Resilience sector insights - Privately owned business

We help our clients in three different areas:

1 - help clients grow and develop their business

2 - help them optimise profit and efficiency

3 - do a mix of the above, but in preparedness for their exit

The first point is around analysing their business to identify the sectors and services with the most growth potential - and helping our clients to understand where the best profit opportunity is for the future.

To help optimise profit and efficiency we conduct a full review of the business operations, including finance, sales marketing, and operations, looking for inefficiencies and areas for improvement.

Finally, when helping our clients to prepare for exit we work hand in hand with our mergers and acquisitions team, as well as our personal financial planning team, to work with a client to set their brief – how much do they want to sell for, and by when? 

We can then link in with any of the other teams in Management Consulting, or more widely in the firm, to get the business owner in the best possible position for exit.

Although there are wider challenges for businesses around the economy, there are still some great opportunities for privately owned businesses and entrepreneurs. The UK is built on the back of SMEs, and there are still huge opportunities in this space, but it is challenging - particularly around the tax environment, regulatory requirements and extra competition created by globalisation.

The businesses we are working with are generally those with a revenue of £50m to £200m. Usually, businesses in this space are operating with a streamlined senior team, and there is little resilience built into their plans. This can mean they don't necessarily have the depth in their teams to have effective succession planning or the resilience you would find in a bigger organisation. They may not have the depth of experience that if a key person, such as the sales director, or even the managing director left, there would be someone upskilled and ready to step in their shoes and pick up that role.  

They can sometimes be too reliant on a small number of suppliers and clients in their business model - similarly, if one of those disappears it would damage the business.

With cybersecurity, our clients are generally less mature, so it's less understood as a risk and the potential impact on a business. Because of the nature of POBs, businesses are not as diligent in making sure people are trained and up-skilled, and they may not have the measures and controls in place for risks in the same way as corporations can afford to. So, it's about looking at the whole context of professionalising a business and ensuring governance and stop checks are in place.

Entrepreneurial businesses often rely on one or two really big ideas to develop business and build their organisation. So, they are very susceptible to business models changing, and at risk of no longer being relevant. For example, they may be a key part of a supply chain, but technology may remove their relevancy.

A longer-term consideration is to get entrepreneurs and business owners to think along these lines, as they tend to be tactical rather than more strategic. Our and their longer-term issue is how do we get them to think longer-term - they run really successful businesses, but that's a day-to-day challenge.

When you ask most business owners where they want to be in 5 years, exit will be a part of that discussion. So, businesses need to start considering Risk and Resilience now - to make the business more viable for that exit strategy. If your plan as a business owner is to grow and scale your business then it will be on your agenda, but it should be on the radar if exit is your plan too. And, if you don't get to 5 years because these things aren't being considered, it’s an even bigger challenge.

The biggest thing we can do for clients in the POB/SME sector is to provide the capacity and capability that enables them to upskill, scale and professionalise in key areas – on things they don't need full time support with, where a corporate organisation may have an individual or even team dedicated full time to these things – for instance HR or resilience. We want to be able to link in with privately owned businesses and provide support as and when they need it - to be a subject matter expert on top of their business as usual.

This is a wider trend with POB, where there is a lack of support in areas such as employment law, health & safety - it can be particularly difficult for our clients to enter new markets. These are areas we can support businesses with.

Increasingly, in sectors like the grocery supply chain there are strict requirements and supply chain visibility is a huge prerequisite - particularly for ESG and CSR requirements. A POB client may have no formal governance process for things ESG or like risk management, but as you grow as a business, this may be a requirement for your clients, supply chain or even a regulator. Again, we can help businesses position themselves for growth by having these things in place.

National Resilience Contact – Dan Breger, Associate Director, Management Consulting

National Privately Owned Business Contact – Guy Harris, Director, Management Consulting