When starting a new director-level role, it is fundamentally important to future success that you quickly get to grips with the people, their views and perceptions, advises John Fordham
Upon taking up the reins at a new company, make time to have conversations with staff at every level about how the business runs, its culture and what it does well, as well as trying to understand any inefficiencies or problems.
Meet the team
Getting off on the right foot and making a good impression will stand you in good stead, especially if you have been brought in to implement change. Get to know your colleagues and ask them about their role, what they enjoy and what difficulties they come across in carrying out their work.
You could ask them what needs to be done to fix problems or inefficiencies and what else would make your job easier. Talking to people helps you to get to know each other, which makes things easier when any changes, or a new push, are undertaken. After you have met your team and heard their feedback, it might be that some need further training to be able to do their job well. The answers to this question gradually reveal performance and people issues and help to review which processes and equipment need improving and also the people involved in the various tasks.
Strategy & plans
You’ll want to know, even before you start the role, how well the company is being managed. What are the key performance indicators, measurements and control systems? What is the implementation process? How is it working? How is communication conducted in the company? And crucially what is holding the company back from growing faster and more profitably?
Reviewing the financials
If you are going to be involved in bringing in new business or have a budget to manage, then asking for an overview or a deep dive into the financials is a good place to start. The key thing to look at is the overall sales, trends, and outstanding orders. Then look at the gross profit and percentage trend. Review the direct costs of materials or product and direct labour, and their percentages against the top line sales figure.
What is the trend and what does this tell you; declining, static or increasing? Is enough gross profit in value being generated to cover the overheads? Why not? What needs to be done? Are overheads too high and when do you expect sales (and good) margins to increase? Check the margins on the product groups, customers and individual products. This should be straightforward, just review sales by product with the direct costs, ranking worst margin to best. That will tell you immediately how the company is doing on profitability.
There are other things to review in the accounts. The cash situation should be looked at with regard to the bank balance debtor days, creditor days and the amount of stock, which may be tying up cash.
Understand your audience
What is your market? It may be large, but what is the need for your company’s products? Who specifically are its customers? What are the alternative products on the market? What benefits does the product have over alternatives? Who are your competitors and how good are they?
I have been told about big markets, but then found there was no requirement for the product, or only minimal demand against the alternatives. Either the products benefits were not strong enough and/or the price was too high. At one company, the alternatives had greater benefits and a cheaper price because of design. I have had clients who have spent thousands of pounds on patents, only to find sometimes there is no demand for their products.
These companies had not even asked any basic questions of potential end users or distributors. Research indicates that 70 per cent of start-ups fail within three years. Obviously, reasons can vary, such as running out of cash, or insufficient marketing and publicity, or scant distribution, but failure is mainly due to a lack of demand for their product.
John Fordham is a management consultant and business advisor with decades of experience in helping turn around businesses to become profitable. He is the author of Rocketship management: how to propel your business to new heights; see www.rocketshipmgmt.com for more details
