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ISSUE 10 | January 2022
Consider best, worst positions NEGOTIATION | STEVEN BROWN HE purpose of entering into a negotiation is for you to inter-act with other party. Your lawyer or if there is a conciliator can assist you to move through three stages by focusing on: 1. Opening up channels of communication; 2. Using the channels of communication to develop bridges of understanding between the parties of each other’s perceptions of the dispute and their respective strengths and weaknesses; 3. Structuring a negotiated resolution of the dispute. The first two stages–communication and understanding–overlap to a greater or lesser extent. Both are directed towards enabling the parties to discuss their dispute, to exchange views and thus more fully to understand their own and, very importantly, the other party’s points of view. A party is free at any time to end a negotiation THREE KEY simply by announcing QUESTIONS they are withdrawing. This does not involve Ask yourself these three any adverse consequence ing regarding the questions before entering such as having to pay matters in dispute. costs or being prejudiced If the negotinegotiations: by anything that may ation fails neither • What could I get? have been said, or even party’s rights are • What should I get? tentatively agreed, during not affected in any the discussions. way. • What must I get? If the negotiation sucIn most cases ceeds the parties ordinarithe parties reach ly sign a legally binding document setting a negotiated settlement. In the small out the terms of settlement of the dispute. number of negotiations that fail are some Oral settlement agreements should not in which, even though no settlement has be used as they can themselves give rise to been reached, the discussions clarify and disputes. narrow the issues in dispute. Rarely, the parties prefer not to enter Ultimately it is for the parties to decide into a legally binding settlement agreewhat settlement they can accept rather ment, but to re-build their relationship than pursuing whatever other courses that having achieved a satisfactory understand- may be open to them.
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Each party has to ask itself whether the available negotiated outcome, although disappointingly worse than it had hoped for, is nevertheless an outcome it can live with, rather than pursuing other courses open to it. The often mentioned ‘win win’ ordinarily comes not from the terms of the settlement but rather from the fact that the settlement enables both parties to put the dispute behind them. You will see that I do not mention anything about mutuality or happiness; rather what is more often achieved is a settlement that both parties will live with rather than are happy about. Negotiation is about you and the other person expressing your views in an orga-
nized manner to attempt to achieve an agreed outcome. Negotiation should be planned and thought through. You need to consider what is your best position, what is your worst position so that you can compare and put offers on the table bearing in mind three things: • What could I get? • What should I get? • What must I get? In entering any negotiation determining the could, should and must of your position is essential. Without knowing what these things are you are not able to compare offers on the table. Steven Brown is Chairman of Etienne Lawyers. Visit www.etiennelaw.com
Importance of being Finance Fit FINANCE | JOSEPH ESSEY
and trends in your business and a plan for managing these.
SW a Virtual CFO, one question I often hear from SME’s is why they need a finance manager or a CFO when they already have an accountant? The answer to this lies in understanding the value to businesses of being what I like to call finance fit all year round. Much like the human body, a growing business needs regular and deliberate care and attention to remain healthy and for a business to maintain performance at an elite level it needs more than the traditional annual check-up to keep itself fit and able to reap the benefits of this.
Why is this important?
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What is Finance Fit? A business that is Finance Fit typically has an ordered system for managing its accounts, is receiving up to date and in depth understanding of its financial performance and has the management of its finances directed towards executing its broader strategy and achieving its goals. While a business that is Finance Fit often is performing well in terms of traditional key indicators such as sale growth, profitability, and free cash flows these are not necessarily determinative of a Finance Fit organisation. The real keys to being Finance Fit is that your financial position supports your strategy and that you have a deep understanding of the risks
Businesses that are not on top of their numbers or managing their financial position in line with their goals are most likely leaving a lot of value on the table. A Finance Fit business is in a much better position to identify and take advantage of opportunities that are available to them as they have a clearer understanding of the things they need to be looking for and are getting the quality information they need to identify these early. For example, a difference between identifying and reacting to upwards trends in input costs of just 3 months can result in thousands if not tens of thousands in sacrificed profits, depending on the size of your business. Also, as any experienced business owner can attest to, prevention is far better and less costly than the cure. You would much rather be compliant before the fact and invest upfront in being adequately prepared then be scrambling to get your finances in order at the last minute and risk paying what can be a significant penalty.
How do you become Finance Fit? The first step to being financially fit is to establish the goals for your business and to have a clear strategy for achieving these. This allows you to set benchmarks or indicators of what good performance looks
like and to manage, forecast and track your financial position accordingly. It is important to remember that not every business is the same in this respect as your industry and the stage of your life cycle can influence what good performance looks like. Once you have set the benchmark, disciplined management of your accounts and regular financial reporting will help you to stay informed of trends and opportunities within your business and to act accordingly. Famed business management guru Peter Drucker is famous for saying ‘what gets measured gets managed’ and the best businesses utilise insightful financial reporting to remain agile and tactile in all business operations.
The final ingredient that I see in most financially fit businesses is that they have a smarter system of managing their accounts and operations. The first step to this is having a flexible accounting system that is tailored to the needs of your organisation and saves you time and money in unnecessary manual processing. The other important step is to avoid doing everything yourself which obviously limits your capacity to grow or improve your business. While you should never outsource your core capabilities, it does not make sense to sacrifice your time on admin and accounts work when you can pay someone to do this at a fraction of the value you can create with the time that this will free up. As we embark on a new year and reflect on our experience of the turbulent year that has past, what is evident is that those businesses with a clear understanding of what success looks like and a robust reporting system that allows them to respond quickly have outperformed their competitors and will remain best positioned to perform at an elite level all year round. Joseph Essey is the founder and operator of Your Business Finance Manager, an Outsourced Finance and Accounts solution for growing small businesses and has over 15 years’ experience helping small to medium sized businesses to manage their financial position and achieve sustainable growth. Visit: www.ybfmanager.com
