Invest your time and energy in scaling and accelerating your business to capitalize on your economic prime
Monetize your years of risk and investment by building your business into a saleable asset
We don’t consult, advise or coach, we partner with you and work with your team, using smart tools and proven processes to build your business into your greatest wealth generating asset. Our partnership is unique & impactful for 6 key reasons:
We are growth partners and link 70% of our fees to a client’s growth. Their growth is our growth!
Beyond one or two experts, we bring 13 accredited growth system facilitators, each expert in their domain, offering “horses for courses.”
Because client growth is our growth and time is money, we get quick results by working with owners and their teams to implement and delegate fast.
Our smart digital dashboard visually represents a company’s growth system to optimize, integrate, and delegate functions, while data helps visualise business risk, performance, scale, and value.
Our growth system works in two stages: generating reliable, consistent organic growth and then next-level growth to embed 5 levers of valuation to deepen profit and turn a business into an asset.
If a client’s growth needs support in funding, company sales or acquisitions, market access, international expansion, IP, and the like, we access a vetted collection of partners to make it happen.
70% or more of our fees are linked to growth, we are invested in your success and will hold you accountable, it is not a “bill you then leave you” engagement.
With Aurik you get access to up to 13 subject matter specialists who will work with you & your team across all your business functions.
We work with you AND your team to ensure their buy-in and easy delegation which flows from that. This ensures quick adoption, and fast results.
Access to a smart dashboard visualises the evolution of your System of Delivery, which fosters team accountability and guides your goal attainment
A single, simple, Asset of Value™ Growth System anchors the 5 levers of valuation, which ensure your business can, one day, be sold.
Aurik has both the internal competency and world-class partners to support your growth and/or exit ambitions through growth capital, M&A or transaction advice.
“When we joined Aurik we were making a loss, now we’re making profits! Things have changed so much since joining Aurik that it’s not the same business, there is a lot more structure, and even our customers can even tell that it’s being run differently. We are much more efficient, we can make quick decisions, and allow the team to resolve issues. There’s a lot less wasted time.” – Anton Die Makers
“We came to Aurik with 9 staff. 2 years later we have 48 staff on book.” – African Shopping Network
“The sessions were insightful and helped identify areas of weakness that we could turn into growth.” – Fastener Agencies
To recap, over the next few weeks, we are talking about how to build a 100m company.
There are five layers that a business owner needs to build to ensure that you can support your company valuation. How you act and direct your team across each layer changes over four stages of growth, from start-up to scale-up, ramp-up, and value-up.
The first layer is about positioning—it answers the question “what makes your business special in your customers’ experience”.
The second layer is the delivery system, which is all about designing processes, activities, and systems based on the experiences your customers want.
The third layer is about getting the right people to do the right thing at the right time every time and at the right price.
Building and growing a business towards a 100 million valuation 20 years down the road is simply impossible without a high-performance team. It’s simple logic. Without a capable team, it’s just you doing everything and holding everything together. This makes your business a job and, at best, you might attract a small buyer for a small price who wants that life.
In this podcast of the Money Show, Pavlo Phitidis unpacks the third layer in “Building a R100m valuation company” [Securing a purposeful team]
Getting the right people
Recruiting the right people is the first challenge. You need to know what talent you want, why you want it, and where to find it. Broad job descriptions based on functional roles doesn’t work, you need to think about hiring in terms of performance. If you are looking for a salesperson, how do you specify the talent and skill sets you need? Good salespeople have similar attributes, skills, and experience. Yet, of the many you’ve hired, most have probably not stuck around, leaving at great cost to your business. Rather, recruit against a system that you want that person to operate, innovate, and manage. It’s far easier to recruit against a set of activities than a set of CV of bullet-pointed attributes.
Doing the right thing
Once on board, getting that person to be able and capable fast is the next challenge. How do you train and then performance manage that person if the job description is shaped as a broad function, like sales? Simply performance managing against targets that a salesperson must deliver, for example, 5 new customers a month, is sure to fail. A sales system includes valuable content and activities to enable a salesperson’s success. For example, who are your customers? How do they buy your products/services? What are their key motivators and concerns? How do you resolve objections? Organizing activities that generate a measured outcome into a sequence allows you to measure performance more closely and usefully.
Arguably, one of the biggest challenges in a business is deciding how to delegate effectively. Delegating responsibilities to a team member only to have to do it, check it, confirm it and so on defeats the purpose. Delegate a system, not instructions. This is the key to unlocking delegation success and performance.
At the right price.
Despite the fact that education, skills, and knowledge are widely available, finding the right talent as you grow and are under pressure might make you think that big, hefty degrees and a weekend course at Harvard require you to pay big salaries. As private businesses, we cannot compete with corporates on salary and must build our businesses more smartly as a result. The key here is the system you employ to perform that function. Again, if it’s built to the specifications of your customer experience, you can afford to get a person with less experience and no Harvard degree to run it and grow from there.
Leading this element of your business changes over time too.
Starting up—get a team on board that is inspired by your vision and wants to be part of the future. The more cross-sectional their appetite to learn, do and help, the better, since in the beginning, you need a jack of all trades.
Scaling up: Specialize your team into functional areas of marketing, sales, operations, and so on. Working with them, build the business systems in a manner that has them co-creating the systems with you. It makes people feel valued, accountable and it automatically sets the standard and bar as to how they need to perform.
Ramping up – get your team to build capacity within each of their functional areas. As leaders, they need to be more strategic and have their underlying team do, so that they can lead the constant improvement of each functional system and coordinate between them.
Value up – lock your key team into the future of the business. Any buyer who is paying a premium price for your business will want to know who is going to deliver the growth and performance in the future that you’ve enjoyed in the past when you leave. A committed, high-performing team adds a full multiple onto your valuation, adding a significant uplift on your market valuation.
The second step in building a 100 million valuation company over 20 years is ensuring that the company is built with a system of delivery.
Over the next 20 years, the company will go through 4 phases that work into each of the 5 years: Start up, Scale up, Ramp up, and Value up.
What we said is that a business that will be able to achieve this has five layers, built in sequence, one on top of the next. The first layer is positioning, and that asks: Why do you exist? What makes your business special in the eyes and experience of your customers?
Positioning is about saying, “let me not be greedy”, let me understand what industry I’m playing in. Let me look at the universe of all clients and customers that make up the industry and then let me find three or four slivers of clients who have the same problem, emerging in the same way, that my product can solve.
Instead of saying I define my business by the features of my product. Let me rather say I define my business by those three or four niche little slices of customers who are similar in their behaviour around how my product can solve their problem; how they wish to learn about me; how they wish to be engaged with me, and when they do become customers, how they wish to be serviced by me. That is layer one – positioning .
In this podcast of the Money Show, Pavlo Phitidis unpacks the second layer of valuation in building a 100million business over 20 years;
The second layer of valuation, is about building systems, which is a process you must begin almost immediately. To give an example, Pavlo met with a business owner whose 40-year-old business specialises in brick laying. So how does this work? The business owner organises groups of people, often referred to as gangs. These are made up of three people; two bricklayers and one individual who does all the mixing of the cement. Depending on the building site that he enters onto, he will organise a gang or three gangs or seven gangs to get the job done on time. What was so interesting about this individual?
The fascinating thing about this business is that laying a brick is not just simply laying a brick, because there are various forms of bricks and the ability to lay these bricks in a fashion that works with the architect’s vision of what the home or the building looks like is vital.
Another interesting thing is that it’s a family business and the father has now bought his daughter and son into the business with a view for them to take over from him. T daughter has a quantity surveying qualification and the son is learning directly from the father about the business operations. However, for the succession of this business, there need to be systems in place and the business needs to be built on a system of delivery, which is essential for the success of the business.
Like the brick layer, building a system of delivery is essential for building your business. Start by listing all the activities you perform and note them down. In the first five years of the business you’ll be working on getting those lists right. Start with how you market your business to your customers, how, when they engage with you, you take them through a process of building their confidence that you can deliver the work. That’s what selling is. And when they eventually come on board, what is that process? What are the activities? What are the checklists that you need to build to make sure that you deliver the service as you promised? It takes five years to get those checklists right. And that is the first five years of the start-up period in building your system of delivery.
Once you have got those lists in play, you are a quarter of the way there. At that point in time, you’re now getting money in consistently because you’ve positioned your business smartly and successfully. You are now finding yourself working 15 hours a day because it’s you who is managing all the activities in the business.
And from there, you move to the next phase, which is where you scale up. Scaling up is where you identify those individuals in your team who’ve got potential and you give them those checklists showing how they must go about marketing the business, how they must go about signing and securing clients, and how they must go about delivering the service to those clients.
The checklists help to gain measured outcomes and are very useful in the early stages of effective delegation. To get that right takes time, because most of us in business think that we are delegating by issuing instructions to our team to get the job done. Effective delegation needs to be how you get the job done rather than just get the job done. And how you get the job done is going to be specified in those activities that make up the Systems. When you get to a point where you’re really gunning it in the market and getting a great response, those good customer experiences that you want to consistently deliver are supported by systems that your team runs and operates. Whether it’s one, two, three, five, fifteen, twenty or more Without those systems to deliver, bad customer experiences quickly erode the five, ten, fifteen, and twenty years of effort, risk, and love that you’ve put into your business
I’d like to talk about how to build a 100m company.
There are 5 parts to this process, which we share as a 5 part series
Each piece will look at the 5 layers of value a business owner needs to build across and through their company. We will also look at these layers across 4 stages over time. Each stage takes around 3-5 years, depending on your skills, history and experience, relationships, and access to funding.
The layers include:
Positioning – to compete and win
Building a System of Delivery
Securing a Purposeful Team
Value – ensuring you have a transferable, premium asset
Across each layer, the 4 lifecycle stages include:
Starting up, Scaling up, Ramping up, Value up.
It is all about starting with the end in mind—why do you do what you do and the difference between a Job and Asset. We will cover that.
This article unpacks layer 1 – Positioning. How do you start, scale up, ramp up and secure your value through positioning and how does it affect valuation and saleability?
You can listen to the discussion from The Money Show or read on.
This is all about how you set yourself apart in the crowded, noisy, competitive market. It is all about how you define your business and purpose. It is all about how you find, win, and hold customers, and it is all about why you exist!
Getting it right takes time and getting it wrong leaves you stuck in a world of operational noise and slog.
So, let’s get it right by looking at why we get it wrong first.
In 1774, we learned from Emerson that success comes from “building a better mousetrap.” He was right because very few products worked and functioned like they ought to, and it was all about winning on the back of a good product.
Then, in the late 19th century, Taylorism came about. It culminated in Ford claiming that you could have any Model T you wanted for so long as it was black. This was all about winning on price, and the production line came about to make that happen.
Then, in the late fifties, Herman Kotler, arguably the doyen of advertising and marketing, said it was all about segments. The theory was that birds of a feather stick together and understanding which birds you serve best would allow you to find and reach them more effectively. You would have seen the early stages of this industry emerge in the series ‘MadMen’.
Today, everyone in business has all three criteria in play – a good product or service, a competitive price, and an effort to market them to a segment of people they believe will buy them.
MBA completed. So why does it not work?
Ask yourself, “Why does my business exist?”
The purpose of any business is to solve a problem for a customer. If you cannot name the problem you solve, you will fail in your business.
Naming the problem is not enough. Understanding how the problem comes about, the cost of the problem, and ensuring that you, through your products and services, can solve the problem at a lower cost than the problem itself is a start.
To get this right, you need to know whom you are solving the problem for. This is more than a segment as defined by Kotler; it is a group within a segment. For example, blue-chip corporates are a segment. Within that segment are the mining businesses. Within that segment, there are deep miners. Within that, platinum. Within that, multinationals and nationals. Within the nationals, junior miners, It is like unpacking Matryoshka Dolls. You want to get to the niche within the segment that will act, behave, engage, and think alike. That is the elixir of your business, since understanding your customers on that basis unlocks how they experience the problem you solve and how they buy and behave around getting the solution to that problem.
Leading this element of your business changes over time too.
Starting up—sell to anyone and everyone, discarding your business plan but starting with one until you understand the segment and niches within it.
Scaling up – say no to everyone and anyone outside of the niche segment that you want to become an expert at serving.
Ramping up – you are marketing and selling into that original segment and also looking for a new niche within that segment that has an almost identical experience around the problem and solution.
Value up – lock in the niche segments you serve through increasing value for them, be it in how you reach them, serve them, and keep them This is the DNA of your business. It is why you exist. It sets you apart and distinguishes your business from your thousands of competitors. It is hard to see and copy once you get it right, adding a whole multiple to the valuation you would otherwise get.
Pavlo Phitidis introduces a 5-part series that is going to look at the five layers of valuation that need to be built in to a company for it to grow to be worth R100 million.
The series will be based on five layers in the business, across four lifecycles of a business, and the five layers need to be reviewed and rebuilt in each stage. The four phases are:
!. A start-up business
2. You’ve found some traction in the market and want to scale up.
3. When you’ve scaled you want to ramp up revenues and deepen
4. The final act – to make sure you lock in your value, and that you, yourself are not the business.
In this podcast of The Money Show, Pavlo Phitidis precedes the five layers of valuation with a discussion of starting with the end in mind…
The first thing to do if you want to start or grow your business is to have a clear destination. Consider the reason for what you are doing and why you are doing it. It is often out of necessity, it gives you economy. It hopefully gives you purpose and meaning. But ultimately, the purpose must be that you are building a saleable asset.
And that means that you need to understand how valuation works in any business.
When you start the business, it is worth nothing at all. However, you still need to grasp the mechanics of value .
You then must make a commitment to decide what you are doing on a day-to-day basis. Are you going to build a job for yourself? At a job, you are right in the middle of the business and its survival. Your team cannot function without your everyday guidance and leadership. Your customers draw heavily on you. Your suppliers draw heavily on you, and it can give you tremendous meaning, and a sense of importance and value.
But an Asset needs to have three things:
And the 3rd point relies on you NOT being central to the business.
Keep an eye on our blog and newsletter where we will share this series to give insights into: Beginning, scaling up, ramping up, and finally valuing up.
Our economy is structured like a sandwich: When you look at the sandwich, it consists of two pieces of bread with a thin slice of meat in the middle. The bread is the visible bit, and you hardly see the meat. However, the protein and nutrition is found in the meat, not the bread itself, it’s what gives that meal its true energy and true value.
In this podcast from The Money Show with Pavlo Phitidis, Pavlo breaks down what it means to be the meat in Sandwich, in the economy…
How it looks from an economic point of view is that policies are made with a key focus on corporates and micro-businesses, disregarding SME sector. Let’s unpack this:
In 2017, South Africa had ,1400 businesses that had a taxable income of greater than R50 million. A tiny number. We had approximately 161,000 businesses with a taxable income (profit before tax) of between one R0 and R1 million.
We had 35,000 businesses, that did, from a taxable income point of view, R1 million to R50 million of taxable income.
The bread in the sandwich is in the corporate sphere because it is exciting for investors because in many instances these are public companies.
The smallest 161,000 businesses in the formal economy are very interesting to government because they carry a lot of voting power.
Government incentives are often structured to be easily accessible to the large corporates, particularly multinationals which are some of the biggest beneficiaries of grants in our country. An example is the automotive industry where we pay to play in order to have Mercedes and BMW and Ford and all these large brands established in South Africa on the basis that they are job generators and on the basis that they spur on an extensive supply chain.
Corporate sector executives are invited to meetings where discussions are had, settlements and deals are done, and the structure of the economy is created around what is best for corporates. In essence corporates have a louder voice when it comes to government.
And then government focusses extensively on micro enterprises because it suits government to do so in order to secure favour when elections come around.
The same is true in most countries.
But here’s the thing: Competition is predominantly found in that mid-tier market of R1M – R50 million.
The mindset of these business is to invest relentlessly to grow your business. There are enough resources in terms of people, purpose, plant and equipment and leadership for them to compete viciously – if they don’t get the deal, there are a dozen competitors who will.
That means you have to constantly improve the value you are offering – and that happens through innovation. Innovation in itself attracts funding. Funding and innovation attract talent, which creates further innovation – and this all creates vibrancy is this segment.
We can’t escape the fact that big business has to exist, as the consumer of mid-tier services, but the more inclusive this mid-tier becomes, the better for the economy, for big business, and for government.
This segment is the meat – this is where the economy is innovating, energised and growing – because it has to!
Business owners risk everything to sustain a business. Given what it takes to achieve this, they and their family tolerate significant sacrifices—stress, absence, missed holidays—it is an emotional roller coaster for all.
In the early days of starting your business, it is a complete hustle! The happens because if you want the business to survive, you have to generate revenue and capital.
Once the capital starts coming in regularly, you can re-invest that capital back into that business with strong teams and skills that will enable you to build your business into your greatest wealth generating asset. or what we call, an Asset of Value. This is a business that you will one day be sold or passed on by means of a succession to the next generation.
In this podcast with Pavlo Phitidis, Pavlo discusses outcomes and scenarios that business owners face when starting out and then building their businesses.
People are at the heart of any business, from suppliers to customers and staff. Your ability to read and work with people – and to get what you need out of them to move the business forward is critical to your business growth.
In this Podcast of The Money Show Pavlo Phitidis outlines his approach to getting the most out of people to achieve your vision of the business.
There are three people or kinds of people you have to understand to harness their ability to build your business.
The starting point is understanding yourself
Next, understand your customer
To get this right you have to listen to your customer – you cannot sell to them on the assumption or hope that they are interested in what you are telling them.
Understanding your customer will help you to be more clear and focused in what you do for them. It is always important to know precisely who you serve, what you serve them and how you serve them. You cannot be everything to everyone.
Then understand your employees
“When it comes to employing additional staff, you must have a strong understanding of your business and a real vision of what sort of personality suits it. It is critical to understand your own values as well as the values of the company you’re building. To the extent that you can get birds of a feather to flock together, you can coordinate, simplify, and scale”.
Inflation is creeping in and the cost of living is rising through fuel and food prices. Consistent political volatility is not making the situation any easier. All this noise creates uncertainty from an individual and a business perspective and can erode your confidence as an entrepreneur and your future endeavors.
As a business owner, you need to steer your ship in the right direction, which means being the captain who stays on the bridge with a clear view ahead.
Business owners need to adopt one strategy! And there can only be one strategy behind your business, and that is to build it into what we refer to as an Asset of Value™
In this podcast of The Money Show, Pavlo Phitidis shares insight on a strategy that all business owners should be working on.
An Asset of Value™ has 3 elements to it:
A business built as an Asset of Value™ will enable you to sell it and reap the capital gain as a reward for all the risk you have taken over the five, ten, fifteen, or twenty years of getting it there.
To build your business into an Asset of Value™, you need to be able to move through the storms because even as a captain of a ship, there are storms that come to pass and how you steer through them will determine the end goal of your business.
Despite the difficulties in the market, your team must be able to find confidence in you to lead them through it all.
With that note, an exercise that will lead you in the right direction would be to take a note pad and, from Monday to Friday, in different colours, write down all your tasks and separate them to see where you are spending most of your time in the business. Is it working with the team? Or micro-managing them to make sure that the business is on track?
This exercise will help you determine whether you are working on the business or for the business.
Having a vision is essential. And sticking to your strategy is essential, because if you don’t have a vision or strategy, then what are you doing? Your business should be built into a business that can one day be sold and not be part of the 94.6% of businesses that are started that never, ever get sold.
To build your business, there are many things to consider. One being that no investor wants to invest in any company where it is just you. You need to have a team. Because if you were to have the misfortune of a sudden death, many investors would be interested in that company if they knew who would carry on the value. Business owners see this as an exciting opportunity and yet the toughest one to get right.
In this podcast with Pavlo Phitidis from The Money Show, he looks at the key elements in building the team you need for a business that can scale and grow.
Some key takeaways from this:
When building a business, the goal is to scale and grow and ultimately sell your business. Thus an accurate business valuation is essential.
In some cases, businesses are sold outright with everything they are built on, but in other cases, businesses are stripped and torn down simply because the buyer is only interested in one part of the business that he sees as valuable, which is not a desirable outcome for the owner because he does not receive the actual value of his business.
Listen to this podcast from The Money Show where Pavlo Phitidis discusses valuation and successfully selling your business.
A business that Aurik is currently working with was about to be acquired. However, in the acquisition, the offer they received for the company was way under what their assets were worth and their understanding of the value of the business.
There are 2 key takeaway points which could be seen as red flags in this business:
For a successful business sale or exit, start at the end and imagine yourself as the buyer; this may help you with business valuation. Grasp the mechanics of business valuation and simply construct a business to demonstrate those mechanics. A few key elements to consider are:
Build a coherent business where the sum of its parts far greater than the whole.
Succession in business ownership means the transfer of a business from one generation to the next.
We tend to think of succession in terms of family businesses, where it can become very tricky and may fail unless it is done right. However, the same applies to the services industry, where businesses like architectural firms, engineering firms, accountants, lawyers and advertising agencies almost always grow through succeeding generations of leaders in their company. These businesses also face the hardships of succession if it is not done right.
In this podcast from The Money Show, Pavlo Phitidis discusses businesses that are affected by succession in the services industry.
In private companies, succession not done right erodes or stalls the retirement wellbeing of the exiting generation and robs the next generation of their future wealth creation path.
With around 75% of these efforts failing, understanding what goes wrong and how to prevent it is critical. Here are four key points to look at for a successful hand over:
1. Aligned future visions.
The misalignment in terms of what that business needs to look like, and be shaped into going forward tends to delay succession or creates a lot of bad blood. This is often because, for example, the exiting founder plans and promises to let go and hand the business over in a year or two. This turns into 15 years during which nothing changes because either he or she has not got the courage to align with the new vision, or their vision is misaligned with the new business owners.
So, getting that alignment right is the first thing that starts the process of succession.
2. Communication across the team
Many business owners only realise they want to sell when it is already too late to sell. If you are looking to sell through succession, the communication with your team has to begin first and foremost with you looking in the mirror and saying, “There are only two outcomes for every business in the world: a sale or closure. Because the way that you build a business to generate income is very different from the way that you organize a business and lead a business towards a successful handover.
Communication with your team will help to shape and develop your team and the business differently for a sale and exit.
3. Relationship transfer
Most professional services businesses begin with deep relationships. A good example of this is two professional engineers working for a large engineering group who develop strong relationships with clients. They then decide to step away from the firm to start their own business by servicing that clients. Ten to twenty years down the line, they still hold onto those client relationships. And even when the leadership of the company finds a young talent in the ranks who they think can continue the legacy of the business, it is difficult to have this transfer because the business has been forged on relationships that were retained by the owners for all these years. The relationship that contributes to 40% of the revenue is tricky to hand over.
So how do you hand over those relationships? It takes time. There is a structure to it. There is a methodology to it, there is a practice to it.
4. Valuation and exit criteria
Once the business owner makes the decision to sell and has found his successor, this can still go wrong for the successor, especially if it’s a senior employee who the business is being handed over to. As an example, the owner will price the business at R20 million, which is an amount the employee will not have nor have had the time to accumulate in the time of employment. So where would you acquire that kind of money?
If you do not get the metrics of this right with the view to educating your successor on how valuation will occur and with the view to aligning yourself with that successor so that this successor can acquire the shares over a period, you’re shooting yourself in the foot.
Succession is not something that just happens. It typically has a five-year runway. So, if you want to exit your business in five years and your plan is to do so through succession, you should get on the horse right now and start planning a showcase.
Pavlo recently had a discussion with a young entrepreneur who wants to start a business. However, this individual has no capital to fund his idea, and sadly, in this country, there is no bank that funds start-ups no matter how good the business idea.
In the discussion with the entrepreneur, these were some of the takeaway points:
In this podcast of the Money Show, listen to Pavlo Phitidis share how you can build a business with zero funds.
The alternative is to just blame, blame, blame the challenges in the country for you not doing something. This view blocks the opportunities, which are out there.