Today, this is called mindset, which is defined as a fixed mental attitude or disposition that predetermines a person’s responses to and interpretations of situations. How people behave is a direct reflection of how they think. The key question for advisers is ‘How well are your clients thinking about their business and the outcomes they are actually delivering?’.
This is much more than working ‘on’ the business. It is taking a step back to understand what the effort really means for them. It is helping clients to make the connection between their mental attitude, their responses and therefore the results they achieve.
What gives mindset such power?
Mindset is a combination of different elements developed over time. These include a person’s:
- attitudes
- beliefs
- past experiences
- core relationships
- values
- skills
- knowledge gained.
When these elements combine, the impact is reflected in that person’s behaviour:
- what is said
- what is done
- what is not done, and, most importantly
- how people go about getting things done.
Often owners and advisers make decisions based on facts and information only. Figure 1 shows only one of the many mindset elements being used. Combining more elements increases the chances of a better outcome. The straight blue line shows how most people want to make decisions and behave when implementing the plan. In reality, most people follow the red line: they ignore their past experiences, avoid emotions and jump to a decision. It is time-consuming, exhausting and does not guarantee results at all.
Seeing the business in a new light
Selling a business to release wealth requires identifying its competitive position in the market and overcoming any impediments to the sale. Accountants and business brokers know what to do to sell a business. However, what must the owner do to help maximise their financial return?
When was the last time an accountant challenged – or even mentioned – mindset, beliefs and values? The owner will not do this reflection on their own. These conversations are critical, and an additional value-add role for accountants is to ensure they occur regularly.
When next walking into a client’s business, stop to consider those elements that add value in such a way that competitors cannot copy. This creates true competitive advantage in simple terms – those parts of the business that maintain a huge gap between it and any competitors. These elements are going to make the business a wealth asset that will be worth the hard work and years of effort when the owner retires. They need to be identified, nurtured, and encouraged to grow. To do this, look at the business through new eyes – but not in the ways you might think!
- Is there an unquenchable passion for creating excellence in the business at every point where the customer touches it? Excellent!
- Is there extensive knowledge in the business – from the owner to all employees? Excellent!
- Is there a clear thirst to learn that is powerful – a thirst to grow knowledge about customers, staff, industry and the product being offered. That is excellent too.
- Do the owner and his/her managers have the skills to run a good holistic business and lead excellent people? Excellent!
- Do the critical people have careers that meet their aspirations and enable them to deliver excellence? Excellent!
But this is still not enough to create value in the business. Rather:
- How owners think, make decisions and behave impacts on their core relationships.
- How they learn from experiences grows their wisdom.
- How they lead their stakeholders adds dollars to the bottom line.
It is interesting to reflect how much of the adviser’s time and effort goes into evaluating how the client achieve results, rather than what he needs to do to deliver.
