More Money More Time Less Stress v2

2
“Your motivation is never money, money

is only an end result. Your motivation is
more likely freedom.”
Simon Sinek
Acknowledgements
The book you are holding would not exist without the business insights
and knowledge of Darren Shirlaw and the development team at Shirlaws,
the international business performance and coaching organisation of
which I am UK CEO.
Darren is one of the world’s most highly regarded experts on what makes
a mid-sized business succeed and what makes the owners and CEOs of
these businesses achieve their goals and ambitions.
Both as a business owner who has implemented Shirlaws’ principles in

my own business, and latterly as a member of the Shirlaws team, I am
deeply indebted to Darren and all the partners and coaches at Shirlaws in
the UK and all around the world. They are a remarkable group of people
who change the lives of business owners every day.
www.shirlawscoaching.co.uk
www.shirlawscoaching.com
Updated Version 2013

3
In this book
SECTION 1: STEPPING UP TO A LEADERSHIP ROLE 7
Chapter 1 - Understanding context 8
Chapter 2 - Understanding the power of ‘why’ 11
Chapter 3 - Understanding your role as leader 16
Chapter 4 - Leadership in action – creating the why 21
SECTION 2: UNDERSTANDING YOUR BUSINESS 27

Chapter 5 - Understanding your business cycle 28
Chapter 6 - Understanding risk in a strategic context 34
Chapter 7 - Becoming a great communicator 38
SECTION 3: CREATING REVENUE TODAY 43

Chapter 8 - Product – the foundation of your business 45
Chapter 9 - Your intellectual property – the rocket-fuel in your
business 53
Chapter 10 - Positioning – your key focus 57
Chapter 11 - The salesforce that never asks to be paid 64
Chapter 12 - Driving energy into customer, distribution and
staff relationships 71
Chapter 13 - Creating revenue – a final thought 76
SECTION 4: GETTING YOUR BUSINESS TO WORK FOR YOU 77

Chapter 14 - The fully functional business 78
Chapter 15 - Capacity planning – the secret of controlled
profitable growth 84
SECTION 5: BUILDING EQUITY VALUE AND EXITING YOUR 89

BUSINESS
Chapter 16 - What really drives equity value 91
Chapter 17 - Leaving your business in good hands 99
SECTION 6: MANAGING YOUR OWN ENERGY 103
SECTION 7: ABOUT SHIRLAWS AND THE AUTHOR 106

4
“There is more to life than increasing its

speed.”
Mohandas K. Gandhi
5
Shirlaws works with hundreds of mid-sized, owner-managed businesses

in 37 countries around the globe. Our job is to help business owners and
CEOs achieve success for their business. Our goal is to see our clients’
businesses reward them richly in wealth, time and fulfilment.
Before we started our business, we spent five years interviewing over 700
business owners. We asked them lots of questions like “Why did you start
your business?”, “How is it going now?”, and “Where could you use a little
help?” What we consistently heard back were three common themes: we
started our business because we believed we could make more money
working for ourselves than being someone else’s employees; we wanted
more freedom over our own time now and in the future; and we believed
that being a business owner was the best way to create balance in our
lives and more choices for our families.
The entrepreneurs we spoke to mostly ran successful businesses. Yet

when asked about their current reality in terms of financial opportunity,
freedom, and balance most of them – and thousands we have spoken to
in the 12 years since – felt they were simply not reaching the goals they
had set out to achieve.
Instead, they told us “I’m not making the money I want”, or “I want less
stress”, or “I don’t get to take the holidays and family time I need”, or “I
want to exit”.
So we set out to create a series of unique business frameworks, tech-

niques and methodologies that build into a whole new language for
running a business. A language that has given hundreds and hundreds of
business owners all over the world three simple things: more money, more
time, and less stress.
The purpose of this book is to share this approach – this new language
– of business management with you. I hope it will help you to achieve for
your family all that you set out to achieve when you started your business.
You see, what I find remarkable is that, while we work with hundreds of
owner-managed businesses and every one thinks the issues they face are
unique, almost all the blocks to a business’s progress can be traced back
to a few key issues.
6
My belief is that if you can address these ‘source’ issues you can unblock
almost any business to achieve its potential – and the dreams of those
who founded and run the business.
My intention in this short book is therefore to examine each of these

source issues and offer some perspective on how we help businesses
overcome them. In doing so, I hope I can help give you some valuable
insight into your own business.
If you are interested in learning more about Shirlaws, you’ll find more infor-
mation about us in the back of this book. If you are interested in having
a chat and a coffee, you’ll find my personal email address at the back of
the book too.
John Rosling
7
STEPPING UP TO
A LEADERSHIP
ROLE
“There is no map. No map to be a leader.”
Seth Godin
8
CHAPTER 1:
UNDERSTANDING CONTEXT
“The main thing is keeping the main

thing the main thing.”
German proverb
“The best leaders figure out how to

get great outcomes by setting the
appropriate context, rather than by
trying to control their people.”
Reed Hastings, CEO, Netflix
As CEOs of small and medium sized businesses, most of us have had

the experience of being so firmly embedded in the day-to-day issues of
running the business that it is difficult to find sufficient time to grow the
business.
We can get stuck in the detail, with the result that the single greatest
impediment to the growth of our businesses and the realisation of our
dreams can be ourselves. This is not a comment on skills or capabilities –
although all of us would benefit from learning new skills. It is a comment
on what we choose to focus our time and energy upon. It is a comment on
the belief we have created that we have to manage everything because no
one will do it as well as we do.
The challenge, if you ever want to have your business deliver the wealth
and leisure you set out to achieve, is to find a new way of working. A way
of working that really successful entrepreneurs who have built vast and
complex businesses – but still seem to have time for ballooning and boat
racing – have learnt to do instinctively.
Understanding context 9
You have to find a way of working that manages your business not in
content but in context. Context is that which brings meaning. It provides
a common language within the business process. It gives clarity to all the
content and allows a business conversation to unfold, resulting in aligned
decision making and understanding.
Imagine a conversation between three directors of a business. Let’s

imagine the discussion is about which is the best fruit: apples, bananas, or
oranges. Without any context to give meaning to the word ‘best’, imagine
how long that conversation could last and how much energy, manage-
ment time and focus it could use up. Now imagine the same conversation
if a clear context of ‘Vitamin C’ was agreed. How long would the conver-
sation have to last?
It is a simple analogy, but how many of us have had the experience of

management or team meetings where issues become muddled and deci-
sions are difficult to reach? In working with boards and teams I find that if
they can set a clear context, decision making can be vastly accelerated –
and relationships improved. In fact, most problems in business stem from
the fact that there is normally plenty of content, but no context.
Context is the wood, content the trees.
The context in which you choose to run your business, project or meeting
is, of course, down to you and what you are seeking to achieve. As an
example, we are working with a fast-growing business that has chosen to
work within the context of learning. Having this context supports decision
making in how the business treats its people, takes decisions, and invests
money. The result is an ambitious and creative business where mistakes
are not a cause for blame but for learning and where the team is motivated
and productive. It’s also a great place to work.
Context is one of the three key skills that all effective leaders have learnt.
So how do you get context into your business? The first and primary piece
of context in your business is called ‘why’ and I’ll look at that in detail in
the next chapter.
10 SECTION 1: Chapter 1
TOP TIP
• Learn the trick of the greatest entrepreneurs: manage in

context and leave the content to your team.
What to do now
• For the next week, when you make any decision in your
business (even the small ones) ask yourself “Why did I
decide that way?”
• When you are communicating decisions, communicate
the ‘Why’ as well as the ‘What’.
• When discussing decisions with your partners or team,
if you find yourself moving in circles ask the group “Why
are we making this decision?” – and have a conversation
about that instead. The actual decision will usually appear
much faster as a result.
11
CHAPTER 2:
UNDERSTANDING THE POWER OF ‘WHY’
“Knowing the why can inform your

actions as a brand, your brand voice,
its character, and everything else that
helps build it into something people
want to have a relationship with.”
Simon Sinek
Protected by Copyright © 2011 Shirlaws
When I took over as CEO of Shirlaws I was fortunate in that I inherited

a well-managed business. But it was one that had just lived through the
worst recession in 80 years. The first thing I focused on wasn’t revenues
or internal cost structures – the content. My first priority was to refocus
everyone in the firm on their core belief in the business – the context. I rea-
soned that if this core belief was strong and shared by all, the commercial
success of the business would follow. It would also be a fun place to be.
Belief is context because belief in the why makes sense of the what.
All businesses understand ‘how’ they do what they do (their manufacture,

sales, delivery, service, admin, and so on), and most but not all truly under-
stand ‘what’ they do (the fundamental intellectual property and rocket
juice that sits at the heart of the business, what makes them famous and
what customers ‘buy’, rather than what they sell). But very few businesses
really understand the ‘why’.
It’s a pity because the ‘why’ is where the power is.
If you think about all the most successful businesses, the ones people
would most like to work for, they all have a strong and well understood
‘why’. It’s this ‘why’ that staff buy into figuratively – and customers buy
into literally.
Simon Sinek explains this brilliantly using Apple as an example. Apple

understands why it exists in its bones and has invested huge amounts of
time in instilling this belief in its staff. This ‘why’ is distinct from ‘what’ it
does. Apple believes that everything they do challenges the status quo. It
believes in solving problems for people through great design. Making and
selling computers is just ‘what’ it does. This fundamental belief in a ‘why’
drives everything the business does – it creates the context for all the
decisions the business makes. Go into any Apple store and you’ll see the
outcome in powerfully motivated staff who love working there and believe
passionately in the product they sell – and communicate that passionate
belief to customers.
Sinek draws the comparison with Dell, a company with a clear under-
standing of ‘what’ it does but not ‘why’ and shows how this limits them.
Since Dell has a clear ‘what’ (make and sell computers) and Apple has a
clear ‘why’ (solve problems through great design) customers will only buy
computers from Dell whilst they’ll buy computers, music and telecom-
munications from Apple. And they’ll make every purchase decision when
buying Dell partly on price (since it’s a rational ‘what’ choice) but price
hardly features when buying Apple, which gives Apple a very healthy mar-
gin and a massive valuation. This is the power of position, which I’ll cover
in detail in chapter 10.
Understanding the power of “why” 13
The key reason behind Apple’s success is that people buy values and
beliefs over benefits. That applies to the customers you want to attract
and the talent you want to employ and it is as true in the corporate and
B2B market as it is in the SME and B2C markets. I’m sometimes asked
why I joined Shirlaws when I already had a reasonably successful busi-
ness and a comfortable life. I had had the experience of applying Shirlaws’
coaching in my own business and had seen the tremendous commercial
return. But what attracted me was the strong ‘why’ I saw in the organisa-
tion – the clear intent to help change the lives of business owners through
coaching and the transfer of skills and knowledge.
It doesn’t, of course, mean that ‘what’ isn’t important. The quality, effect-
iveness, and value of what we supply and how we do it is vital – we all
make rational (‘what’) purchase decisions every day. It’s just that the ‘why’
is often forgotten in the content-driven, busy world of the SME. And by
forgetting it we are missing a major trick.
For us, as business owners, it is important to note that beliefs and values
are vital for creating effective and valuable customer and staff relation-
ships – far more so than facts on websites, price promotions, or the pros-
pect of pay bonuses (all of which could play a supporting ‘rational’ role).
As a bonus you’ll get a fun place to work and marketing and sales will be
easy, giving you spectacular revenues as well.
We’ll look at how this impacts on buying behaviour – and most interest-
ingly our ability to create effective referral networks in later chapters.
So if you want powerfully motivated staff who will take your business to
where you want it to go, allowing you to stop ‘running’ your business, you
need to create fundamental belief in the ‘why’ in your business. The ‘why’
is about vision and dreams and possibility – not about logical strategies.
When Martin Luther King stood in front of a quarter of a million people on
Washington Mall in August 1963 he didn’t say, “I have a plan”. So how do
you create a ‘why’ in your business? We’ll look at that in more detail in the
next chapter.
CASE STUDY: APS
When Brian Armstrong and I started APS (www.aps-advance.com) in

1998 in Australia and the UK, it appeared to most people that it was
just another software company providing practice software around the
individual business requirements of accounting and consulting firms.
We had both worked in, and left, a more established organisation that
was a toxic environment for employees and clients. We were clear
that APS needed to prove that it was possible to build an ongoing and
sustainable business in our chosen market place that was truly suc-
cessful from both a cultural and commercial perspective.
That was and is our ‘why’, the question we asked of ourselves and the
one that continues to govern our business model today. To us, life is
a journey, not a destination, so we continue to focus on the ‘why’ – as
do our teams in the three countries in which we now operate. No one
is perfect and to say that we have attained and maintain a 100% score
would not be truthful. It does, however, remain our intent never to lose
sight of this purpose.
But for us it was not just the ‘why’ part of the conversation – we also
had to be clear about ‘what’ we were going to do to achieve that and
‘how’ we were going to execute it – both culturally and commercially.
Culturally our strategy is quite simple: FAMILY. It’s a context that binds
core values. We recruit people who are aligned with these and want to
be part of this structure.
Similarly, we form relationships with clients who want the same thing
– to be a client rather than just a customer, as is so often the case.
Commercially our strategy is also simple – what we do is implement

systems that give professional service firms the information they need
to serve their clients and to run their own business. Key to this out-
come is developing and maintaining a sustainable relationship.
Understanding the power of “why” 15
How we do that is through the provision of software, its implemen-

tation, ongoing consulting, support and regular software upgrades.
Fundamental to this provision of software and client service are the
shared and agreed values that are part of our everyday language and
behaviour – internally and externally – to be caring, flexible, open, pas-
sionate, safe, honest. We aim to have the 100% conversation within
our team and with our clients.
But, for us, understanding the ‘why’ set the whole context and pur-
pose for our business and enabled us to agree the ‘what’ and ‘how’
easily and with focus. These haven’t changed.
Brian Coventry, CEO, APS.
TOP TIP
• Find the fundamental ‘why’ in your business – and

create a strong sense of belief around it.
What to do now
• Remind yourself why you started this business. Was it

for reasons other than money? (It usually is.)
• Remind your team about why you started this business –
most weren’t there at the start.
• Have a session with your team, with the sole purpose of
reinforcing the ‘why’.
16
CHAPTER 3:
UNDERSTANDING YOUR ROLE AS LEADER
“While Management is operationally

focused, setting priorities, allocating
resources, and directing the execution,
Leadership is more forward thinking,
more about enabling the organization,
empowering individuals, developing
the right people, thinking strategically
about opportunities, and driving
alignment.”
Randy Komisar
People who run businesses use various titles but you’ll have noticed I use
the term Chief Executive or CEO. That’s because I believe it is your role to
be the Chief – to lead and not to manage. That’s why I prefer not to use
the title ‘Managing Director’. If you want to grow your business and have
it working for you and not the other way round, your role should evolve
so that you are not ‘managing’ the business at all. In other words you live
as much as possible in ‘why’ and less in ‘what’; more in belief and less in
plan, in context not content. Therefore in my own business I am CEO, not
because it sounds grander but because it describes the role I do and how
I want to see it develop.
So what is that role? At Shirlaws we believe that the role of the CEO of any
business – including SMEs – can be described in three simple concepts:
Understanding your role as leader 17
• Set the context

• Manage the energy
• Coach, don’t play
Set the context means it is your job to understand the ‘why’ and know
where you are going. You create the dream. It means you are ‘above’ and
often 6-12 months ‘ahead’ of the business, allowing your team to run the
today. It also means you hold the context so that every decision in the
business is simple to make in a contextual, not content-driven, space. It
means you understand where you are in your Life Cycle, understand and
hold the business to the contextual choices you have made in terms of
risk, market position, product, etc. All these will be covered in later chap-
ters.
Manage the energy means it is your job to create the belief in your ‘why’
and to create a compelling vision for your team. You sit above the busi-
ness. Your job is to ‘feel’ your business like a living animal and know when
things are not right. It is to support the energy and enthusiasm of the team
and the key relationships you have outside the business. I think about
it like this. All employees in the business possess a certain amount of
energy that can be devoted to progressing the business. If this energy is
aligned and ‘flows’ easily through the business there is a greater chance
of success. Alternatively, if the energy gets dissipated, for example in
managing processes that are not working or where departmental heads
have different contexts and hence work against each other, energy gets
expended inside the business and is not channelled into activities that will
result in the growth and success of the business.
Coach, don’t play means you’re not on the field any more. Your job is to
build the confidence and skills of your team (over time) so that they have
the ability and belief and are given the responsibility to play the game
– you create the big picture and then support, observe, and encourage
them. You coach. That way your team runs the operations of the business
and you get to grow the value and scale of the business.
You’ll notice that none of these concepts say ‘run the business’ or ‘deliver
the bottom line’. That’s because to have your business work for you, you
will need, in time, your senior team to carry out these management tasks
for you. In fact my whole theme so far (managing in context, setting the
‘why’) has been about getting your business into the position where it
is bigger than you and is not dependent on you. That means your role
changes to the fascinating and stimulating role of entrepreneur – and not
manager.
For many SME owners that may not seem realistic right now, but if you
follow the ideas set out in this book I believe it will become possible. In
any event, you will have the choice of how much day-to-day management
you want to take on.
CASE STUDY: YRM
YRM (www.yrm.co.uk) is an architectural company with offices in

London, Vienna and Bucharest. Established in 1944, YRM has com-
pleted over 800 design projects in 37 countries. YRM is well known for
high-quality functional and durable design delivered to agreed budg-
ets and timescales. John Clemow joined YRM in 1978 and leads the
fourth generation of YRM’s leadership.
“In mid 2007 as the economic storm was looming, I heard Peter
Harford of Shirlaws speak at a seminar about sluggish leaderships,
succession fall out, and underperforming businesses. It felt like I was
the only person in the room, with a laser dot on my forehead. Our top
table was an operationally circular partnership model and, as Manag-
ing Director, my role was mainly cleaning up the mess left behind by
the owner-managers enjoying their own games. I recognized I was in
the classic Managing Director position of being well and truly stuck in
the content and I brought Peter in, initially to coach the Board.
“We realized we needed to operate as a proper company board, with

a CEO supported by a business structure with defined functions, lines
of communication and delegated decision making. I realized I needed
to act differently if I was to be a genuine CEO, to take more of a
leadership role, to be ‘in the context’, as Peter would say!
“Peter helped me understand, implement and ultimately enjoy my CEO

role. To get the leaders focused and on track, we needed to develop
Understanding your role as leader 19
and crystallize our vision and strategy, which was both motivating and
enjoyable. This gave me a positive framework for dealing with some
difficult problems to reverse our trajectory. I selected emerging lead-
ers to prepare strategies for some priority areas of the business. I saw
my primary role in energizing and supporting these rising stars. Great
work was done, which continues on the next set of issues to tackle.
Our conversations are mainly on how these strategies tie in to our
vision and overarching strategy.
“It took two years of hard work to embed the changes in thinking,
action and attitude. There is inevitably some occasional backsliding,
which means I have taken my eye off the ball. The panic and frustration
that I and my colleagues felt has been replaced by calm determination
and a clear sense of purpose. I wake up in the morning knowing what
I need to do today and looking forward to the steps needed ahead. We
have weathered the storm so far, and I only occasionally need to do a
bit of light cleaning.”
TOP TIP
• Set the context. Manage the energy. Coach, don’t play.
What to do now
• Review the emails you’ve received this week, or the

meetings you’ve already attended. What portion of your
time is spent managing context and energy, or coaching
the team – and what portion is spent playing in and
managing the content of your business?
• Review the internal meetings you have scheduled for the
next fortnight – are you there to coach your team and
help them grow, or provide the answers and increase
dependence on your input?
• Growing into the CEO role can take time. You can’t drop
all of your tasks today – but are you committed to being
a CEO rather than a Managing Director?
21
CHAPTER 4:
LEADERSHIP IN ACTION – CREATING THE WHY
“How do you get people to come

together around a goal and objective
and be great? It’s establishing a sense
of common purpose. Greatness
doesn’t come from a tactical sense
of execution. Greatness comes from
having a vision that goes beyond
yourself and even beyond the
organisation.”
Randy Komisar
“When people believe in what you

believe in, they work with their blood,
sweat and tears. When they don’t
believe in what you believe in, they
work for your money.”
Simon Sinek
We have established that having a strong ‘why’ is fundamental to creat-

ing spectacular success and a satisfying and rewarding environment for
everyone in the business. ‘Why’ businesses are great businesses – and
great places to be. In this section I’ll look at the key elements that create
the ‘why’, and how you can build them in your business. We’ll look at
‘what’ and ‘how’ themes in later chapters.
i. Culture
As CEO it is your job to build and nurture the culture of your business.
This isn’t some fluffy bolt-on – it is fundamental to your success. It is the
reason talented people will work for you, stay loyal to you, and create
wealth for you. It also makes your business a fun place to be. It’s a funda-
mental building block to your market position (see chapter 10), which is
what ensures customers continue buying from you and pay more for your
services than those of a competitor.
ii. Intent
To create the culture you need to know very clearly in your own mind
the fundamental purpose or intent of your business – why your business
exists. People want to feel part of something with a purpose more compel-
ling, more important, than just making money. Making money is the out-
come of doing what you do brilliantly. The source of getting everyone to be
brilliant is rooted in an aligned purpose. It’s vital to understand why you get
out of bed every day and come to work – and it’s equally vital to discuss
this with your key team to establish agreement as to what the intent of the
business is. If you feel daft doing this, bring in some external facilitation.
iii. Values
A common and aligned intent can be an incredibly strong motivator for
everyone in the business. But it needs to be supported by a very strong
set of shared values. I meet businesses all the time that have their values
written down and filed somewhere. It’s a waste of time. If no one knows
what the values of your business are, how can they be used to create a
powerful culture? How can those values be used to align your people into
a powerful force to deliver brilliantly?
Why do most businesses fail to leverage their values – to create value from
values, if you like? It isn’t because they don’t have values. In my view, it
is because they misunderstand what values are for. Your values are not
Leadership in action – creating the why 23
to post on a website simply to demonstrate that you are a business with

integrity. They are the building blocks of your shared culture, and they
support your intent. They are the common principles that drive your busi-
ness and all your people to success.
The secret of unlocking this potential lies in three simple steps:
• You have to agree, as a team, what your shared values are (and review
these choices annually). These are not your values to impose on the
business (remember the plan is to get the business working for you).
And ideally, you shouldn’t have more than three.
• You have to make them real. You must associate each value with a
set of behaviours that you will use to check that your values are being
lived.
• You must consciously live by your values, publish them and use them,
making them integral to the business.
With these three steps you will create values that will genuinely support
the cultural and commercial success of your business.
iv. Vision
Having founded your powerful culture on a shared set of values and with
a common intent, your job as CEO is now to paint a picture of where you
are going as a business that is so compelling and exciting that everyone
in the business will buy into it and carry your business to where you want
it to be. I have a dream, not I have a plan.
Of course, almost every business has a vision. But very few ever get there.
In my view, that’s because no one in the business really believes in the
vision or feels the vision to be theirs. As with values, if the vision of your
business is your vision and is not shared and owned by your team, then
the business will always be dependent on you and can never reach your
ultimate goal (unless, of course, that goal or vision is pretty modest).
So how do you get your team to own the vision, to hold it as their own and
drive your business towards it? The vision has to be compelling. ‘To be
the premier widget manufacturer in the West Midlands’ is an intention (or
a mission, if you insist). It is unlikely to get your team champing at the bit
on a Monday morning. You need to find a vision that they will immediately
understand and buy into.
Then, here’s the trick, you have to take them to that vision and really get
them to feel it. What it would smell like and taste like to be there? If the
vision is powerful enough and relevant enough to them, once they have
experienced it they will want to work enthusiastically towards that goal.
If all this sounds like a lot of work when you are just trying to run your
business then you have made my point for me. If you really want to grow
your business and have it work for you, you need to (progressively) stop
managing your business and start leading it. Culture, vision and values are
vital elements of leadership. It will create a powerful ‘why’ for your people
and your customers.
Have you ever reflected on how officers get their soldiers to put their lives
in extreme danger? The answer is that they don’t ‘get’ them to. They lead.
The army, the regiment, the platoon create a strong culture based on a
shared set of values and intent. The officer or NCO then sets a clear vision
or ‘objective’ and the unit, literally, goes through fire to achieve it. That is
exactly what you are trying to do. But with fewer bangs and less blood-
shed.
A final word
Culture and vision are not easy things to achieve. Most businesses fail
to create either in a way that will really drive value in the business. In my
experience, the only way to design and build intent, values and vision that
everyone really, really buys into, is to invest in some outside help. An out-
side perspective helps ensure that everyone is able to express themselves
and be heard, and feel comfortable in doing so.
Leadership needs constant work. Culture needs your constant attention.

‘Manage the energy’ is your day job. Checking in with your people, doing
little things that will keep their energy positive (see chapter 12). This is
important because it’s the only way you will reach the goal you have set
for yourself.
Your intent is likely to stay the same but the business needs to be reminded
of it. Your vision needs to be kept fresh and alive to your people. Your val-
ues need to be re-visited about once a year.
Leadership in action – creating the why 25
An absolute cardinal rule of leadership in an ambitious company thatreally

intends to grow is to get the senior team off site and out of the business at
least once a year, and preferably twice. This is your strategic retreat and
it is the time to review and refresh your vision and values and work on the
key strategic initiatives that will fundamentally grow your business.
How are you ever going to have time for all this? That we will cover in
chapter 14.
CASE STUDY: UnLtd
UnLtd, The Foundation for Social Entrepreneurs (www.unltd.org.uk)

is a charity which supports social entrepreneurs – people with vision,
drive and passion who want to change the world – by providing fund-
ing and support to make their ideas a reality. The UnLtd Ventures team
has a strong sense of its purpose, but its members were finding it
difficult to articulate succinctly. The team felt pulled in many directions
and was somewhat unfocused.
The members were aware they were not communicating as effectively

as they could with target clients and were unable to share an agreed
criteria on whom to support.
UnLtd Ventures asked the Shirlaws Foundation for help. Together we

worked on clarifying what the team really needed to achieve, the val-
ues the team shared, and the clear intent or purpose around which
they could align. Nynke Brett of UnLtd remembers the problem was
not being unable to articulate their values. The challenge was they had
so many.
“We knew it was important to get these clear as a team so we could

focus effectively on helping our clients but we all felt overwhelmed.
For us it was incredibly useful to have a knowledgeable facilitator
to steer the conversation. I remember the breakthrough came when
we were asked ‘if you were “unlimited”, what would you be?’ and it
suddenly seemed so easy – that’s when we agreed on our values of
‘fearless, caring and challenging’.”
These values were then built upon to create a compelling ‘intent’

for the team, with an agreed purpose or context – in their case ‘to
transform how business is done (one entrepreneur at a time)’. Nynke
concludes: “Having these values and an agreed intent has been
incredibly important and helpful to us, and using them has changed
our behaviour and effectiveness as a team.”
TOP TIPS
• A strong culture will drive your success by recruiting the

best people and most loyal customers. Culture comes
from a discussed and agreed intent based on shared
values.
• Leadership is about creating the dream – the vision thing
is your job.
What to do now
• Successful leadership teams get away on a Strategic

Retreat every six months. When was your last,
meaningful leadership offsite? Commit to holding one
in the next quarter – and right now add this item to the
next leadership meeting agenda.
• Leaders learn from each other. Are you building your
leadership network? Do you work with an external
leadership partner to help you and your business? If not,
make a note right now to attend more business leader
events and find a mentor or business coach.
27
UNDERSTANDING
YOUR BUSINESS
28
CHAPTER 5:
UNDERSTANDING YOUR BUSINESS CYCLE
“We reach quite inexperienced the

different stages of life in spite of the
number of our years.”
Francois de la Rochefoucauld
In Section 1 I have set out some broad principles of managing in context,

and not content and how being stuck in the detail of our businesses is
often both stressful and unproductive. But how much detail you should
have in your in-tray obviously depends on where your business is in its
life-cycle, and on its size.
A CEO of an early stage business has a very different job from one running
a mature business. Your role changes year by year and to understand
your priorities at any one point it’s vital to know where you are and what’s
coming next.
All businesses have a natural life-cycle and go through clearly identifiable

growth stages. These stages are not based on set periods of time, but
rather on ‘energy’ within the business. It is this energy, or ‘feelings’, of the
key players in an organisation that will dictate which stage a company is
at and when it moves from one stage to another.
At Shirlaws we have worked closely with hundreds of businesses all over

the world. Using this experience we have created a model of progression
we call the ‘Stages model’. This model applies to every company, regard-
less of size or sector.
Understanding your business cycle 29
This is a somewhat simplified version of our model. It shows each stage

or phase of the business’s development and the feelings at each phase
shown in red below the timeline. These feelings are a remarkably accu-
rate indicator for precisely where the business lies on this timeline. Using
data drawn from thousands of businesses we can then support our clients
in understanding how they can navigate their business along this cycle
and exactly what the business should be doing at any point to maximise
returns – both commercial and cultural.
The first stage is the ‘Start-Up’ phase, which begins on day one of the
business. Remember how you felt on that day? Excited, nervous? Your
energy levels were high, you were doing everything in the business, work-
ing long hours – it was frantic, but you loved it. You were investing time,
energy and money into the company. If you hadn’t invested so much and
worked so hard, the company would have failed fast because that initial
phase is tough. You need to win clients, get a reputation, and establish
a cash flow. That hurdle is what we call the ‘First Brick Wall’ and to get
through it you need to make that investment.

Because you work hard, the business begins to fly, and you get to the
second phase or ‘Growth Stage’, when the company is doing well, turn-
over is growing and you begin to feel good about how everything is going.
These are the good times when you begin to reward yourself for all your
hard work in establishing the business. Perhaps you move house, buy a
second home, a new car or boat – you deserve it, after all. It’s payback
time.
But now you still seem to be working seven days a week, taking work
home, going in at weekends – and the business is not growing at the same
rate. There are more people in the company, so more day-to-day prob-
lems to solve. You are doing everything you did before – and more. At this
point your feelings can best be described as frustration, stress and, even-
tually, disillusionment. You are at what we call the ‘Second Brick Wall’.
Now this is a crucial stage for any business. There are three options: you
can get through the wall and take the business forward, the business will
plateau, or it will decline.
The crucial element to get you through is further investment, and this time
it needs to be investment in skills. The business has changed and, unless
you had a planned strategy for growth, you need to assess what your role
should be (you shouldn’t still be responsible for running everything in the
business) and assess the roles of everyone in the business – how well are
you delegating responsibility? You need to reassess how the company
is positioned in the marketplace against the competition and customer
expectations. Sales methods need to be reviewed. Are there the right
skills in the organisation for the business you now are? And what about
your plans for the future – do you have a planned succession strategy?
If you recognise the needs of your business at this stage and invest in put-
ting the right strategies in place, then you move into ‘Advanced Growth’
and start to feel contented with work and will have achieved a good bal-
ance with your life outside the office. In fact, most business owners simply
say they feel enormously ‘proud’ at this point. It’s the feeling that suc-
cessful serial entrepreneurs have. They have worked out how to get their
business to work for them.
So, how does your business feel today? Is it an exciting and frantically
busy place? Calm and relaxed? Or stressful and increasingly frustrated?
Understanding that will tell you what you should do now and what is com-
ing up in the future.
How do you feel? You may be in a different stage from your business or
your key team. Understanding that will help you know how to manage
your relationship with your team (manage the energy) and give you an
insight into what skills you might personally want to develop.
Naturally, the capabilities and skills needed to break through the Second
Wall can be planned into the business as you accelerate up that growth
curve. The more of these you build in while times are good, the less painful
the Second Wall will be. Culture is also hugely important, as businesses
with a strong culture and a clear vision avoid much of the stress and dis-
illusionment.
But to really invest in these core long-term capabilities you need some
genuine perspective – to be ahead of and ‘above’ the business. The trou-
ble, of course, is that in the good times we are all too busy in the content,
focused on clients and revenue creation (and having fun), and as we move
towards that Second Wall we are still in the content but now too busy
fighting fires. That’s why managing in context is so important (and difficult
to achieve).
In the next two sections we’ll look at the skills that need to be developed
in more detail and outline the behaviour required by the company and its
senior management team to move the business forward and recapture the
excitement of the early days. But first let’s look at a couple of other tools
to help you better understand your business today.
CASE STUDY: UK phoenix
A couple of years ago we were asked to help a UK phoenix printed

circuit board manufacturer. The company had started again with the
same shareholders/directors and the same staff. The issue they faced
was of a deeply divided board and shareholding that threatened to
destroy the business before it was fully established.
When we started coaching the directors we talked to them all individ-

ually and it became clear that two of the directors were excited and
energised about the opportunity to start again. They threw themselves
into the startup phase enthusiastically and were producing results,
while the third director/shareholder was, privately, not energised by
the phoenix opportunity. This unspoken reluctance was driving an
increasingly wide rift between the directing shareholders.
This needed addressing before we could help the business progress

any further. The challenge was to create an environment and a frame-
work in which an honest conversation could occur without it descend-
ing into blame and recrimination. Our approach was to work through
the business cycle model Stages, examining where the old business
had been before it was closed and where the new business was on
the Stages cycle. We also then talked about where the individuals
were on this cycle. Within half an hour there was an honest acknow-
ledgement from all around the table about their differing places and
the impact that had on them working together and building a new
business together.
Within a week a new arrangement was agreed, which essentially gave

a part of the business to the third shareholder to run on a small scale
– leaving the two energised directors with the shared vision with the
bigger business to scale appropriately. All were delighted with the out-
come.
TOP TIPS
• Know where you are in your business life-cycle and plan

ahead.
• Know where your key directors or partners are and
understand how this impacts on your relationships and
decision making.
• Build in now the skills and capabilities your business will
need to grow in the future.
What to do now
• The Shirlaws Stages tool can be found at

www.shirlawscoaching.co.uk/stages
• Ask a trained coach to help identify where you are on
Stages, or complete our short online Stages tool. All our
global coaches can be found at
www.shirlawscoaching.com/Our_Business/Our_People
• Create a list of your ten most important colleagues and
clients. Share this book and/or those links with these
ten people and organise a meeting to discuss your
similarities and differences.
34
CHAPTER 6:
UNDERSTANDING RISK IN A STRATEGIC

CONTEXT
“Take calculated risks. That is quite

different from being rash.”
George S. Patton
“There are risks and costs to a

program of action. But they are far less
than the long-range risks and costs of
comfortable inaction.”
John F. Kennedy
The concept of risk/return is well understood in investment circles. The

higher the risk the higher the potential return (and importantly but nor-
mally forgotten by the investor, the higher the risk the higher the potential
losses). For the CEO, risk is often the ‘hidden variable’ in many business
decisions. Risk touches on every area of a company’s operations and yet
when the case of ‘cost versus return’ is considered by the Board the var-
iable called ‘risk’ is often not discussed.
The term ‘risk profile’ is also heavily used in investment circles. The finan-
cial adviser will want to measure a client’s risk profile before investing their
funds. It is often a score out of 10, with zero indicating highly conservative
and 10 indicating ‘willing to take any bet’.
Equally, an executive team can have a business risk profile that they can
measure and use as a strategic and contextual metric to manage risk-
based decisions in the business.
Understanding risk in a strategic context 35
This can be a vital measure. It can create a contextual understanding when

serious divisions at board level occur. And it can help create a benchmark
to support decision making when circumstances change. For example,
most businesses experience a severe drop in Risk Profile after a serious
economic downturn, just at the moment when the business needs to be
decisive and proactive.
In the first instance, let’s look at debilitating differences of opinion within

the senior team, for example between the CEO and the CFO. We often
see boards where the CEO might have a risk profile of 7 or 8 but other
members of the team have a profile of 4 or 5. But this knowledge is hidden
without a metric to measure it. All that shows up is that the board think the
CEO is impetuous and he or she feels frustrated and constrained.
The same can occur at different levels in the business and even between
businesses – in supplier–customer relationship, for example. How useful
would it be if you had a way to measure the relative risk profiles of your-
self and your bank manager and a sensible basis upon which to have this
conversation?
And what of the impact of a serious change in circumstances? More often

than not during a downturn the entrepreneur or CEO reduces their busi-
ness risk profile without being aware of it. When the market starts to move
the CEO needs to start aggressively reinvesting in the business to get
the uplift in the next phase of the market. But many will hold off until the
market has moved. The fear (called lower risk profile) that they may invest
too early causes them to hold off on investment and therefore they don’t
get the revenue uplifts. The language used revolves around “when the
market improves then I will . . .” It is these fears, that naturally evolve from
the recession, that ultimately hold the business back.
So how do you fix this? How do you create a metric to measure the risk
profiles of your key team to aid alignment and understanding – to create
the context that leads to quick decisions? And how do you create aware-
ness of the business risk profile so that you can use that to benchmark
vital decisions such as when to invest in the cycle?
First, be aware of risk and your relative attitudes to it. Be aware of how
that may have changed. If you want to measure the board and entire man-
agement team’s personal business risk profiles, you can do so at www.
navitasip.com.
Then, as part of your strategic retreat, agree a business risk profile which
you will use to benchmark all your significant decisions. Openly discuss
where the conflicts in the business are likely to show up relative to each
other and to that agreed business profile, so that you can manage these
in the future without argument and misunderstanding.
Understanding risk in a strategic context 37
TOP TIPS
• Knowing your risk profile is a useful strategy.

• A lack of communication about risk creates problems.
What to do now
• Benchmark the risk profiles of your key team and openly

discuss the implications of these. Choose your own
benchmarking system, or have the team use ours.
www.navitasip.com/indicators/Risk.aspx
• As part of your strategic retreat agree a risk profile for
your business.
• Have the board or management team mandate to use a
business risk profile and risk management processes to
ensure that all future decisions are made by looking at
cost, return and business risk.
38
CHAPTER 7:
BECOMING A GREAT COMMUNICATOR

And why 60% of your communications could be misunderstood . . .
“If there is any great secret of success

in life, it lies in the ability to put
yourself in the other person’s place
and to see things from his point of
view.”
Henry Ford
“Give me the gift of a listening heart.”

King Solomon
Communication is a lead issue in most businesses today. Most people

freely admit that they would benefit from more effective communication.
They also admit they do not have a clear understanding of their commu-
nication style. They do know that they are often misunderstood when they
believe they have been quite clear in their communication.
Yet becoming a great communicator is actually pretty simple. There are

two main principles which underpin this skill.
The first is awareness – awareness of the differences in communication

and processing styles between you and the person you are communicat-
ing with.
The second is to be an effective listener, being calm and creating enough

space to listen and absorb what is being said to you. If you are too busy
talking and preparing what you will say next, how will you know what is
really being said to you?
Becoming a great communicator 39
We found a long time ago that, if we were to help business owners and
CEOs become highly effective business operators, we had to focus a lot
of attention on the way people transmit and receive information. There is
a huge amount of scientific research around this subject and dozens of
products and systems on the market that help businesses communicate
more effectively. But we found them to be complex and difficult to use
effectively in a small business or team. So we created a simple tool which
we call Think Feel Know, which has proved to be highly effective in sup-
porting our clients in understanding and improving their communications.
Think Feel Know is a simple framework which creates understanding

about the ways in which individuals prefer to process information. It
acknowledges that there are three ways in which to process information:
thinking, feeling and knowing.
There are only three rules:

• Each of us has a natural, preferred style of communication
• No one style is better than the other
• We use all three all of the time.
The thinking style is all about data, rational argument, pro-

cessing and balancing options. People in whom thinking
predominates like to take time, get their facts straight and
know their options before making a decision.
The feeling style involves stories, anecdotes and colour,

and lots of human interaction. People in whom feeling
predominates make decisions based on how they feel
and enjoy reaching decisions in consultation with others.
They like to be presented with a visual argument (pictures
and graphs), not just data.
The knowing style involves intuition and instinct. Commu-

nication is short and efficient. Decisions tend to be made
quickly without necessarily getting into too much detail or
looking at the data.
A simple story might illustrate this. Consider a family eating out in a rest-
aurant. The father looks closely at the menu and at each item and
analyses what he will choose based on what he had to eat recently, the
price of the dish, and whether he thinks this will represent value for money
in this particular restaurant. The mother talks a lot about what she feels
like eating and looks at what other tables are having – even asking people
if they’d recommend it. The daughter hardly glances at the menu, asks for
something that isn’t even on the menu, and gets irritated that the others
are taking so long. The father is a thinker, the mother a feeler and the
daughter a knower.
It’s important to understand that we all use these different ways to com-
municate and process information to a greater or lesser extent, but each
of us has a natural, preferred style (or balance between the three). No one
style is better than another. Having the ability to recognise and understand
your own style and the style of others allows you to adapt your communi-
cation and connect with others more effectively through verbal and written
communication.
It can impact how business teams communicate, particularly where indi-

viduals have a strong preference of style. A strong knower may find a
strong thinker frustrating while the thinker finds the knower impetuous
and can’t understand the rationale for decisions made. Great teams have
a balance of each – and have the knowledge and awareness of their pro-
files so that argument and disagreement can be avoided.
It can also influence the relationship between businesses and suppliers

and customers. A surprisingly high proportion of entrepreneurs and busi-
ness owners are strongly skewed towards knowing and feeling (they are
intuitive, creative, and driven by ‘why’ not ‘how’). Yet many of their advis-
ers (accountants and bankers) are predominantly thinkers. This suggests
that if you want to achieve real influence over the people you do business
with it would serve you well to understand and adapt your communication
style. If you have advisers or people in your team who are predominantly
thinkers, adapt your communication (verbal and written) to include more
data and information than you might normally do – and offer options and
choices. If you have a strong feeler in your team communicate with them,
using visual material, stories and anecdotes.
Becoming a great communicator 41
This doesn’t mean you have to change everything you do or that what you
do now is wrong. But having an awareness of this can help so that if you
have a particular individual with whom you don’t quite connect you can
adapt your communication style.
So what do you do with mass communications – websites or public

presentations? It is a good idea to review all your materials and consider
whether the balance is right and whether you have elements that effec-
tively communicate in each style – including data, imagery, and short
summarised bullet points, for example. If you don’t, it’s likely that you are
simply not talking effectively to around 60% of your audience.
A large UK household name entertainment company was finding that each

of its departments worked as a silo with conversations between depart-
ments often misunderstood and too much communication being left to
email. This was having a serious impact on the productivity and cultural
integrity of the business.
Through a series of individual interviews and workshops, employees and

managers were exposed to Think Feel Know as a discipline and given the
opportunity to express observations, concerns and beliefs.
The outcomes were that each employee had a greater awareness of

themselves and the people they worked with. The whole business learnt a
common ‘language’ to understand and connect with people from all over
the globe, in the form of a quick and easy tool to apply immediately and
see instant results.
The client commented: “This is far simpler and more effective than many
of the profiling tools available on the market today. We now have a com-
mon language to use with all of our territories. Learning about this has
been fun and the light bulb has gone on many times during the session;
now I understand why sometimes when I speak to people it is as if I have
hit a brick wall!”
TOP TIP
• If the person asks you a ‘how’ question they are

in Think, a ‘what’ question they are in Feel, a ‘why’
question they are in Know.
WHAT TO DO NOW
• For the next three days, LISTEN more carefully to every

question you are asked and take a moment before
you respond. Ask yourself what state/style the person
speaking to you is in – Think, Feel, or Know?
• Get yourself and your team profiled
www.navitasip.com/indicators/ThinkFeelKnow.aspx
43
CREATING
REVENUE TODAY
44
You may recall right at the start of this book I made the slightly surprising
claim that not all businesses really understood what they did, although all
businesses understood how they did it. Of course, all businesses know
what they do – but do they really understand it? Do they understand the
true and full potential of what their business does for customers?
In looking in detail at the ‘what’ of the business let’s first look at product,
then turn our attention to the mysteries of intellectual property, and then
market position. Finally we’ll look at effective commercial relationships.
45
CHAPTER 8:
PRODUCT – THE FOUNDATION OF YOUR

BUSINESS
“Make your product easier to buy than

your competition, or you will find your
customers buying from them, not you.”
Mark Cuban
“The essence of a successful business

is really quite simple. It is your ability to
offer a product or service that people
will pay for at a price sufficiently above
your costs, ideally three or four or five
times your cost, thereby giving you a
profit that enables you to buy and to
offer more products and service.”
Brian Tracy
What you sell – be it a product or service – is the foundation of your busi-

ness. Most of us would accept this without question. But for most smaller
businesses their product is a given and the board doesn’t spend a lot of
time thinking really strategically about what else the business could do
to leverage its resources (intellectual and financial) to drive more revenue
more profitably.
For a start, many small and mid-sized companies have one product or
service – let’s call this P1 – and distribute it to one channel or type of cli-
ent or ‘distribution’ base (see chapter 11), which we’ll call D1. But what is
obvious is that the more products and distribution channels you can build
the more profitable and valuable your business will be in terms of equity.
It is key that when you introduce another product (P2) to the same cus-
tomer base, you are lowering the cost of that sale because you already
have the loyalty of customers who know you and will be ready to accept
the product. You are therefore able to get a higher margin on your P2
products.
Sometimes organisations think they have diversified in a market when in

fact they haven’t. For example, an accountancy practice may think it has
three products (P3 – e.g. tax returns, audits and a company structures and
advice service), but as far as its clients are concerned these are all seen
as the same thing, just one product. If, however, the accountancy practice
establishes an IFA division selling financial services to the same customer
base, then it has developed a second product.

Product – the foundation of your business 47
A business we recently worked with distributes organic vegetables

and was looking for ways to expand. Stocking a few more varieties of
vegetables would not constitute a multiple product range – selling vegeta-
bles is what it did. To develop real, profitable growth it needed to look for
something else it could sell to its existing customer base, many of whom
were catering outlets. Its solution was to set up a training section teaching
chefs new ways to cook vegetables, particularly the more exotic varieties.
It had already established credibility in providing quality produce and had
loyalty from its existing customers, so the new training division proved
successful quite quickly.
Of course, it’s a strategic choice for the business whether to focus on

building a range of products and sell into one distribution channel or to
have just one product and develop multiple distribution channels for it.
If you pursue the first strategy of multiple products and develop five quite
distinct product offerings, we would say your business model is P5/D1 (ie.
5+ Products/1 Distribution channel).

An alternative business model might be to have just one product and to

develop a variety of distribution channels across which to sell it. We would
call this P1/D5.
A third model would be to develop multiple products and sell them across
multiple channels which we refer to as P5/D5.
Which business model you choose has implications for the value of your
business. In terms of building equity these models rank like this (from
most valuable to least valuable):
1. P5/D5
2. P1/D5
3. P5/D1
4. P2/D1
5. P1/D1
Obviously, a multiple product and multiple distribution (P5/D5) growth

plan for an SME business would be a fairly long term strategy and one
that would need careful implementation.
The key point is that if you are currently a one product, one customer base
(P1/D1) business then introducing a second product will positively impact
on growth and profits, and hence the value of your business.
So, what else could you do to drive the value of your business from the
foundations up? You could usefully reflect on what your product or prod-
ucts look like. Your product can be defined as what customers give you
money for. It sounds obvious, but for most of us our product is a whole
bundle of different offers, some of which we charge for and some of which
we give away. By getting really clear about what it is that customers are
actually paying you for you may be able to unbundle your product and
charge very profitably for the bits you currently give away (advice or con-
sultancy, for example). You may, of course, choose not to charge for these
services as you derive value in other ways from giving them away – but
this needs to be seen within a strategic framework based on your position
(chapter 10) and your client servicing policy (chapter 12).
The opposite approach, of course, is to bundle a set of products together,

to create a competitive advantage to capture share and increase the
volume of sales. You’ll see McDonalds following this strategy with their
‘Happy Meals’, for example, and will recall that is what Microsoft did with
Office when competitors offered word processing and data packages
separately.
It’s a good idea to look carefully at what your main competitors are doing
– and consider adopting the opposite approach to create competitive dif-
ferentiation.
This is of particular importance as the economy moves towards a recov-

ery phase, as it’s exactly the right time to be innovating product. I’ll look
at this in more detail in chapter 9. A simple exercise can be very helpful in
understanding how you can innovate your product packaging to react to
changing market conditions. The reality is that it is hard work and expen-
sive, generally, to create completely new products, but relatively easy to
repackage your existing offer.
If you haven’t significantly repackaged your offering over the last two
years, using the diagram below may be helpful.

Insert a description of the product you have been selling over the last two
years, how you have packaged it, and what the customer is really buying
– what the outcome of the purchase is for them. For example, customers
of a training company may have wanted as an outcome to achieve staff
development and better team alignment two years ago.
In the next line start by describing what your customers really want today
as an outcome. In the last two years this is very likely to have changed.
For example, the clients of the training company now want cost savings
and efficiency – so they want training that delivers that or they won’t invest
in it at all.
You can then describe how you could package your product to meet this
demand. The training company will have to repackage what they deliver
and how they deliver and charge for it. For most businesses who have not
repackaged their product in the downturn the chances are they are selling
a boom proposition in a bust market, and are likely to be driven to com-
pete on price, which will obviously undermine their margins.
While you are about it, you might also look to the future and consider the
output your customers will seek in two years’ time – hopefully as markets
are back in growth – and how you might repackage to meet that demand.
A proactive strategy to product development is key to any growing busi-

ness. By looking at your product portfolio you will enable your business
to grow its customer base and span wide-ranging markets, a necessary
requirement not only for immediate profit but also a strategy to develop
longer-term equity.
CASE STUDY: La Playa Insurance
La Playa (www.laplaya.co.uk), an insurance company operating out of

London and Cambridge, asked Shirlaws to work with them to design
their product extension strategy.
The starting point was to understand the business from a product dis-
tribution perspective. At the time they sold a huge variety of insurance
policies and programmes, some bespoke and some off-the-shelf, to
four different markets: private client, TV and media, agri-business and
technology. The list of products sold to these four markets amounted
to around 27 (P27/D4?), which felt complex and difficult to manage.
Through coaching the business the approach to product was sim-

plified and it was agreed that they were actually P1/D4: they simply
sold general insurance in differing forms. This enabled the CEO and
board to clearly define what product extension opportunities would
be attractive and appropriate for the business (financial services,
accounting, HR, recruitment, etc.) and what other markets they might
over time want to move into (yachts, sport and leisure, bloodstock,
etc.).
The next stage involved the business writing a detailed strategy with
Shirlaws’ support. In the short term this defined exactly how each dis-
tribution channel should have full access to all of the product menu,
which proved a good revenue generator building on internal referrals.
In the longer term, the strategy created an implementation plan for
future product roll-out with budgets and RoI so that the business
could genuinely focus on how to get there.
TOP TIPS
• The more products and distribution channels you can

build, the more profitable and valuable in equity terms
your business will be.
• It’s a strategic choice whether to focus on building
products to sell into a single distribution channel or
to develop multiple distribution channels for a single
product.
What to do nOW
• By getting really clear about what customers are paying

for, you may be able to unbundle your product and
charge very profitably for the bits you currently give
away.
• Or take an opposite approach and bundle a set of
products together to create a competitive advantage to
capture share and increase the volume of sales.
• Seek advice on how to successfully re-package your
product.
53
CHAPTER 9:
YOUR INTELLECTUAL PROPERTY – THE ROCKET

FUEL IN YOUR BUSINESS
“Our value is basically our IP and its

deployment.”
Rob van der Meij
“The traditional business designs

a product and sells it to create a
major product stream. But the more
advanced business model is built on
intellectual property (IP) to generate
much higher value than the traditional
‘product only’ business.”
Darren Shirlaw
In the previous chapter we considered the importance of strategically

examining the potential product, packaging and distribution opportunities
available to create profitable growth in your business. In this chapter we’ll
look at an allied concept, and one that supports this activity and can free
up tremendous creativity in your approach to product. That concept is
Intellectual Property – or IP.
The IP in your business differs from your product. It is the set of fun-
damental skills, knowledge, expertise, experience, relationships and
physical resources that support your position and allow your product
to exist. It is the fundamental rocket-juice of your business and it is what
makes your business unique. For a lot of businesses it can be an elusive
concept – but well worth getting to understand thoroughly.
IP is your company’s ‘know-how’ and it’s what you build your reputation
around. Let’s take a household name as an example, McDonald’s. What
they sell is hamburgers – but what is their IP? Are they known for being
good at building hamburgers? No more than another hamburger com-
pany. So what in particular does MacDonald’s do well? MacDonald’s IP,
or know-how, is around franchising – it’s what sets them apart from other
hamburger companies. McDonald’s actually makes money from franchis-
ing, which gives them much higher equity value.
Another great example is provided by the Saga group of companies.

Saga started as a travel company and its suite of products in the early
days were all involved in travel. It would have been very easy to focus on
the ‘product’ (travel) as the strategic driver of the business. But the Saga
board realised their real IP was in their market and the knowledge of and
relationship with the over 50s. By extending from this unique asset Saga
skilfully became a financial services and media group with a multi-billion
valuation. It may seem a rather obvious move with hindsight. But seeing
the true IP in your own business (and not just your product) is remarkably
hard. The entertainment genius Harry Warner was only seeing the current
product and not the underlying IP when he famously said in 1927 “Who
the hell wants to hear actors talk?”
Companies make more margin from commercialising their IP than from

their originating product. It’s like making more money out of your second,
third and fourth product than your first.
To pin this difficult idea down, an example of its power in action may help.
I was recently asked by a large accountancy practice to advise a client of
theirs who had come to them for help in selling the business. The com-
pany concerned was in the asbestos removal business. The owners felt
trapped in their business and wanted an exit – the market was in decline,
margins were under strong pressure as competitors brought in foreign
sub-contractors, and additionally they had been badly impacted by the
recession. This was a classic P1/D1 business which was additionally very
reliant on the business owner (see previous chapters!). The valuation the
accountants were able to place on the business was consequently not
attractive, which trapped the owners in the business. The accountants felt
we might be able to help.
Your intellectual property – the rocket-fuel in your business 55
When we met, I asked the business owners to describe their IP – what

was uniquely valuable in the business. The initial answer was that the IP
was “asbestos removal” but this, of course, was the product IP. After con-
siderable discussion the owners of the business began to articulate the
genuine IP and came up with an impressive list that included: the removal
and transportation of hazardous waste, the profound understanding of
complex legislation and compliance with European and UK regulation,
health and safety training, the recruitment and deployment of specialist
tradespeople, strong relationships with local government and agencies,
project management in a complex regulated field . . . The next step was
to ask the business owners: if they came across a business with those
attributes but with no idea of the product the business sold, what product
would they imagine such a business could deliver. The answers (which
ranged from specialist consultancy, through health and safety and other
specialist training, recruitment and specialist transportation) gave the
business a huge choice of new product (P2, P3, etc.) ideas based on their
own IP, and therefore highly likely to succeed.
It’s a great idea for businesses to carry out an exercise like this with or
without outside support. The diagram below will help with the process.
In understanding your own IP you need to be very clear about what makes
your business really unique amongst your competitors, whether it’s your
systems and processes, knowledge, intellectual resources, people or
relationships, or a unique combination of these. This knowledge will help
power your innovation strategy and drive profitable growth and burgeon-
ing equity valuation.
And what became of the asbestos business? It was clear that sim-
ply repackaging the offer would not solve the fundamental problem.
But understanding the IP allowed the business to create a whole new,
and highly profitable, product suite away from asbestos – or even the
building trade – in the collection, transport and disposal of low hazard
council waste, leveraging the existing relationships the business had and
the unique proposition contained within the company IP. The business
goes from strength to strength and the owners are revitalised, having re-
examined their position and functionality strategies. They are currently
planning an exit in about five years. They are on a roll.
TOP TIPS
• Know your IP. It is the fundamental rocket-juice of your

business, what makes your business unique and is the
source of profitable growth through product innovation.
• Understanding and leveraging your IP will create a
fundamental building block to accelerated equity value of
your business.
What to do now
• When you’ve articulated your IP, take yourself and your

senior team out of your own business (this could be on
your strategic retreat) and ask yourself what a business
with this unique set of attributes might theoretically
do (what products it would sell). It’s a good idea to get
external help with this as you are probably too close to
your business to appreciate all of your options.
57
CHAPTER 10:
POSITIONING – YOUR KEY FOCUS
“In almost any industry, the big

winners are companies that consumers
instantly associate with a single
highly-focused concept – like Heinz
and ‘ketchup’, Volvo and ‘safety’ and
Federal Express and ‘overnight’.”
Ries and Trout
The stronger your position or brand, the easier it is to attract the best
talent to work for you, the more other organisations want to be associ-
ated with your company and, importantly, the more you build customer
loyalty – which in turn makes any new offerings you introduce attractive
and desirable.
There is a market understanding that words like ‘positioning’ and ‘brand-

ing’ sit in a marketing space. This can certainly be the case in many
businesses but, in my view, for most mid-sized businesses, the purpose
of positioning is to get laser focus on what the business is all about – what
it is famous for in the eyes of its clients. In other words, it is the strategic
conversation that takes place before any operational marketing activities.
Positioning your business is a strategic activity which impacts the whole

of your business model. So, the key question behind any positioning strat-
egy is an understanding of what you stand for – who you are. Being able
to answer this succinctly enables you to move into a contextual explana-
tion about your business – fast tracking sales opportunities, distribution
channels, and identifying potential acquisitions, mergers and joint venture
opportunities.
Ask yourself: what would your business look like if it had a laser-like focus
on what you were famous for?
As business owners we often start off with a clear focus which is shared
by all the founders and first employees. As the business grows, new peo-
ple join, new ideas are tried, and unexpected customer desires are met
(who says “no” to revenue at this stage?), so that focus can begin to fade
and eventually blur.
In the growth phase of the business – and particularly as you near that
Second Brick Wall (see ‘Stages’ in chapter 5) – it is therefore vital to review
your positioning. This involves you as CEO, with your key team, making a
number of contextual choices:
• Should we be a distribution company or a product company (see pre-

vious chapter)?
• What is our primary position and should we position ourselves around
market, service, product or price?
These choices can be visualised below.
The product or distribution choice is a very strategic one. Of course, all

companies do both operationally and therefore if you approach this choice
from an operational or content viewpoint then it will be hard to draw the
distinction and be clear what to really focus on.
Have you ever wondered why many large corporations continually restruc-
ture their businesses? One answer is that they will often find it hard to
understand the strategic focus of their business.
Positioning – your key focus 59
• A distribution company has a focus on developing relationships with its

market-place
• A product company has a focus on product research and develop-
ment.
This key strategic choice of your primary position informs the whole of
your business model. Once you are clear on your focus you can create a
further choice. Are you focused on market, service, product or price?
Let’s examine this in more detail. If you have a distribution foundation to

your business you could choose a primary position of market or service.
A market focused business (‘who you serve’) tends to be strongly iden-

tified with a market category, strong at building markets, or a business
whose partners would have a strong sense of belonging to ‘my market’.
Saga is a good example of a business that developed a primary market
position. They have a business model based on their knowledge of the
needs of a particular market demographic and have chosen to focus on
this market and build the asset base of the business by developing P2/
P3/P4 into this market-place. Saga started with a single hotel and is now
as much a financial services and media business, but still within a single
market.
A service focused choice (‘how clients experience what you do’) tends
to provide a lot of extras to the client base, has an over-riding service (as
opposed to a sales) ethic, and focus on the customer feeling well looked
after. This is about being famous for how you do something, more than
what you do or who you do it to. The choice informs the whole P&L,
driving where investments should be made and what priorities should be
given. Harrods has a clear primary service position.
A company with a product foundation tends to make a choice of either

product or price as their primary position.
In a product focused business (‘what clients get from you’) the prod-
uct may potentially have a higher profile than the company itself. It is
often first-to-market, a business investing heavily in product research and
development, and attracts “me too” product offerings from other mar-
ket players. A company such as Coca-Cola is an example of a business
with a clear product position. They jealously guard the product recipe and
traditionally outsource the distribution and client relationship to joint ven-
ture bottling operations.
Finally, in a price focused business the focus is upon providing value as

well as on developing a strong supply chain and a business model to
support economies of scale. Budget is a good example, as are EasyJet
and Ryanair. At the opposite extreme, Rolex also has a clear price-based
strategy.
Once these key strategic choices have been made it is important to draw
comparisons with other players in the industry to map where your position
fits relative to the competition you face in your industry.
A simple grid can be used to instinctively map your industry and all the
players. This will tell you how you sit in comparison to your competitors
and more importantly it will show up any industry gaps that you could
choose to fill. There’s an old marketing adage of ‘cherchez le creneau’
(find the niche or gap) – that is often where the easy wins are. In the 1950s,
VW noticed that all the car manufacturers in the US were in the same mar-
ket area and moving in the same direction – big and flashy with fins and
chrome. The ‘creneau’ was in a small car and they positioned the Beetle
with the phrase ‘think small’, neatly capturing an overlooked market sec-
tor. In doing so they associated the brand with intelligence and discretion.

The power of a clear position understood by customers and lived by staff

is vital for profitable growth and equity valuation (see Apple). And although
it’s easy to use corporate brands we are all familiar with, the lesson is the
same for any business.
Years ago, I worked in brand development in a large spirits business. We

undertook some research asking 50 brand loyalists of our main com-
petitor’s brand to switch for a month to our brand and vice versa. In
product and price terms the two brands were essentially indistinguish-
able. We paid them a modest amount plus their bar bill. After a month
every single consumer returned to their preferred brand. But what was
really interesting is that we asked the customers not to reveal to anyone the
reason for their change in brand. Within hours of the research starting we
had participants begging to be released from the trial because they felt so
uncomfortable with a different brand and not being able to explain why;
one man’s wife thought he was having an affair!
All very interesting and you may feel it is far removed from your business,
but let me ask you this: if I paid your best customer to switch to a com-
petitor who matched you on product and price, and paid the costs of the
service, how likely is it that customer would be begging me, within hours,
to return to you despite the cost?
That is the power of positioning.
The key to positioning for mid-sized businesses is to understand that it

is all about focus. But it is your choice what you focus upon given the
capabilities of the organisation, the nature of what you do and, critically,
the competitive situation. A client said recently that he was really engaged
with innovation but didn’t want to be a product company – his answer was
to develop a focus around innovating the service he offered his clients,
and he is loving it.
CASE STUDY: Craster Woodworking
Craster Woodworking (www.craster.com) started out in 1992 as a

family joinery business. When Alex Craster took over the business
from his father in 2004, following a career in corporate business, all of
a sudden he found himself running a small business on his own for the
first time and it felt lonely at the top. He had no external assistance
at that time and was running around doing everything in the business
and uncertain about where he was going with it or how to get there.
Alex was introduced to Shirlaws by a contact of his and was immedi-

ately attracted to us. “They were different from any other consultant
firm I’d experienced before and my coach had great energy that I felt
was the right match for me,” he says.
Early on, the coaching focused on what the business was known for
in the market-place and more importantly what it wanted to be known
for. By getting clear on where Alex wanted to take the business the
coaching helped him clarify how to get there and got him and his team
to focus their time and energy on the activities that built the position
he wanted the business to occupy in the market.
The result saw a huge increase in the product range the business
offered its clients. It also resulted in an acquisition – the first the busi-
ness had made in its history, which allowed the company to further
boost its product range, enter new markets and take on new and pres-
tigious clients.
A key output was the launch of a digital product development platform

which provides buyers with a secure login system where they can see
what’s being designed for them and keep up to date with the progress
of their orders. It’s helped the company build stronger relationships
with their clients, which supports where the company wanted to be,
moving from being a manufacturer to being a partner working with
clients to design bespoke hardwood products that define the hotels
they serve. This helped Craster build their own unique brand identity –
a high value proposition in such a competitive market. It has also seen
revenues more than double, and margins improve too.
TOP TIP
• For mid-sized businesses positioning is about getting

customers and employees focused on what the
business is all about – what it is famous for. Being able
to answer this succinctly enables you to fast-track
sales opportunities, distribution channels, potential
acquisitions, mergers and joint venture opportunities.
What to do now
• Understand your primary position. If you cannot get the

distinction between distribution and product then bring
in some assistance from outside.
• Know whether you are focused on market, service,
product or price.
• Get it down to one word per area, and then one single
word that positions the whole of the business.
64
CHAPTER 11:
THE SALESFORCE THAT NEVER ASKS TO BE

PAID
Having examined strategies around product portfolio and positioning
we obviously need to look at gaining more customers or clients. Clearly
your business already has a successful marketing and sales strategy and
this will be specific to your sector or market (and if not there are many
advisers, not least my own firm, who can support you in developing these
skills). In this chapter I’ll therefore concentrate on other routes to winning
profitable new business.
First, let’s look at ‘networking’ as an approach to winning profitable new

business. Referrals are often the best source of new customers so it
makes sense to look at maximising opportunities from networking and
from existing contacts. The hardest parts of a sale – creating awareness
and credibility in your company, products or services – is already taken
care of when someone is referred to you by a third party that they trust.
Plus a referral is ‘pre-sold’ – they are coming to you because they genu-
inely need what you offer.
Yet, despite this, surprisingly few businesses take a truly strategic approach
to developing their network of contacts into a fruitful source of revenue.
Networking and a proactive referral strategy will quantifiably contribute to
your bottom line – if you are prepared to devote senior resources to it. This
is a strategic activity and may well fall to you to lead. You need to develop
a plan of action with set targets that you are prepared to monitor actively
and to which you have committed sufficient resources.
The first step is to identify the type of new business you want to attract.
Should you take on any business that comes your way? Most of us accept
that there is some business that is more profitable than others. Your refer-
ral strategy can proactively develop these more profitable clients and the
way to recognise them is to develop a planned approach to client man-
agement. The initial task is to analyse your client list to identify those
clients that produce the most ongoing business revenue and then agree
and design a profitable client rating and categorisation system.
The salesforce that never asks to be paid 65
Everyone connected with the sales process needs to understand what a

profitable client looks like in terms of minimum spend requirement, level of
servicing required and any other particular determinates.
To give you an example, one company that sells IT hardware found it was
unable to sell profitably to the SME sector. It carried out some research to
understand how SMEs purchased IT and identified that the critical factor
was not industry, company size, system or applications, but rather the
presence or absence of a full-time IT manager. Businesses with a full-time
IT manager spent between three and five times as much on IT as a busi-
ness that was identical in every way, except that they used a part-time
IT manager. The question on the full-time or part-time status was added
to the start of every sales and marketing contact activity to ensure that
expenditure was focused only on potentially valuable prospects.
You will see that you will have to spend some time on researching your
data in this area, understanding the criteria for new business that will help
you grow and then formally setting it out by size, sector, value etc.
You can then list your established contacts that can offer suitable intro-
ductions to this type of business.
Individual directors and managers within a business often have their own
relationships with potential contacts and these need to be transferred
from the individual to the company database.
In addition, you can look at organisations outside your known contacts

that could open up the right type of opportunities for your business.
As well as setting up your own network of contacts you should also
investigate established business networks in your area with member com-
panies that match your criteria. Good networking organisations will have
an emphasis on referring business and monitor how effectively the organ-
isation is operating.
When looking at another company with which you could jointly refer
business, it’s important to ensure there is a similar ‘energy’ in both the
businesses. Are you both in a similar growth phase – or in a comparable
stage of your life-cycle (chapter 5)? If you are then there will be a momen-
tum on both sides to build business together. If, for example, one side is in
a platform state after a period of growth or close to the Second Brick Wall
while you are early growth, then the ‘high’ energy will be one-sided – that
is, with you – and the relationship will probably stagnate.
The starting point for any network relationship is an open meeting between
both sides to discuss joint opportunities and benefits, and assess energy
levels. But it is also the time to be completely honest about any fears. To
build a successful distribution strategy – that is a programme of increased
sales through referrals – then you have to fully understand what fears exist
(and there always are some), and look at ways to alleviate them. No mat-
ter how good the benefits appear, unless you remove the fears – the
reasons for resistance – on both sides, you will never really move
forward.
Here’s an analogy of how fears can jeopardise successful distribution:

imagine you produce a brand of cornflakes that are full of vitamins, low
in calories and without artificial additives. The consumer who buys them
gets the benefit – a healthy food product that tastes good and is an excel-
lent addition to their diet. However, as the manufacturer you have to get
the product to the customer through distributors such as supermarkets.
The supermarket will have a number of fears: will the product be of a
consistently high standard, is the packaging acceptable, can the manu-
facturer supply enough product, and so on? The supermarket’s fears will
outweigh any of the benefits of stocking the new line. Unless the manu-
facturer can address the supermarket’s fears the consumer is never going
to see the product on the shelves and get the benefits it offers.

This analogy highlights the issue you will face in creating a relationship
with a ‘distribution partner’ – in this case, an organisation with strong
existing relationships with the customers you would like to serve. Like the
supermarket you will need to really understand the fears held by the distri-
bution partner and then ensure there are clear benefits to both in referring
customers to each other.
It’s often assumed that the only benefit that would make a third party refer
customers to you is the receiving of a commission. But there are many
reasons the right partner will refer ideal customers to you. I refer custom-
ers to other firms and have never sought a commission. I have a network
of exhaustively researched and matched partners to ensure I can make
the perfect introductions if a client would benefit from it. Our focus is on
a happy client with a growing business, and if other firms (accountants,
banks, lawyers, marketing companies) can help achieve that our ‘benefit’
in referring the client to the right adviser is in terms of client loyalty. We
also learn a great amount from our distribution partners, so an exchange
of knowledge and expertise can be another powerful motivator to refer. It’s
important when developing potential relationships to fully understand how
that relationship will benefit the other party. But not before overcoming
their natural fears.
Typical fears centre on whether the two potential partners can genuinely
trust each other, whether the other will deliver consistent excellent quality
to important customers the partner might refer, and whether by referring
customers to the other, the partner may lose a sense of control over the
relationship with their customer.
To take this partnership seriously and genuinely overcome these fears is

clearly going to take time in engaging in a series of open conversations
to establish if you have the potential for a relationship, understand what
reservations or fears each party has and seek to address them. It’s vital
to understand the benefits to each, agree written guidelines so both sides
understand what is expected from the relationship and monitor and revisit
the relationship on a quarterly basis, keeping a check on the value of new
business that is coming from the relationship.
The reason referral relationships usually don’t deliver is because fears are
never properly resolved (or even discussed) and not enough time in regu-
lar meetings is given to the relationship. When I take my boys to rugby on
a Saturday I’ll often get chatting to another dad. Imagine we meet again
on a subsequent Saturday and the other guy asks us all back for tea. And
the following Saturday we reciprocate. Maybe after a few of these con-
vivial occasions he might suggest he picks up my boys one Saturday to
save me turning out on a cold winter morning and I may very well accept.
But imagine another scenario in which I meet that dad and at that first
game he offers to collect my boys the next weekend. Would I agree?! Yet
the only difference is in the time it has taken to overcome fears of trust,
‘quality’ and control. It’s obvious in social relationships but we disregard it
in professional ones. For most of us our customers are perhaps not quite
as precious to us as our kids – but it can be a close-run thing.
Of course, this is a significant investment in your time. But the reward

can be a network of partner businesses that understands the value that
your business can offer their customers (based on your culture values and
position) and are actively and regularly referring pre-sold, profitable target
customers to you. I cannot stress enough the value of this. Before I joined
Shirlaws, I owned an outsourcing business and, under Shirlaws’ coach-
ing, I created a focused distribution strategy for the business. We doubled
revenue in nine months and I was able to re-task my sales team away from
direct sales and into professional relationships. I found I already had an
unpaid sales force.
CASE STUDY: FD Centre
The FD Centre (www.thefdcentre.co.uk) is the brainchild of founder

and CEO Colin Mills, a one-time corporate finance director. The firm,
launched in 2001, provides experienced part-time FDs to SME busi-
nesses needing a high impact, low-cost solution to managing their
financial affairs.
When Shirlaws were first introduced, the company employed 22 FDs

and generated revenues of £750,000. The company had a vision to
reach £5 million in revenue by 2010. At the time Colin had spent two
years searching for some form of sales training. Accountants are not
known for their sales skills and it was causing a block in the business’s
ability to grow at the pace Colin needed to fulfil his vision. He simply
hadn’t unearthed the right solution for his business until he got a call
from one of his partners to say “I’ve met these people. They’re really
different. I think they’ve got what you’ve been looking for.”
Colin agreed to invite Shirlaws in to carry out a business review. It

showed that 70 per cent of sales leads were being generated from
advertising while only 30 per cent of leads were coming from referrals
from their strategic alliances. This was a fraction of what was needed
to really push the business into fast growth.
Working with Shirlaws, the business designed a distribution strategy

in order to build new channels to market. The FDs started to meet
and build contacts within other professional services providers such
as accountancy firms, law firms and banks. Within three months they
were already reaping the benefits. As well as quickly increasing the
number of sales leads they were getting, above all it gave the team
confidence.
Colin Mills recalls one of the first meetings: “One early distribution
meeting we had with NatWest was outside in the gardens of a hotel
one bright summer’s day with a flip chart. We matched up people
round the table, pitched the concept using the Six Step process
Shirlaws had trained us in. It enabled us to really engage key people
and it went down well. It was cool and we got a couple of referrals
there and then. We knew then that implementing the strategy Shirlaws
had coached us to develop was absolutely the right choice.”
Reflecting on the results achieved over 18 months, Colin Mills says:

“After a year it was clear the source of clients had shifted. Previously
the ad campaigns were generating 70 per cent of new business with
30 per cent coming from referrals. Now that’s completely switched
around with 70 per cent of business coming from referrals and 30 per
cent coming from the ad campaigns, despite the number of those
growing in that time too.”
Sales at the FD Centre doubled in the first year of implementing a dis-

tribution strategy and doubled again in the second, putting Colin on
track to achieve his vision of £5m revenue.
TOP TIP
• The more distribution channels you can build, the more

profitable and valuable in equity terms your business will
be.
WHAT TO DO NOW
• Set down the criteria for potentially profitable clients, i.e.

what type of business is going to grow your company
profitably?
• Explore which companies might offer mutually beneficial
relationships. Check that both of you have similar
‘energy’ levels.
• Rigorously explore fears and benefits and ultimately
formalise guidelines on working together and monitoring
progress.
71
CHAPTER 12:
DRIVING ENERGY INTO CUSTOMER,

DISTRIBUTION AND STAFF RELATIONSHIPS
“Here is a simple but powerful rule

– always give people more than they
expect to get.”
Nelson Boswell
“There’s a place in the world for

any business that takes care of its
customers –after the sale.”
Harvey MacKay
I’ve already talked a lot about relationships in business: with your key
team and staff, your customers and your distribution partners. We have
explored techniques to understand and better manage these relationships
at different points of the business life-cycle and how to communicate
more effectively whilst developing shared values.
In this chapter we’ll look specifically at driving energy into these relation-
ships – and I’ll focus on customer relationships primarily. Business is,
after all, about establishing relationships and managing them so they are
mutually beneficial to you and your customers. For a start, every com-
pany should be monitoring customer satisfaction as an ongoing business
function. If your surveys show there is dissatisfaction or if you are losing
business to your competitors then look first at the type of service you are
providing.
Managing the ‘expectations’ of your client base is key to developing

robust enduring relationships. One way of explaining this is to look at your
current contact with customers in one of three categories: ‘up’, where you
are exceeding customer expectations; ‘neutral’, where you are meeting
expectations; or ‘down’, where you are failing to meet expectations. In
the diagram below the red arrows indicate the likely outcomes when you
meet, exceed or fail to meet your clients’ expectations.
We find the majority of customer relationships in companies are either

operating in the down or neutral position. But by fully implementing a
customer service strategy that is focused on putting client relationships
in the up position – that is continually exceeding expectations – you will
increase sales and create a positive differentiator between yourselves and
the competition.
In developing such a strategy it helps to understand a bit about how a

customer buys. Our research shows that if you can get a new customer
to buy from you once, then the probability of them buying from you again
increases with each purchase. After the first successful purchase, there is
a 50% chance of them buying again from you rather than choosing some-
one else. This increases to 70% with the second purchase, 85% with the
third and if you can supply four separate services you have a ‘client for life’
with a 95% chance they’ll keep buying from you.
So, we say that you should be aiming for four satisfactory ‘touches’ with
each customer, or four opportunities to develop an ongoing relationship.
Driving energy into relationships 73
Controlling that relationship requires understanding and managing the

customer’s expectation (standard service) and then looking at ways in
which you can exceed that expectation (extra service).
Your first step is to plan a strategy where you agree exactly what you
are prepared to offer as the standard service and then develop an ongo-
ing programme of ‘extras’ to make your customers appreciate you and
build loyalty. Extras don’t have to be expensive but should be something
personal, and that your customer will value. Indeed, they can be free –
actively looking for business to introduce to your clients from your own
network can create huge loyalty (see previous chapter). Or simply asking
your clients about their business and listening to them with no expectation
of making a sale.
As we covered in the previous chapter, for most businesses, you should

segment your customer base to recognise and put resources into the
highest value or highest potential category of clients. Most importantly,
you then have to ensure that your customer understands when you are
giving him something over and above your standard service level. The
trap many businesses fall into is to over-service clients, so that eventually
their expectation of standard service includes that added level of service.
Once an activity becomes an expectation, it is perceived as part of your
standard service. If, for example, you tell your customer that because
of their loyalty you are giving them a three day delivery time instead
of five, then eventually the three day service becomes standard rather
than extra. Then you have to give them something else to maintain that
loyalty-building effect and make them feel special. This obviously has
implications for your costs.
If you are giving your customer something over and above your standard
offering, whether that is additional time, if you are a consultant, a value
-added gift, a discount, or a quicker delivery time, you need to let your
client know that is what he is getting – a special recognition of his loyalty
to you.
For example, if for the past three years you have been taking your key cli-
ents to an important rugby match, then they will be expecting to go in year
four. Your expensive extra has become a standard. And what is worse, if
you then stop inviting them you’ve created down energy!
By creating an element of excitement about the extra activity you create

more energy in the relationship and make every promotion really work in
the process of building customer loyalty. This means you have to be more
creative in thinking about ways to make your customers feel special and
ensure your customer service strategy accommodates the need to con-
tinually update your offering. It also means you need to consider how to
build the cost of developing new value-added offers on an ongoing basis
into your budgets.
Exactly the same principles apply in distribution and in staff relationships.

A strategy of extras should be part of the culture you build in your busi-
ness. As part of the culture it requires effort and above all consistency,
but it will reward you with a loyal and productive team – and a more fun
place to work. Again, extras don’t have to be expensive but you do need
to think the implications through. A client of ours baked a cake for each
staff member on their birthday, which was a lovely thought when she had
a staff of 12 but became a nightmare as the business quickly grew. Your
extras should be creative and surprising. We work with a successful busi-
ness that had a problem when the directors’ bonuses became a standard.
It was costing the business a lot of money but creating little up energy.
The solution was, one year, to pay the bonus to each director’s spouse
or partner by cheque with a letter singing the praises of the director and
requiring the cheque to be spent within three months on something the
director would really appreciate. It created a lot of energy and fun!
Driving energy into relationships 75
TOP TIPS
• When you plan and communicate expectations, you

move relationships from ‘neutral-to-down’ into ‘neutral-
to-up’ – and everybody is more energised.
• Ensure that your customer really understands when
you are giving him an ‘extra’. Beware! Once an extra
becomes an expectation, it is perceived as part of your
standard service.
What to do now
• Review the steps in your workflow process (you may

need to document your workflow, or customer journey,
first). Aim to include four satisfactory ‘touches’ with each
customer as a standard.
• Set the criteria for ‘extras’ – what category of customers
will receive them, and who in your organisation is
responsible for deciding what they receive and ensuring
the communication is clear?
• Plan an ‘extras’ strategy for your staff as part of your
culture.
76
CHAPTER 13:
CREATING REVENUE – A FINAL THOUGHT

The following diagram provides a useful summary of everything we have
covered so far. It shows the business in simple contextual themes. It
shows that each of these is dependent upon the others and that the busi-
ness effectively flows like a river. If any of the key parts of the business is
not working it creates a block to the flow of revenue and energy. If the river
flows smoothly it becomes effortless to manage and builds exponentially
as revenue flows through it.
Problems in a business often have their source upstream. For example,

businesses often think they have a problem with sales but the source is
quite likely to be in poor channels or an unfocused position.
Score your business now in each of these key areas, using a simple sys-
tem of a TICK if you feel you’re getting this right in your business, a
NEUTRAL – if you feel there is work to be done, and a CROSS if you
feel this is really not working well. You’ll quickly uncover where your blocks
are and where you should be devoting your time and energy as CEO.
Do this exercise every 3 months. And have your leadership team do the
same – are your results consistent?

77
GETTING YOUR
BUSINESS TO
WORK FOR YOU
And give you back your time . . .
So far, I have talked a lot about effective CEOs shifting into a more stra-
tegic space (the ‘why’ conversation) to drive revenue growth, build equity
valuation, and to give you choices about how you spend your time.
In this section I want to turn to ‘how’ you can make all this happen. Many
CEOs have created a belief that they have to manage or double-check
everything because they do it best – inevitable at start-up, but completely
impossible if you wish to really grow your business.
The key question now is who is going to step into this operational role if
you’re stepping out of it and how will the business operate? This section
explores how we have helped hundreds of business owners achieve just
that – and, in most cases, significantly reduced costs through big effi-
ciency gains.
78
CHAPTER 14:
THE FULLY FUNCTIONAL BUSINESS
“So much of what we call management

consists in making it difficult for people
to work.”
Peter Drucker
“Being busy does not always mean

real work. The object of all work is
production or accomplishment and
to either of these ends there must
be forethought, system, planning,
intelligence, and honest purpose.
Seeming to do is not doing.”
Thomas A. Edison
The fully functional business 79
Smaller businesses operate in very competitive environments and being

able to respond to market changes – whether taking advantage of new
opportunities or fighting off increased competition – is vital in achieving
profitable growth or perhaps even surviving. Yet how often do you find
yourself spending your time handling day-to-day tasks and fire-fighting
the myriad issues that constantly arise in an SME organisation? There just
never seems to be any time to work on the stuff that will really grow the
business (like building culture, or commercial strategies, like refocusing
the positioning or looking at new product or packaging opportunities) or
to plan and communicate where the business is going (vision).
It’s a classic situation. More often than not, in a company that has grown
from the top down, owners structure their businesses without a real plan
in mind. As the business expands, they simply hire staff. And the people
they usually hire are for the department that screams the loudest. Busi-
nesses don’t grow in an orderly, methodical way. Growth turns up in lumpy
chunks and the key to your success is how you manage those chunks.
If you’re serious about growing your business beyond what you can per-
sonally and directly manage – or you want a less stressful life – resourcing
your business should be a strategic function and not one that is dictated
from the bottom up.
The starting point is to identify the best functional structure for your busi-
ness, one that will enable you to step back from a fully operational role,
maximise the talents of your employees, and operate at maximum profit-
ability.
This means assessing which job functions and activities are really needed
and then allocating roles to the people who are most appropriately skilled
or experienced for that job. And you may well find that the most appropri-
ate person is located in another part of the business, or you might have to
bring in some training to develop a skill the business needs.
For us at Shirlaws, all activities within an organisation fall into one of three
groups and we colour code them for simplicity as red, blue or black acti-
vities. By using colour-coding you can easily plot where time is currently
spent across your business and then match that against what the busi-
ness actually needs.
Red activities are those that support the infrastructure and are non-
revenue generating, such as administration, finance, HR and IT.
Blue activities are all revenue generating functions and are customer-
related so include anything to do with making, selling, delivering, and
servicing whatever your customers buy from you – as well anyone involved
in marketing, for example.
Black activities include any functions related to business growth. These

include leadership functions such as the development and nurturing of
culture and setting of the vision, as well as other contextual areas that will
create long-term growth such as developing your market positioning, new
product and packaging strategies, key external professional and referral
relationships, and joint venture, licensing or merger activity.

In a sense most red and blue activity is fairly content-based (‘what’) and
black activity is more contextual (‘why’). Too often business owners and
directors are busy handling red and blue activities instead of strategic
black activities. Sorting out IT problems, organising for the offices to be
decorated, handling a stock problem or even doing sales calls because
you believe customers like to see the boss are not black or strategic func-
tions – so you should not be spending time on them.
For most of us it’s a salutary exercise to systematically (and honestly!)

colour-code a typical week in red, blue, and black. That simple exercise
tells most CEOs why they feel so stressed and why there is never enough
time to actually grow the business. Of course, there will always be the
need for you and your key team to do some red and probably more blue.
And the percentage of time spent on each will depend on where the busi-
ness is on Stages in its life-cycle. But the simple fact is most of us spend
too much time stuck in the content of red and blue and far too little in
black. And however great we are at it (after all we’ve been doing this since
we started the business) it really isn’t where CEOs and owners add the
most value.
The next stage is to look at the next tier down, and the one after that. What
are your people really doing? And then to create an organisational struc-
ture and clear workflows in red, blue and black that suit your business at
its current stage of development by assessing which job functions and
activities are really needed, allocating roles to the people who are most
appropriately skilled or experienced for that job and then empowering staff
to take the responsibilities attached to each role. It is vital to understand
that with each role comes responsibility and it will be necessary to rewrite
every job description so that everyone knows their area of activity – and
the responsibility they will have to solve problems that arise in that area.
The trick is to get each staff member to take real responsibility and for the
owners and directors to genuinely delegate and trust staff to fulfil their
responsibilities. Allied to a strong culture and a clear vision, this process
creates enormous pride and exceptional performance among staff. This
in turn creates a hugely productive business where every job is only done
once instead of the traditional inefficient system of reporting lines and
double-checking every task.
Putting in place an efficient functionality structure can take some time

and is challenging to achieve without outside help. There will be false
starts along the way, but it can have considerable benefits for a business.
As a guide we find an average increase in productivity of up to 30% in
businesses which we support to implement a functionality strategy. It is a
vital step in getting your business to work for you. But just as importantly,
getting this right will help in developing a culture where employees feel
fully valued and fulfilled. And that would be something to feel proud of
achieving.
CASE STUDY: Roselle Events
Roselle Events (www.roselleevents.co.uk), based in Edinburgh, plans,

produces and manages conference, incentive and recognition events
within the corporate sector. The company was set up eight years ago
by Jo Daley and her business partner Val. For the first few years they
managed to grow organically. However, a couple of years ago the
business started to feel as though it was getting stuck. It was not
growing as quickly as it had done and Jo recalls feeling that she didn’t
have control of the business.
At the time, Roselle employed five people but for a small team they
were still surprisingly disorganised. Roselle decided to address this
with a strategic organisational project based on the principles of red,
blue, and black to create consistent processes and efficiency to the
business. That project took six months to complete but had a huge
impact on the culture of the business.
“People began taking responsibility,” says Jo. “It’s amazing because

now I couldn’t imagine the business without the functional process
and structure it has now. Every process is documented too, we have
policies and procedures, structure charts and everyone knows what
area of the business and which process they are responsible for. So
it’s a bit like having a log book for a car with all its service history. Our
processes are documented so that it actually becomes an asset in our
business which increases the value of it. In the first 12–18 months we
grew by £1m – a 60–70% growth rate. And in the current year we’re
going to turn over £3 million.”
TOP TIPS
• If you’re serious about growing your business,

structuring and resourcing must be a strategic function
and not one that is dictated from the bottom up.
• If you want real productivity you can’t give people
responsibility – they have to take it.
What to do now
• Review your diary for this month. Systematically colour-

code each meeting, appointment or task in red, blue,
and black. What percentage of your time do you spend
in each colour?
• Begin a functionality project – create an organisational
structure and workflow in red, blue and black that
spreads responsibility better and creates more time for
you to lead.
84
CHAPTER 15:
CAPACITY PLANNING – THE SECRET TO

CONTROLLED PROFITABLE GROWTH
“A very good question to ask as you

develop your business goal setting
strategy . . . do you have the capacity
and capability to realise the future?”
Peter Drucker
“It is usually easy to gauge which

businesses have a capacity issue. They
are the ones that feel busy, but are
not profitable. Ones where staff seem
to be working flat out and yet there’s
no time to take on more work or plan
where the business is going.”
Darren Shirlaw
Capacity planning – the secret of controlled profitable growth 85
When I talk to clients they can all tell me their turnover, profit margin and
cash flow. But few business owners can tell me the maximum capacity
within the business and their current running rate (what percentage of that
capacity is being used efficiently).
A business that is making efficient use of all its resources (people, equip-
ment, machinery etc.) is running at around 80% capacity – there will
always be holidays, sickness, plant malfunctions and so on, that will pre-
vent 100% use of resources. But most businesses we see are operating
well below their maximum capacity and consequently are missing signifi-
cant potential profit.
It is easy to spot businesses with a capacity issue. They are the ones
where everyone feels like they are on a hamster wheel with no way out;
they feel busy, but are not profitable and there’s no time to take on more
work or plan for the future. I am painting an extreme case but does this
sound at all familiar?
So how do you measure capacity? If you run an organisation that sells

time-based services then you can obviously look at the potential hours
available and actual hours sold and see what additional capacity exists
within the business. For other types of companies, choose a measure
that is appropriate to your business – and you may need a different metric

for different functions in the business. It’s then vital to look at what con-
straints there are in the business. For example, you may have a machine
that is producing 100 units a day, but you are only able to distribute 50
units a day because of the functional efficiency of this part of the business
– a bottleneck that constrains your ability to maximise efficiency.
By understanding capacity issues you can gain more clarity around

business planning and growth strategies. Let’s stay with the time-based
business. A consultancy that is only working at 50% efficiency (but is
unaware of the fact) and wants to grow will probably take on more staff.
The owner will probably be pushed to recruit by division heads who are
apparently unable to take on any new business. Yet increasing the num-
ber of people you employ who are not working efficiently (or to their full
capacity) only decreases the company’s profitability and is not growing
the business, but merely expanding it.
Profitable growth occurs when an organisation plans its future in a series

of ‘platform’ and ‘growth’ strategies.
In a platform phase, the company increases its efficiency and profit-

ability. This is initially achieved by implementing the efficient functional-
ity we covered in the previous chapter. Inefficiencies occur when roles
overlap and, for example, operational people are spending too much time
on administrative tasks. In our consultancy example, it is inefficient for a
consultant who is charged out at £1,000 a day to spend 50% of their time
on non-specialist admin jobs. Platform initiatives may also include train-
ing of staff or improving processes and systems – anything which raises
efficiency levels but does not actually grow the capacity of the business.
When the implementation of these platforms has increased the running

rate (over time) from 50% to around 75% then the business needs to
change from a platform to a growth strategy. This could involve investing
in resources such as additional staff or new premises, or could be about
looking at market position, products or pricing strategies, or changing
client criteria to concentrate only on larger, more profitable clients and
stopping working with smaller clients. We looked at these strategies in the
previous section.
Capacity planning – the secret of controlled profitable growth 87
If the distinction between ‘platform’ and ‘growth’ is confusing imagine a

cup half empty (50% capacity). When it is almost full (having followed a
platform strategy), the contents need to be tipped into a bigger cup – and
that is a growth strategy – at which point the contents revert to taking up
perhaps 50% of the larger available volume. When you have consolidated
that growth (platform strategy again) you will change to another growth
strategy. And so on.
You and your board can use this concept to plan the journey (vision) you
would like to take to your commercial goal. For example, you can imagine
that a strategy of building your running rate (platform) to 80% before
making modest investments to grow your capacity (growth) such that run-
ning rate drops to 65% would feel very different to, say, a 40%/60%/40%
strategy.
You can also plan ahead exactly what platform and growth strategies you
will adopt and when these will be phased in, how much each will cost, and
exactly what impact that will have on your running rate and therefore your
profitability. That is a far more useful document than most business plans,
will allow you to feel absolutely in control – and make a fairly compelling
case to your bank.
Understanding this capacity model enables you to plan and develop a

profitable growth strategy for your business – and gets you off that ham-
ster wheel.
TOP TIPS
• Know the capacity of your business and current running

rate – these enable you to plan and develop a profitable
growth strategy for your business.
• Understand where the bottlenecks that choke the
profitability of your business are – and release them.
• Understand the difference between platform strategies
and growth strategies and use these to maximise
profitability today and plan your growth tomorrow.
What to do now
• Develop a capacity plan. Use this as a daily management

tool and a key monthly measurement of performance.
• Visit our video coaching programme and complete the
capacity course at www.navitasip.com/video-coaching
89
BUILDING
EQUITY VALUE
AND EXITING
YOUR BUSINESS
90
“When it comes to unlocking the market

value of a privately held company,
it is not limited to the bottom line.
Profitability is hugely important, but
the factors of customer diversity,
management depth, proprietary systems
or products and technology, channels
to market and contractually recurring
revenue and brand and position can
result in truly significant premiums over
traditional valuation approaches.”
David Kaupi
91
Chapter 16:
WHAT REALLY DRIVES EQUITY VALUE

For most of us, our greatest asset – and the source of our future wealth
and freedom – is our business. What determines the valuation of that
asset can be simplified as a formula: V = P x M. In other words, the value
(V) of our business is a function of the profit we generate (P) times a mul-
tiple (M). So far, so obvious.
So, who controls our profit? Well, obviously, we do – and most business
owners spend huge amounts of energy on increasing this number (see
previous chapters!).
But who controls the multiple? This is not quite so obvious. However, my
view is that we do too – or, at least, we do if we really understand what
drives that multiple. But far too few business owners focus energy on this
element of the equation – which is a pity, because that is where the real
power is, particularly in a recovery phase. I’ve also found that this is where
most of the fun in running a business can be found.
To explain this I’ll use a framework that we call the Seven Layers of Valu-
ation. Each layer contains the critical assets that build business valuation.
And each layer you put in place raises the worth of your business by a
particular increase in the multiple. For the sake of simplicity in this expla-
nation, I have taken these out, but if you would like to talk the numbers
through for your own business please do drop me a line. You’ll find my
address at the end of the book.
It’s important to note that each layer is cumulative. That is, you can include
elements of each layer in your business, but you cannot achieve the total
impact until you have fully implemented all the layers below.
The first layer is simply the industry benchmark. Meeting this merely
implies your business has all the characteristics expected of a typical
business in your industry. To achieve that layer you will be able to demon-
strate good control of your costs, stable and sustainable revenues, and
have no surprises on your balance sheet (assets and liabilities). Your man-
agement team will also be up to scratch.
If you have weaknesses in any of these areas the multiple your business
can command will fall below the benchmark and your business will be
devalued – perhaps significantly – by any external valuer. It really is critical
for the future value of your business wealth that you sort these areas out
as quickly as possible. If you have concerns about what ‘good enough’
looks like to meet the industry benchmark and would like some advice,
once again, please get in touch.
Assuming you have achieved a benchmark business, how do you strate-

gically build your asset value? How do you increase your multiple?
What really drives equity value 93
Your asset journey starts with ‘why’

Your first area of focus should be on your team – on the talents, capabili-
ties and above all the culture of your business. Assets can be commercial
and cultural. This layer is all about culture and is the bedrock that supports
everything above it. A fully implemented talent and culture strategy will
create a business already worth more than a typical benchmark business
– a ‘V + 2’ business. That is because with talented people, committed to
your vision (the ‘why’) and enthusiastic to perform, you can innovate and
extend your assets. Without it you will struggle to build real value and you
are likely to be stuck in a business dependent on you to operate it, when
you could be innovating and growing it.
This is not about making a ‘cool culture’ just to create a fun place to work
(although that helps!). It is about creating the fundamental platform for all
of your future asset growth. It is about creating a culture of performance,
innovation and excellence. To quote Simon Sinek again, as I did in chapter
4, “When people believe in what you believe in, they work with their blood,
sweat and tears. When they don’t believe in what you believe in, they work
for your money.”
Steve Jobs used to say “Innovation has nothing to do with how many R&D
dollars you have. It’s not about money. It’s about the people you have,
how they’re led, and how much you get it.” In other words, culture.
It might be worth skimming back over the opening section of this book
now but with an ‘asset’ head on. I would also recommend a read of Dan
Pink’s great book ‘Drive’ if this subject interests you.
Innovation starts at home

With a talented team that is functionally efficient and independent of you,
you and your senior team are freed up to innovate. It’s time to take a long
look at your business and decide where innovation will create the greatest
value.
Many businesses have created great systems on the basis that they will
reduce costs and help them go to market. But look at it in a different way
and you suddenly realise you have an asset on your hands. Your system
has added real equity value to your business because it creates scalable
future profit streams (for you or someone else). You may recall Kiddicare
commanding a significant premium when it was bought by Morrisons.

They weren’t buying the Kiddicare product, but their system of online
retail. Another example of a business that creates a religion out of systems
innovation is Amazon (just look at their recent advertising). On your next
strategic retreat take a look at your own systems – but in an asset and not
profit context.
Another clear area of innovation is in your product. Take a look at chapter

8 again, but think of your product in an asset context. If you can genuinely
innovate then you have a ‘V + 3’ business. As the economy begins to grow
and new markets develop, the ability to innovate can begin to create real
value – hence the higher multiples achieved.
The saga of extension

The next layers take us into the territory of truly valuable businesses. These
are enterprises that fundamentally understand their core DNA, the rocket-
fuel of the business – what we call their ‘intellectual property’ (chapter
9). And they know how to use it to build radically new product extension
opportunities (‘V + 4’), and new channels (‘V + 5’).
Many companies attempt to extend their products but are disappointed

by the revenues and margins that result. Very often this is because the
company has attempted an extension that appears logical but that is not
sourced in the real assets of the business.
You may remember my story in chapter 9 about the asbestos removal

business. Their product was asbestos removal and their attempts to
extend from this had been disastrous. Yet when they understood their true
assets (their IP), they were able to extend, highly profitably, into entirely
new product areas.
The question to ask is, “Would I increase equity quickly through a logical
‘next step’ extension, or is it faster to understand our fundamental assets
and extend in this direction instead?”
We recently worked with a medical supplies company with £12.8m of rev-

enue and £2m of profit. The management team wanted to reach £24m of
revenue to double its profit, so we asked them to consider two alterna-
tives:
1. Instead of a medical supplies company, think about yourselves as a

supplies company with one business in the medical space. What other
business lines could you develop, which relate to being really good at
supplies?
2. Now imagine you are running a medical company. All your assets –
knowledge and contacts – relate to the medical industry, rather than
being good at supplies. If you are now a medical company, with one
business in medical supplies, what else could you do?
Focusing on the business assets stimulates new ideas for really profit-
able extension. Once the management team recognised themselves as a
medical business, rather than a supplies business, they began to create
innovative possibilities – medical recruitment, for example.
In another example, we asked a foreign exchange business about its

assets. At first they were unclear, so we asked the owner, “What are you
really good at?” He replied, “I know a lot about tax and international busi-
ness structures. It’s what I use to win foreign exchange business.” So,
instead of foreign exchange, we suggested he thought about the business
as an international company where one arm offered foreign exchange.
What else could it now offer by way of services? He realised the extended
business could offer tax and international structuring. “The next thing
would be trade advice,” he said. “We have so many cross-border clients it
would be easy to refer people and set up trade.” Within an hour, as a result
of a shift from ‘FX’ (product) to ‘international’ (asset) he had considered
six new viable business lines. While they were not all possible in the short
term, these ideas helped him create a new three-year business plan.
My favourite example of asset-based product extension is the Saga story

and how that company made a transformational leap. Saga understood
that although their product was travel (at the time), their asset was a unique
understanding of a marketplace. That insight allowed them to extend into
media, financial services and more, building a £4bn valuation business.
Had they logically extended into additional travel products (18–30s?), I
wonder where the business would be now.
And the same logic applies to channel extension. Based on a clear under-
standing of your assets, what channels are open to you? And are these
extensions ‘distribution’ (partnerships, JVs, online) or ‘territory’ (Europe,
US, etc.)? A clear understanding of your assets will indicate which stra-
tegy is right and the real value your assets offer in the chosen channel.
The big league

This takes us neatly to the top of the valuation tree and to companies
that can build and exploit powerful brands (‘V + 6’). These are the really
valuable businesses of the future and the ones that command the highest
multiples. If they wish, they can achieve truly significant scale (‘V + 7’).
Reading this, you will have realised that this all about choice. It’s a choice
whether to look at your business purely from a profit (P) perspective, or to
look at the people, systems and products in your business as assets (M).
Your choice could fundamentally change how you see your business and
how you run your business.
My belief is that, even if you never sell it or even re-capitalise it, running
your business as if you might do so – with a focus on asset and not just
profit – is fundamental to creating the kind of business that will give you
the wealth, freedom (independence from driving the P) and fulfilment you
set out to achieve in the first place.
And there is one further choice. Using the seven layers you can decide the
kind of business you want to own and run. The idea of developing multiple
channels, brands and international scale may excite you. Or it may not.
The choice is yours. It’s your vision.
CASE STUDY: Travel and conference company
One example of how this works is the sale of a travel and confer-
ence company. Two partners were running the company, but wanted
to retire. The business was generating $11m gross revenues with a
margin of 3%. With $330k a year in profit they had received an offer of
$750k. Their accountant thought they should get at least $900k and
were being short-changed by $150k. He asked us to take a look, so
one of our partners reviewed the business from the perspective of the
Seven Layers of Valuation.
What this revealed was that the company had some extraordinary
hidden assets. Among the products they had was the organisation
of conferences for large corporates. In this market they’d created a
unique product, had developed distribution relationships, and a strong
position. This amounted to some powerful and valuable Company IP
– in organising three- to five-day conferences for the top 10 to 600
executives in each company they had more information on the top
100 companies’ executive teams than anyone else in that market. All
that was needed was to develop this IP.
Fifteen months later the business sold for $11m. The difference
between the final $11m and original $750k offer is their company IP.
The original offer was simply a “Trading Valuation” whereas the sale
price was an “Asset Based” valuation.
TOP TIPS
• Run your business as if you mean to sell it. It will create

the right disciplines (and make the business independent
of you).
• If you really do intend to sell it, start planning five years
out.
• Focus on the assets in your business and not just the
revenue side of the equation.
WHAT TO DO NOW
• Take your senior team on a strategic retreat and start

to look seriously at your business as a structured set of
assets. Work out where you are in the seven layers and
act to build your assets.
• Focus on each layer in turn. It may take several months
to implement any one layer fully. What is your culture
like? Amazing is good enough.
• Work out what your real IP – your source asset – is.
Work out how to innovate and then extend from that. If
you need external help to do that, invest in it. It will be
the best investment you ever make.
• Work out your own valuation vision. Is it V+3, V+5 or all
the way to V+7?
99
CHAPTER 17:
LEAVING YOUR BUSINESS IN GOOD HANDS
“Many business owners say to me

‘I’m going to exit in five years’ and yet
when we ask them a year later, they
say the same thing. It’s a permanently
moving target – an aspiration not a
strategy.”
Darren Shirlaw
“The great leader speaks little. He

never speaks carelessly. He works
without self-interest. And he leaves no
trace. When all is finished, the people
say, ‘We did it ourselves’.”
Lao-tzu from the ‘Tao Te Ching’
As I said at the beginning of the book, a very common theme we hear from
business owners is “I want to exit”. But this requires a great deal of plan-
ning. As we discussed in the previous chapter you should consider your
own exit strategy up to five years before the date you feel you may wish
to step out of the business – or at least out of the level of involvement you
currently have. This is a neglected but important issue as it should affect
how you structure the business going forward.
So, if you haven’t given it much thought then you should take some time
to understand what you want to get out of the business, and when – and
how you can make five years a realistic time frame for an exit strategy
– whatever that means to you. You need to organise and structure the
business so that you are leading it not running it – in other words, it is
operationally independent of you. And you need to put in place the key
strategic building blocks that a buyer will value when looking at acquiring
your business. These two key ideas are mutually linked in that a business
that runs brilliantly and grows profitability without being dependent on the
founder is both a joy to own and a highly valuable proposition.
There are four elements to a succession plan. We have covered three of

these already:
1. Building value (chapter 16). Increasing the traditional multiples by

which your business is valued.
2. Timing (chapter 5). Your business will pass through a number of pre-
dicted stages dictated by your energy levels. There will be the good
times and times of frustration when the business doesn’t seem to grow
any further no matter how hard you work. This is when you need to
invest in the business to reassess its structure and ensure maximum
use of the resource capacity within the company.
3. Independence (chapters 4 and 14). Everyone in the organisation
should be aware of their function and areas of responsibility within the
business. You need to plan to remove yourself from daily admin tasks
and concentrate on strategic issues that will drive the business forward
profitably. And in planning your exit you need to be working towards a
position where your leaving will not affect the company’s development
plans or operation.
4. Priorities. Understanding what is important to you in your exiting. It is
this fourth area that I will cover now. As I briefly covered in the previous
chapter, in assessing your priorities there are three main options avail-
able to you: income, equity or control – or a combination of these. You
may want to leave the business as the CEO but still have it provide you
with an income or your intention could be to sell it on to your own staff
or an outside interest and walk away. Alternatively you may want to
sell your equity but retain control. Each is a valid option but all require
careful planning.
Leaving your business in good hands 101
A good way to start this exercise is to list the order of your requirements.
It may look like this:
1. Equity
2. Control
3. Income
Or it could be:
1. Income
2. Equity
3. Control
Or any other combination that meets your needs. But by setting out your
priorities you can begin to consider who may be able to succeed you or
who will be interested in taking some or all of your equity.
If you anticipate your successor is going to come from within your

business then you need to consider what their priority list will look like –
probably dictated by their current life stage. For example if someone has
a young family with ten years of school fees ahead of them, then income
is likely to be top of their priority list and financing the purchase of equity
a lower priority.
So having decided on your priority list and having identified third par-
ties outside or inside your business you think will be interested in your
proposition, you will open negotiations. If both parties can be open about
comparing their needs then you have the basis for recognising if a deal
is potentially possible or if you both have priority lists that are incompati-
ble. If this is the case, then you can walk away before too much time and
too many costs have been wasted. If you have set up the business from
scratch then it is easy to become very emotionally involved in discussing
its future. Formally setting out priorities makes negotiations less personal
and easier to discuss.
I mentioned the importance of thinking five years ahead. It may seem a

long period, but if for example, you are in a situation where you have a
management team that is interested in negotiating a management buy
out (MBO), then by setting this sort of time frame, you may be able to put
in place improved performance criteria whereby the MBO team can pur-
chase equity through profit shares. Or if key performance indicators and
performance milestones can be set out for a number of years, then third
party finance organisations can be approached to discuss funding, based
on successfully hitting these targets.
Whatever route is right for you, time and planning is necessary if you are
to achieve the outcome you want, at a price you want. Don’t let a lack of
strategic planning now hinder your future retirement or ability to move on
when you want to, with maximum benefits.
TOP TIPS
• Take some time to understand what you want to get out

of the business, and when.
• There are four elements to a succession plan: building
value, timing, establishing independence in your
business and understanding your priorities.
• Use a ranking of income, equity and control to
understand the relative priorities of a potential
succession candidate or acquirer.
What to do now
• Write down your ranking of income, equity and control.

• Have your partners do the same – compare and discuss.
This can also be connected with risk (see chapter 6).
103
MANAGING
YOUR OWN
ENERGY
“Awareness is the greatest agent for
change.”
Hazrat Inayat Khan
“Be the change you want to see in the

world.”
Mohandas K. Gandhi
104 SECTION 6:
I started out this book by suggesting that your role as CEO is to set the
context for the business, to manage the energy of the business, and to
coach not play. This requires a huge amount of energy and self belief; it
requires you to find a way to manage your own energy and to find the time
to set your own context and understand your own intent, to create and
hold on to your own vision.
As CEO, understanding energy and responsibility is the key to being an

effective leader. If your job is developing and nurturing the business, who
is nurturing you?
The best place to start is by understanding yourself and your own energy
using many of the same techniques I covered in respect of your busi-
ness: really understanding your values, taking time to explore your vision,
understanding where you are on the stages of your life journey, under-
standing the way you operate and the way you communicate.
The real secret to empowering who you are and managing your own
energy is to discover your intent – the fundamental purpose that drives
you. What you will realise is that living your intent nourishes you and con-
stantly replenishes your energy.
Once you find a way to live that keeps you fit and healthy, then keeping
track of your intent and deliberately including it in your life has a higher
level effect – you could say it sets the context for your wellbeing.
Put another way, if you want to effect any change (proactive or reactive)
there is one simple place to start; it is with the old, old adage ‘know thy-
self’.
To really know yourself and understand your energy based on your intent
you need to take the time to achieve an awareness of yourself. Awareness
is the greatest agent for change and the single most effective tool you will
ever need in your life. With it you have the ability to understand all that is
going on in and around you; it gives you context. It enables you to take a
step back and ask yourself questions. Do I want to react or respond to the
situation? What else do I need to know? It gives you time to decide (even
in a split second) whether your decision is one which will support you and
those around you.
Managing your own energy 105
With awareness all of this is possible and easy to achieve but it needs
proactive commitment for change, an understanding that this will take
time. How you manage the change will be how you manage yourself and
those around you.
As a CEO of a busy and fast-growing business I have found the support

of a coach the single most useful tool in my arsenal. I find the clarity and
perspective offered by coaching invaluable – both commercially in better
understanding my business and personally in gaining greater awareness
of myself. If you are really to create the business you want, one that will
give you the wealth, leisure and sense of fulfilment you need, I whole-
heartedly believe you must start with yourself and be prepared and willing
to look at the effect you, your past and future expectations will have on
yourself and your business.
TOP TIPS
• Awareness is the greatest agent for change.

• Be the change you want to see inside your business.
• Find someone to support and nurture your development.
106
A Personal
Note from the
Author
I wrote this book on a boat, enjoying a summer holiday with my family.
But I was compelled to write this book because of my own experience as
a business owner wanting more money, more time, and less stress – an
experience that led me to bring Shirlaws into my own business, and then
to join Shirlaws as a coach and now as CEO of the UK business.
Where to start
The good news is that you’ve already started! This book is thorough (it
may even feel overwhelming), so I would encourage you to get messy with
it, write notes on it, and mark those sections which are most applicable
to you right now and work on them today. Make a diary note to review the
book again in three months – other chapters may be more applicable in
the future.
In the absence of this book, I first started to change my business by read-

ing some online articles and joining mailing lists for more material. If you
haven’t already, you can do this at www.shirlawscoaching.co.uk (and
you’ll receive an electronic copy of this book to share as well).
The next step is to attend some business events. This is an easy way to
ask more questions about how the information in this book can be applied
in your business and your life. All of our events are shared on our website.
Some are free and all offer massive value – www.shirlawscoaching.co.uk/
events/
About Shirlaws and the author 107
For me, the event that inspired me to bring Shirlaws into my business was
seeing Darren Shirlaw speak at a conference. Darren speaks at a number
of global events, including annual Shirlaws conferences around the world.
If you have the opportunity to hear him talk, seize it – he is the most amaz-
ing business speaker I have had the privilege to experience.
We have also built an impressive team of business people to deliver the

message of more money, more time, less stress, through events and
coaching in 37 countries (and counting). Having Shirlaws supporting my
business literally changed my life, exceeding all my expectations of out-
come and allowing me to step away from my business far sooner than I
had anticipated.
That I am not unusual and so many of our coaches are former Shirlaws’
clients is testament to the commercial and cultural success our coaches
deliver and our clients achieve – like me, not only are they able to transi-
tion away from their business, but when given an abundance of choices
for their next business step they choose to join our organisation and help
change people’s lives.
What for me began as an article and an event ultimately changed my busi-

ness for the better and my life in ways I had not foreseen. There is power
in this book, and I trust you have enjoyed it.
“The best business advice I ever

received? Get a business coach.”
Eric Schmidt, CEO, Google
www.youtube.com/watch?v=yVfeezxmYcA
108 SECTION 7:
What to do
now
• Join the Shirlaws mailing list – www.shirlawscoaching.co.uk
• Attend a Shirlaws event – www.shirlawscoaching.co.uk/events/
• Attend a Shirlaws conference – www.shirlawscoaching.co.uk/events/
• Meet with a Shirlaws coach to discuss how, specifically for your com-
pany, they can help you create more money, more time, and less stress
– see www.shirlawscoaching.co.uk/locations/
ABOUT
SHIRLAWS
“We became a coaching client in
November. Our revenues are up 31%
in January, 24% in February. I wish
we’d become a client three years ago.
What a business we’d now have!”
Rajan Amin, CEO Coversure
“The most transformational part of

working with Shirlaws is the hands-
on skill transfer into our business that
generates additional profit.”
Iain McMath, CEO Sodexo Pass UK
110 SECTION 7:
“Where I think a business coach adds

value is providing a space for business
owners to step away from the business
for a period of time, and focus on
high-level issues. In addition to
providing the space to do this, a coach
also makes sure it happens despite
whatever crisis happens to have arisen
that day.”
Wayne Davies
I hope this book has been useful in sharing some of the skills and tech-
niques we have found to work in transforming owner-managed business.
But this is just the start of what we strive to do for our clients. We work
closely with business owners and management teams to turn these con-
cepts into fully developed strategies tailored to the individual business.
We transfer into the business the skills and methodologies needed to turn
that strategy into an implemented reality. We support the client in using
this knowledge to create the systems and the behaviours that will result
in a business that is easy to run and a joy to own. As someone wrote to
me recently “you make multi-millionaires but what people thank you for is
giving them back their lives”.
We call this business coaching. It’s about unblocking barriers to growth to

ensure your business pays you richly in time and money.
Founded in 1999 Shirlaws has now grown to include operations in North

America, UK, Europe, Middle East, Australia and New Zealand. Our
coaches take the many complex issues involved in running a business
and help make them simple and easier to manage.
We work alongside clients to guide their businesses to achieve long-term,

profitable and sustainable business growth.
What Shirlaws brings is a language and system for growing businesses

and building internal capability. A language and system that gives our cli-
ents three simple things: more time, more money, and less stress.
If you’d like to know more about us please take a look at www.

shirlawscoaching.co.uk and www.shirlawscoaching.com
In the UK, you can contact Shirlaws directly on infouk@shirlawscoaching.

com. As promised in the introduction, you are welcome to contact me
directly on jrosling@shirlawscoaching.com
If you liked what you have read in this book do please get in touch. We are
always happy to have a coffee and a chat with any business owner at no
charge. We love business!
112 SECTION 7:
ABOUT THE
AUTHOR
John Rosling
John Rosling is UK CEO of Shirlaws, the international business coaching
organisation. John divides his time between that role and working with
a small number of clients in the UK and across Europe helping their
businesses to grow, and developing the skills and performance of their
management teams.
John started his career with Unilever in the UK and Japan before moving
to Diageo as International Marketing Controller with development respon-
sibility for 113 markets.
Since leaving the corporate world he has established or acquired a

number of small businesses in carbon responsibility, CRM, finance/asset
management, e-commerce and business outsourcing. He retains an inter-
est in a small number of these businesses.
John is married with three children and lives in Hampshire.

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2

“Your motivation is never money, money

Both as a business owner who has implemented Shirlaws’ principles in

Updated Version 2013

SECTION 2: UNDERSTANDING YOUR BUSINESS 27

SECTION 3: CREATING REVENUE TODAY 43

SECTION 4: GETTING YOUR BUSINESS TO WORK FOR YOU 77

SECTION 5: BUILDING EQUITY VALUE AND EXITING YOUR 89

SECTION 6: MANAGING YOUR OWN ENERGY 103

SECTION 7: ABOUT SHIRLAWS AND THE AUTHOR 106

“There is more to life than increasing its

Shirlaws works with hundreds of mid-sized, owner-managed businesses

The entrepreneurs we spoke to mostly ran successful businesses. Yet

So we set out to create a series of unique business frameworks, tech-

My intention in this short book is therefore to examine each of these

“The main thing is keeping the main

“The best leaders figure out how to

As CEOs of small and medium sized businesses, most of us have had

Imagine a conversation between three directors of a business. Let’s

It is a simple analogy, but how many of us have had the experience of

Context is the wood, content the trees.

• Learn the trick of the greatest entrepreneurs: manage in

UNDERSTANDING THE POWER OF ‘WHY’

“Knowing the why can inform your

Protected by Copyright © 2011 Shirlaws

When I took over as CEO of Shirlaws I was fortunate in that I inherited

All businesses understand ‘how’ they do what they do (their manufacture,

It’s a pity because the ‘why’ is where the power is.

Simon Sinek explains this brilliantly using Apple as an example. Apple

CASE STUDY: APS

When Brian Armstrong and I started APS (www.aps-advance.com) in

Commercially our strategy is also simple – what we do is implement

How we do that is through the provision of software, its implemen-

Brian Coventry, CEO, APS.

• Find the fundamental ‘why’ in your business – and

• Remind yourself why you started this business. Was it

UNDERSTANDING YOUR ROLE AS LEADER

“While Management is operationally

• Set the context

CASE STUDY: YRM

YRM (www.yrm.co.uk) is an architectural company with offices in

“We realized we needed to operate as a proper company board, with

“Peter helped me understand, implement and ultimately enjoy my CEO

• Set the context. Manage the energy. Coach, don’t play.

• Review the emails you’ve received this week, or the

LEADERSHIP IN ACTION – CREATING THE WHY

“How do you get people to come

“When people believe in what you

We have established that having a strong ‘why’ is fundamental to creat-

to post on a website simply to demonstrate that you are a business with

The secret of unlocking this potential lies in three simple steps:

Leadership needs constant work. Culture needs your constant attention.

An absolute cardinal rule of leadership in an ambitious company thatreally

CASE STUDY: UnLtd

UnLtd, The Foundation for Social Entrepreneurs (www.unltd.org.uk)

The members were aware they were not communicating as effectively

UnLtd Ventures asked the Shirlaws Foundation for help. Together we

“We knew it was important to get these clear as a team so we could

These values were then built upon to create a compelling ‘intent’

• A strong culture will drive your success by recruiting the

• Successful leadership teams get away on a Strategic

UNDERSTANDING YOUR BUSINESS CYCLE

“We reach quite inexperienced the

In Section 1 I have set out some broad principles of managing in context,