into targets for individuals as well.

    In this light, performance management is therefore very important. Reason being that it is a proposition aimed at improving management information. Performance management enables the behaviour of resources and the effectiveness of communication activities to be evaluated. Performance management includes functions to gather statistical information, maintain and examine logs of system state histories, determine system performance under natural and artificial conditions, and alter system modes of operation for the purpose of conducting performance management activities.

    Performance measurement also involves assisting managers and supervisors in establishing, maintaining, and monitoring effective performance management programs to plan, monitor, develop, rate, and reward employee performance, and services that support formal and informal award programs to provide employee incentives and recognition.

    Performance management is particularly relevant in the systematic process of monitoring the results of activities; collecting and analysing performance information to track progress toward planning results; using performance information to inform program decision-making and resource allocation; and communicating results achieved, or not attained, to advance organisational learning.

    The starting point of successful strategies is acquiring, retaining and developing resources of at least a threshold standard and this clearly applies to people as a resource. Therefore, relative performance can be managed by the aid of activities that can help enable successful strategies in the following ways:
    By identifying people based core competences or implementing support strategies on which future strategies can be built on. Through goal setting and performance assessment of individuals and teams. By introducing team incentives which tend to have complementary effects on individual incentives rather than replace them.

    Recruiting people with marketing and IT skills is a key method of improving strategic capability particularly where new competences are needed in the organisation.

    Redeployment and redundancy planning are important especially if the organisation is facing change. Succession planning is also necessary to refocus away from preparing people for particular jobs in a hierarchy to simply ensuring that a sufficient large pool of talented individuals exist to meet future senior leadership requirements. Reduction in the use of formal programmes in training and development to more coaching and mentoring to support self development.

    All of the above will help establish a performance level that will be sustainable in the future if adequately implemented. However, the real challenge for an organisation goes beyond the management of relative performance to establishing a system of continuous improvement for the performance level already achieved.

    This is because like in many aspects of a business success, sustainability of the performance achieved is quite the key to sustainable business growth. Therefore there is the need to look at how relative performance can be improved.

    Performance Improvement is a systematic process of discovering and analysing human performance improvement gaps, planning for future improvements in human performance, designing and developing cost-effective and ethically-justifiable interventions to close performance gaps, implementing the interventions, and evaluating the financial and non financial results.

    The goal of any company is to provide value to investors. Information technology can improve business performance and help you stay ahead of the competition, but it must be subject to the same structures imposed on other areas of the business. It must deliver real benefits in a cost efficient manner. For this reason, outsourcing for example can be considered as one of the many strategies of performance improvement in an establishment which can be considered as not just the preserve of the IT department, but is relevant to the CEO and/or CFO both of whom are responsible for the financial performance and growth of the company.

    One way of the many ways of improving relative performance is for an organisation to form successful alliances. However, the success of alliances tend to be dependent on how they are managed and the way in which the partners foster the evolution of the partnership. The following are very crucial to a successful alliance formation:

    Trust is the most important ingredient of success and a major reason for failure if it is absent. Trust comes in twofold. Trust can be competence based in the sense that each partner is confident that the other has the resources and competences to fill their part in the alliance. Trust is also character based and concerns whether partners trust each others motives and are compatible in terms of attitudes to integrity, openness, discretion and consistency of behaviour.

    Senior management support is important since alliances require a wider range of relationships to be built and sustained. This can create cultural and political hurdles which senior managers can help to overcome. Defining and meeting performance expectations. This requires the willingness to exchange performance information. Clear goals and organisational arrangements- particularly concerning activities that cross or connect partners.

    Compatibility at the operational level requiring efforts by partners to achieve strong interpersonal relationships at these lower levels and not just between senior managers of the partners. Allowing the alliance to evolve and change rather than prescribing it too parochially at the outset.

    In a nutshell, the relative performance of an organisation is dependent not only on the overall corporate or business strategy, but also on the people (that is the management as well as the workforce), the process of product and/or service delivery, the strategic initiative of the organisation and any alliances formed by and on behalf of the organisation.

    Previous Publications:
    About Business Core Competence
    About Business Process Strategy
    About Business Process Re-engineering
    About Business Process Analysis
    About Shareholder Wealth / Profit
    About Stakeholders
    About Time Management
    About Value Based Management
    About Outsourcing
    About Negotiation

    A series of workshops geared to a varying target audience from start-ups to established businesses

    WORKSHOPS:

    Ignition .


    Equipped 2 Go .


    Profit Modeller .


    Check-up .


    View Workshop Framework

    Means of evaluating the activities of the company, whether or not it is in line with its strategy and if at all the strategy is working

    Information:
    A performance monitor is necessary for a company irrespective of its size. It serves as a means of evaluating the activities of the company, whether or not it is in line with its strategy and if at all the strategy is working. Our team of consultants at Allo SBT will review your company performance in terms of the cost and value drivers of the business and how to best maximise shareholder value.
    We will specifically look at:

    1. The source of capital: This will be looked at in two categories;
    (a) The cost of capital i.e. whether or not it varies directly with the source of capital. In most cases it does meaning the higher the amount borrowed, the higher the amount to be paid back. Therefore look at the debt to equity ratio of the company (gearing ratio).
    (b) The cash outflow of the company as a result of capital repayment.

    2. The capital expenditure of the company: Does it increase shareholder value or decrease the companys cost? i.e. lead to an increase in sales value or a decrease in working capital by reduction in stock retention levels or more so an increase in the productivity of labour.

    3. If the company is about to make a new capital expenditure: The effect it will have on the fixed cost in relation to the variable cost of the company. Hence, the resulting impact on sales levels.

    4. The cost structure of the organisation: This is in terms of the assets and liabilities of the company (Current Ratio).

    5. Where does the Value / Cost driver of the organisation lie: If the value/cost driver is outside the company, then it will be best to constantly improve relations with the suppliers or otherwise. It might also be worth bringing the particular activity into the company.

    6. The bargaining power of the suppliers and buyers and the existing relationship between them.

    7. The business strategy in place. That is, if it leads to added value to the company.

    8. The internal control systems in place. What measures of cost control have been put in place? How is information generated and stored in the organisation? Is the decision making process based on information generated as a result?

    9. The influence of time: Over time, the key cost or value drivers of the company may change. How will the company respond to these changes and what means of replacement have been developed?
    Demystifying the business planning process.

    Business Planning:

    What is a business plan?
    A business plan is a written statement of your business, what you want to achieve with it and how you will do that. It should outline the structure of your business, the product or service, the customer, the growth potential and the financials. But as well as giving information about your business it should also inspire you for the future. A business plan should give you an idea of what you need to achieve.

    Every business should have a plan. Whether it is to open a second shop or float on the stock exchange. It is why you are in business. It helps you to define strategy and, if properly used, will help you involve and motivate key members of staff.

    It allows you to work out how to make your business a success and can help you avoid failure by plotting the pitfalls along the way. It should outline a realistic target for how that can happen while remaining flexible enough to make changes along the way. By setting out a plan and some targets, you can also monitor your progress and get the business back on track fairly quickly if anything goes wrong.

    Why plan?
    Think about why you are writing a business plan and who will be reading it. Most businesses put together a business plan to raise money and the plan becomes even more critical in determining the success or failure of your business.

    It is the initial selling document and it will either get you in the door or not.
    Think about who your audience will be and the information they will need before committing funds. Make sure that the plan is prepared to a high standard, is verifiable and void of jargon or general position statements.

    A bank manager, business angel or venture capitalist will all be poring over your business plan in great detail before they risk putting their money into it. If you are looking to raise a bank loan, a bank manager will be looking for how likely it is that the business can repay the money. That is more likely to come from a steady business with a gradual growth plan and a steady cashflow capable of supporting the repayments.

    An equity investor, whether it is a business angel or a venture capitalist, is likely to want to see good growth prospects. Unlike a loan, equity investments are not repaid and these investors will only make money by taking a percentage of your business and selling it for a higher sum in Because these investors only get a return when they sell their stake in the business, they will also want to see an exit route which will allow them to cash in their investment.

    What goes in?
    The plan is basically split into four parts the business; marketing; finance and the management team.

    The business
    It should start with the basics of your business. A cover sheet should outline the company name, address and current owners. Start by outlining the legal structure of your business and who owns it. Keep this brief as an investor is more concerned about how the business will operate in the future. Then describe your business and the product or service that you provide. Explain why the product will be profitable and why your customers will buy it, whether your product is unique or simply better than other products on the market. If you business is in the high-tech or biotech sector, you may include any patents or intellectual property owned by the business. Try to give a break down of the overall sector and its potential. Perhaps you can use competitors to show how big the market is and what percentage of sales you think you can capture. However, avoid falling into the trap of basing your business on simply taking a small share of a large market. Trying to capture a 1% share of the whole Chinese population just because it is a big population won't impress. You will need to have a clearer idea of who your customers are and how you will get them to buy your product. All of these will tie into your goals and objectives for the business. The eventual aim for the business and how you expect to achieve that.

    Marketing
    The key to marketing is understanding your customers. You must be able to profile your target customer and their likes and dislikes accurately. This will help you understand how to position the product in the marketplace and how to price the product. You must also be aware of how your customer base is likely to change over time, whether it is declining or growing. It should offer the reader a combination of clear description and analysis, including a realistic SWOT (strengths, weaknesses, opportunities and threats) analysis of each area. This will demonstrate to investors that management is realistic about the company's prospects. This includes spelling out any competition. By ignoring any competitors, readers will think you have overlooked a major problem for your business.

    Finance
    This should include all the financial data on your business. Include any previous year's accounts, up to three years if you can, as well as details of any outstanding loans or assets. Also include the current management accounts, cashflow forecasts and a breakeven analysis. Make sure that realistic financial projections are outlined and that you provide different scenarios for sales, costs and cash flows for both the long and short term. Don't be tempted to dress up the figures. Sales figures growing ever steadily will not impress a seasoned investor. Similarly, be realistic about your costs. Consumer products, particularly those on the internet, will need to plan for a large upfront marketing budget. Neatly spreading an equal amount of your marketing budget across the whole year simply isn't realistic.

    The management
    This section should outline all background and experience of all the key members of the management team. You should attach CV's for each individual and outline the strengths and weaknesses of the team as a whole. If you are missing certain skills in your management team, this can easily be solved. Business angels often take an active part in the companies they invest in and any venture capital firm will have a wide network of contacts that may be able to join the board in a non-executive capacity.

    The executive summary
    The last thing written is the first thing that appears in the business plan the executive summary. This is the most important section and summarises in two pages what is written in detail in 10 or 15. This is where, among other things, you state the company's mission statement a few sentences encapsulating what the business does for what type of clients, your aims for the company and what gives it its competitive edge. The mission statement should combine the company's business' current situation with your aspirations.
    Just as the business plan, the executive summary should be clearly written and powerfully persuasive, yet it should balance sales talk with realism in order to be convincing. It should be no more than 1,000 words. Any investor should be able to get a good feel for the business from that summary. In fact, this summary may be the only opportunity you get to put your case to investors. Venture capitalists refer to the elevator test. If you can't convince an investor of how good your business is in the time in the lift between the ground floor and whatever floor you exit on, you may have missed your opportunity.

    That sounds harsh but venture capitalists are busy people. It is common for a venture capitalist to see hundreds of business plans a year.

    Raising Finance:
    What are the types of capital?
    Despite the common complaint that there is a lack of money available for startups, there are actually many sources of capital on offer.

    But not all are suitable for every type of business. The choice may vary depending upon the industry or region your business is in. It will be influenced by how much money you need and what other security or finance you can offer when setting up.

    There are two main types of capital; debt and equity. They are very different and will have a big difference on the business as it grows and develops.
      Many small businesses actually use equity finance without even realising it. According to research, some 61% of businesses are launched with either personal capital or that of friends and relatives. That can be equity arrangement where friends and family take a stake in the business.

      The big advantage of equity finance is that it never has to be repaid and there is no interest rate paid on the money. Equity investments are true risk capital as there is no guarantee of the investor getting their money back. The investment is not tied to any particular assets that can be redeemed from the business and, should the business fail, an equity investor is less likely to get their original investment back than other investors.

      The return from an equity investment can be generated either through a sale of the shares once the company has grown or through dividends, a discretionary payout to shareholders if the business does well.

      However, the reason that firms will give you cash in this form is that they will take a share of the business in return.

      Formal equity finance is available through a number of different sources, such as business angels, venture capitalists or the stock markets.

      Each varies in the amount of money available and the process to completing the deal. For example, business angels are typically looking to write a cheque for a minimum of NGN 15,000,000 - any smaller amounts are not usually appropriate because the fixed costs are too large.

      However, they all have one factor in common. Equity investors are prepared to put up risk capital in return for a share in a growth business. If your business can not support growth rates of at least 20% you may not be able to attract equity funding.

      It is this control and the prospect of a higher return if your business is successful that attracts investors to put up this type of capital. It is also these factors that many small businesses are wary of they are reluctant to give up control of their business. Particularly firms that are likely to grow fast, such as IT or internet companies, that are likely to need further cash injections as they grow, there is some reluctance to give away a share of the business at an early stage. There is a real ignorance about the possibilities of selling shares and because of that ignorance there are fears. Companies here usually reinvest the profits or go to a bank for money because they always think they will lose the business. There is this sacred cow that I don't want to part with my business. But why do you want 100% control? There is a suspicion about selling equity and the common thing is to simply get a bank loan. However, the very rapid growth and capital consumption that these businesses experience makes them unpopular with the banks. Banks, the major providers of debt finance, like to see steady growth projections based upon a surefire business plan. But many companies are still reluctant to seek equity financing as they see it as relinquishing control.

      There is a misconception about 'giving away' equity. In fact, companies sell the equity for valuable consideration.

      In fact, many companies are giving up effective control if they rely on an overdraft as a major source of finance.

      There are many different options available for small businesses. Each business should investigate the options available and choose the right finance for the right purpose.

    What are the sources of capital?
  • Banks
  • Grants
  • Factoring
  • Leasing & Hire Purchase
  • Incubators
  • Business Angels
  • Venture Capitalists
  • Corporate Venturing

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