Let your accountant understand and “feel” your business. Why?

A good accountant has a wealth of experience and can foresee the direction in which your business will develop from an accounting point of view. Therefore, he or she will be able to support and advise you on the best practices. 

All the income received less total costs (development, construction, marketing, independent advisers, due diligence, agents, financing, group overheads, etc.) equals the development margin. This is how the majority of developers, or investors, calculate how much they can earn. But, to a significant extent, it is not the correct approach – this is not the real development margin (or project margin).

To find the real development margin, your project cost needs to include one extra element: the post- project maintenance expense.

Divestment, in its positive meaning, is acquisition potential with a track record as someone’s careful investment decision, which is in its own time approved by a business board.

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The caveat of a divested business could be that it reached its potential and no longer creates added value for the current owner.

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However, everyone’s KPI are different and for another investor, it may serve its purpose (e.g. allows the strengthening of market presence).

Regardless of the contract’s complexity, associated revenue tag, geographical coverage and business approaches, there are numerous and never-ending issues that can arise, even at the very last minute, not to mention the imperfections found only when time has passed.

In this insight we explain the top 10 caveats to consider when preparing and negotiating contracts.

To start, cross-functional collaboration can be defined as a formal (or informal) collaboration between individuals (or teams) representing different business units, specialisations and hierarchies. 

In other words, cross-functional collaboration means working in diverse teams to define complex goals and avoid misaligned decisions; this comes with its own challenges.

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In this insight, we provide an aggregated list of three common challenges and offer respective solutions.

Many projects (regardless of the industry) remain inefficiently managed and experience delays in development, exceed their development budgets, or struggle to find investors. Some are complete failures.

Virtually every activity is dependent on energy supply, from households to the public sector, and from manufacturing enterprises to transportation activities. As such, all economic and social activities require confidence in a stable energy industry.

The benefits of an efficient energy sector are the creation of employment, earnings and taxation, the outputs of exploration and production companies, and distribution and supply of the energy sources to those who require them.

The golf industry generates more than 80-billion USD and in the US alone there are more golf clubs than McDonald’s. A successful golfer can earn as much as 50-million USD per year. Even someone who finishes in 70th place in the PGA Tour still receives 0.2% of the purse (total prize money).

This sport is a luxury sport with demand created by viewers who want to see the best of the best. The rules are simple to follow making golf attractive to a wide variety of viewers.

According to Eurostat, around 2.6 million businesses open every year aiming for prosperity and financial gain, yet more than 50% of these are expected to close down in their first five years. The business arena is a fierce territory, where only the best succeed and the majority is expected to break even and/or go bankrupt.

Nevertheless, to establish a business, to develop something great with added value that becomes recognised, and to see how this has positive socio-economic effects is a welcome pleasure for business founders. This insight focuses on the things that business owners or managers should be aware of and expect to deal with.

This is a very important issue that everyone has to deal with, from consulting to the heavy manufacturing sector. How should you set your pricing strategy in new markets? Would you be willing to price initial contracts under, at or above break-even cost, and if above, at what level? Are you entering the market long-term or to benefit from a currently booming economy environment?

Through our professional experiences – which span from initial group estimates to detailed month-by-month calculations pertaining to various industries, such as energy, renewables, travel retail, healthcare and professional education – we have developed a list of the key inputs that specifically highlights the most critical considerations within each parameter.

A well-defined strategy allows executives to make the right forward-thinking business decisions at the right time, whether they relate to corporate planning or specific project investments. Sooner or later, every decision requires either a ‘yes’ or a ‘no’ decision.

And, at this point, the decision is typically complex, involving a variety of internal and external factors along with continuous change in the business landscape. The decision either removes a company from the competition or creates a chance for success.

We do meetings almost every day, running the gamut from informal coffee breaks to senior board-level meetings involving strategic decisions and investment case approvals. It might not be obvious at first glance, but both coffee talks and board meetings are very similar: in both cases, we have to agree (or disagree) on something.

But why do we have a greater chance to succeed during coffee breaks, but we are ‘shaky’ during official business meetings? More importantly - how can we reduce the ‘shaky’ status and become more trustable and convincing at official meetings, so that we can achieve positive results?

These two measurements, Net Present Value and Internal Rate of Return (known as NPV and IRR), are highly valued decision makers. But how to understand and apply NPV and IRR in business investment choices, be they JV establishment, M&A potential, new sales channel establishment, or sell/own decisions? 

Budgeting for unforeseen legal claims is especially important for small and mid-size businesses where cash flow is tight. You never know who will decide to make a claim against your business. But what you can do is expect and budget for such claim responses in your start-up costs. 

In this insight, we would like to highlight the importance of project cost budgeting. We find that for many entrepreneurs, it is hard to properly estimate total project cost. This can happen regardless of the business type and size, from carwash opening estimates to wind site cost projections. 

Which option is better? Which one is more productive? Which one has greater personal expression? Does a combination of both options work better? It all depends. But one thing is clear: calls (and personal meetings) allow you to establish stronger business and personal rapport. Yet the majority of us tend to stick with emails. Why this is so? 

A lot has been said on this topic, yet it remains a sort of a mystery to many of us, even for those who do presentations regularly (in the same way, there are never ending discussions and opinions on how to prepare a best coffee). This issue complements by high responsibility of delivering important information – be it a market entry decision, project investment analysis, M&A, shareholder reporting, etc. 

Each business idea – be it a small grocery store, hotel opening or acquisition of a large manufacturing company – requires meticulous but easy to understand investment decision analysis.

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Business analysis may be based on complicated equations and evaluation methods, but the logic behind such analysis and explanations has to be simple and clearly explainable.

Simple ideas, project proposals, technical advancements, start-up pitches and well-prepared business plans must all be presented to decision makers.

Before doing anything, we have to prepare. Communication must be specific to an organisation’s needs in order to avoid general and time-wasting content, which in turn leads to complicated and inefficient decisions.

Ersteberg has published a study on the issues associated with the development of renewable energy projects and introduced its own 5-stage project management efficiency tool.