Innovative, Experienced, Measurable

Starting a Business Overview

Part of the JC&C Bowers Group

Don’t become a useless conglomerate!

For many, the incorporation of a new business is driven primarily by the creation of a product or service innovation that the leader believes offers significant advancement over existing industry offerings.

Some ideas are just too good to hand over to someone else and alas; a new business is founded.

Aspirations of conquering the world in hand and a hive of activity pursuant, however, for most, operational structure and capital expenditure primarily focused on just getting the job done - An afterthought in most instances but failing to act strategically now, will eventually create rather big challenges for you and your business. Getting your latest innovation to market is obviously a key driver for you but if due care and attention are given to the operational structure of the business are managed at infancy then an opportunity exists to ensure longer term efficiency and mitigate the learned challenges that corporate businesses face today. (related article – the rise of Corporate Venture Capitalism)

Consider this; if you latest innovation is a huge success and you establish yourself in the marketplace, over time, your innovation with become mature, hold less profit and if structured towards a public listing; will eventually lead to the search of the next product innovation to appease shareholder demands. (related article – Company structure; your first strategy). It’s highly likely that you’ll find yourself strangled by EBITDA constraints, unless you’ve addressed them very early on in your incorporation.

Now is the time to undertake planning and action.

Starting a Business| Overview

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Don’t let EBITDA strangle your innovation

For those not familiar with the term – EBITDA is Earnings Before Interest, Tax, Depreciation and Amortisation. It is commonly used to gauge a company’s financial performance. It’s originated use for leveraging buyouts of existing businesses and as such; you can quickly see as to why it’s been widely adopted by shareholders as a measure for the buying and selling of share equity but that’s enough for now on that.

EBITDA is typically seen as one of the founding measures of business success but is it the underlying measure we should be focusing on as business owners and for ensuring long term success, and continual development of your business or is it a shareholder measurement castrating your business?

It’s an important topic that should be given consideration as you look to incorporate your business. The greater the strategy from the offset; the less challenges faced later on, as, the business progresses and looks to move from start-up to public or private corporation.

It is a given that some innovations will have a longer product lifecycle than others but, there will eventually come a day when your innovation is considered historical – the ‘cash-cow’ comes to an end in all scenarios unfortunately.

An example of an extended lifecycle innovation: – Mobile Telephony Service Providers have experienced a long and fruitful lifecycle but over time EBIT has diminished, operators having to bolster offerings with increased ‘data’ propositions or subscription benefits like Spotify in order to continue to attract customers and ensure revenues. During this time, they’ve collectively attempted to introduce significant numbers of additional products but have struggled to innovate to the level of other focused industry players or their propositions just uncompetitive and compelling – just stop and ask yourself what your mobile provider is renowned for outside of your mobile offering!

How many of you thought poor customer service or lousy adverts? Compelling right!

Why so? Surely with the extensive budgets and resources at their disposal they should have hit after hit? In a recent appointment we worked with such an organisation and found that of the 200 odd products they had within their portfolio, only 6 of those products generated over 80% of the company’s entire revenues.

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Starting a Business| Overview

Don’t let EBITDA strangle your innovation

Let’s explore this and identify what you can do differently to mitigate your business falling into this trap.So, your products made you and your shareholders millions, but, now that products long since established and you need to innovate and quickly. There’s unrest at the quarter after quarter of decreasing revenues & dividends and you know it’s not long before your head rolls if you don’t address quickly, despite you owning the business or so you thought.

You look at the management accounts, you note the ongoing operational cost, the budget for R&D and the resource already maxed out, that, you need to come up with your next big hit and you quickly identify that this new product’s cost base is already loaded with cost from the business and you need to maximise the existing Capital Expenditure of the business and alas; you’re in exactly the same boat as the scenario as those floundering Mobile Telecoms Service Providers.

This is a common operational stranglehold that EBITDA can have on your business and a fundamental reason behind the influx of Corporate Venture Capital funds being introduced to the market.So what can you do right now to ensure that your business addresses these challenges ahead of the issue and maximise your businesses potential long before these type scenarios become your never-ending nightmare?

A lot of the answers to this question are complex in nature and in order to give you the best possible understanding, we’ve broken this into a miniature series of addressable activities that you should consider.

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Starting a Business| Overview

So what can you do right now to ensure that your business addresses these challenges ahead of the issue and maximise your businesses potential long before these type scenarios become your never-ending nightmare?

A lot of the answers to this question are complex in nature and in order to give you the best possible understanding, we’ve broken this into a miniature series of addressable activities that you should consider.

Over the course of the next 10 weeks, we will be providing a synopsis on the following underlying activities that start-up businesses should undertake and address in order to best position against these future risks. Make sure you follow JCC Consultancy to avoid missing the series:

Experience Operating Ethically Our business has been built by inspiring people that have left large successful corporations to make an impact of our own, under a vision we control. We ensure that every company we work with can utilise our experience and knowledge to achieve their own goals, free of the inefficiency that growth can introduce when managed improperly.

We maintain the JC&C Bowers Group ethos of acting in a fair and trustworthy manner. We won't get involved unless we're 100% confident we can add value and complete activities to the highest standards. Therefore, if after initial assessment we conclude that

we aren’t quite the right fit for you, we will attempt to source a suitable partner for you, and you won’t be charged anything by us.

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Starting a Business| Overview

Mini-series Title

Business Structure Aiming for IPO of remain Private

Share StructureProtecting Equity whilst hiring talent

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Market BenchmarkingIdentifying your market value ✔

Economic PlanningCreating profit longevity ✔

Company wide Innovation Mitigating EBITDA challenges ✔

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Mini-series Title

Operational Structure Maximizing lifecycle investment

Account PlanningCapex Enigma ✔

Maximizing ReturnsRemoving cash drains ✔

Readying for the futureRaising Expansion capital ✔

Creating heritageCreating & Executing the vision ✔

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