Governance | Teik Oh

Work out your divorce before you get married!

Dec 17 2014

As a business advisor, I have advised my fair share of start up businesses where the owners have been friends or colleagues starting as co-owners. I have also sat through many a business dispute between these people who started off as friends, colleagues, and co-owners!

You will be well familiar with the much touted statistics of the large proportion of start up businesses that fail. Yet even businesses that succeed may eventually (and more often than you think) have a falling out between co-owners.

It is predictable that when you are at the beginning of an exciting idea you think it will last forever. Yet, it is also predictable that circumstances will change and the business is unlikely to stay the same. The business may ebb and flow and different people may have different risk tolerances for that ebb and flow. Opportunities may arise and different people may view those opportunities very differently depending on their own priorities.

If nothing else, relationships change with time, emotions change with time, energy levels change with time. Profits and growing wealth (or the opposite!) raise questions never asked at the start of the relationship.

So, when asked what is the single most important structural thing to consider when two or more people start a business together, I don’t say type of entity or share values, I say “write up your divorce papers before you get married!”
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Do you have the skills to be a Board Director?

Dec 03 2014

Having spent a lifetime advising Boards of small and larger enterprises, I now spend a considerable amount of my time sitting in Board myself as a Non-Executive Director. It is interesting to me when I look over the meeting tables at my fellow Directors and see what they bring to that table.

I believe many Non-Executive Directors bring technical skills to the Board, and others bring their management experience having run their own businesses. This is all well and good, but I believe that being a Non-Executive Director, you need to bring a different set of more helicopter-level skill-sets. Funnily enough, I believe these skills are very similar, if not the same as those of a good leader in a business, or those necessary to run your own good small business, even though the extent of the practice of those skills is different.

Here is what I think you need to do if you become a Non-Executive Director.
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How non-financially trained people can prepare a budget in 5 easy steps

Nov 25 2014

Preparing a budget is “easy” for an accountant and small business people who have some finance training. However for many it is the stuff of voodoo.

But when you break it down, there is no real mystery around the preparation of a budget, it is based on your plans and intentions, costs that you can obtain from suppliers, and some judicious making of assumptions and estimates. In truth, any non-finance executive or business owner can do it if they approach the task logically.

Here are 5 basic steps to take to compile your budget.

Comment 13

Stop Micro-managing!

Nov 18 2014

I had a meeting with a client yesterday. Amongst other issues we discussed the fact that even as her company grew, she had to continually look over people’s shoulders, tell them not only what to do, but also how to do it in a satisfactory way.

When I asked her what was a “satisfactory way” she explained that it was the way she would have done it, the way her customers had come to expect how her company would do it. She gave me an example where her version of “satisfactory” included a hand-written note to the customer the next day to see if the product met his needs and if she needed to explain any aspect of it to him. In other words quality was not a fixed value but a set of behaviours that had come to represent what the customer wanted. Only, she seemed to be the only one in the growing company who seemed to understand that, despite her experienced (and expensive) new hires.

Comment 13

Financial Understanding starts with the Chart of Accounts

Oct 10 2014

We are about to discuss accounting matters.

Hey, don’t click past, it really is important!

Well yes, a little boring too, but sometimes you need to get into the detail of the boring to get the information you need in order to do all the glamorous stuff like building a vibrant business. In fact often you need to get into details to make sure your product or service delivers its promise. Think of a mechanic – no point creating a culture of caring for the customer if your mechanics fail to bleed the brake valves every time. Or a lawyer who’s innovative and really digs deep for the client – not proofreading and the typos will get him every time.

So, one of the crucial (boring) details in any business is the accounting. You can hire a tax accountant at the end of the year; you can hire a once a week book-keeper; you can even employ a full time accounts-person and buy an expensive accounting software system; but the decision about some detail must lie with you and while you should take some of their advice, you need to decide on some key elements of your books.

Comment 13

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Category - Governance

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Work out your divorce before you get married!

Do you have the skills to be a Board Director?

How non-financially trained people can prepare a budget in 5 easy steps

Stop Micro-managing!

Financial Understanding starts with the Chart of Accounts