Day: September 16, 2020

Ontbytsake

Ontbytsake interview: Reset Rebuild Reignite

Dawie Roodt from Ontbytsake on Kyknet chatted to Aurik CEO, business growth specialist and author, Pavlo Phitidis about his new book, Reset Rebuild Reignite.

The book shares practical insights and strategies to build a business to be able to thrive in a crisis, and was written during the Covid-19 Lockdown.

The book is available in all good book stores or get your copy online HERE 

HOW TO GET THE RIGHT EMPLOYEES TO BUILD YOUR BUSINESS INTO AN ASSET OF VALUE

Tough economic times mean that unemployment is rife. But, as a growing business owner, you’ve noticed that it seems near impossible to find the right kind of people for your company. Unfortunately, the most skilled and best people often cling to the safety net of their current jobs. As the owner of a developing business, finding the right people, at the right time, to join your company and help it grow towards being an asset of value, is critical.

On The Money Show with Bruce Whitfield, Pavlo talked about the right way to hire the right people for your business:

IT’S NOT JUST THE ECONOMY THAT’S THE PROBLEM

Even though unemployment may be rife right now, that’s not the only concern. Inflexible labour laws mean that it’s difficult to hire and, if things go badly, fire someone if they don’t work well for your business. It’s absolutely vital that the first twenty to thirty people you hire to join your growing business are the right fit, because the wrong hire could bring your company to its knees. Moreover, the urgency behind needing good people for your company could lead you towards hiring the wrong people, by accident.

IT’S DECISION TIME

Choosing to grow your team, or not to grow your team, both bear a cost. If you opt not to hire anyone, you’re not building a business: you’re merely creating a job for yourself. If you choose to hire, you must hire well, and commit to the path of growing your business, because people are an essential element of that journey.

WHAT NOT TO DO

You may be feeling the pressure to hire, but the biggest mistake you can make is to hire someone quickly. Quick hires seldom turn out to be good hires, and a bad hire can derail your business before its even begun to operate properly. Notably too, you shouldn’t hire someone to do a job – you should hire someone who brings skills, a good attitude, and true value, to the systems of your business, while operating within them.

WHAT TO DO

Building your business into an Asset of Value begins by creating the systems that enable its growth. Building that System of Delivery begins with:

  • Knowing why you do what you do: A business that is being built into an asset of value, focuses on securing customers and delivering a service to them, through its systems. A true asset of value knows what business it is in, and exactly who it serves.
  • Knowing your customers’ problems: Your business is defined by your customers’ problems, and its services are built to solve those problems. Knowing, understanding, and responding to, those problems is critical.
  • Creating a system that effectively solves those problems.
  • Employ people to operate systems, rather than doing a job

Once your system of delivery is set up, you can look towards employing people to operate those systems. Creating effective systems, and giving your team well-defined job descriptions, enables them to operate in a manner that’s measurable and motivating. That then goes on to build a positive company culture.

LEARNING FROM MISTAKES

Success teaches us very little, but learning from mistakes is invaluable. Enabling your team to make mistakes, to fail and to learn, is essential. By safeguarding your business and empowering your team to take small steps first, and make small mistakes as they learn, is an imperative. Managing the risk of mistakes will ultimately make your employee, and your growing business, stronger, and better equipped to face future challenges.

 

succession

Negotiating the family business deal

We received a long email from a listener who is considering going into his parent’s business. He has a career in a different industry but has worked in the family business before. His folks have an option to get external professional management into it, but they are reluctant because it’s part of the family heritage.

Many businesses are considering succession as a strategy to hold onto an asset that makes money and will grow its capital value. Getting this right begins with an understanding of what the deal and the process would be between the founders or parents and successors or kids. These engagements can become extremely emotional and very complicated. The debates often get dragged into the history of the relationship and personalities involved rather than what right is for the business.

Here are two negotiating positions worth considering from either side of the fence. The logic holds for family succession, management succession and new partner formation in existing businesses.

Founders

Founders typically hold some of the following emotional mindsets regarding their businesses.

  • History and story about how they started, the difficulties overcome, sacrifices made and unrealised potential.
  • The social fabric of their lives is stitched from the business and this history. As leaders, which all private business owners are, their status comes from the business and the industry.
  • That they existed and left a mark or legacy becomes a key feature for many founders even though they don’t, won’t or can’t admit it.
  • At the later stages of their business life, the sense of defeat or resignation resulting from fatigue after “years in the engine room” can switch to a new lease on life when they see new energy appear in the business, through a trusted family member or younger colleague.

This makes negotiating with founders tiresome. They sway from resignation to regeneration and from withdrawal to “all-in”. Messages about the intent and the relationship between them the successors can be confusing and conflicting. Navigate them slowly and with empathy. Clarity comes from engagement and time and the process needs patience.

Strategically, the founders need and want the following, even though many struggle to express it:

  • Certainty that their years of sacrifice and hard work will yield a pension
  • Confidence that, in the case of a family succession, the kids won’t reverse the gains and collapse the value of the business, since they have no runaway left to step back in and “fix it” again
  • The relationships they have built and the promises they have made will be honoured by the successors. This is often seen from the context of the strange, usually unprofitable deals done between them and their first customers. It’s also seen through the relationships with suppliers and staff.
  • The successors must, need and should struggle to earn the fruits of the business
  • Control over the money since it’s the source of their retirement

Successors

Successors come into this environment opportunistically or reluctantly.

Reluctant successors either have no other options or are driven by family duty and responsibility. In many cases, the business is simply not saleable, and the founders face a dire economic outcome without the intervention.

Opportunity is often motivated by a respect and admiration of what the founders have built and excitement to be part of the future journey.

If reluctant, the emotional mindset will be governed by impatience and possibly resentment.

If opportunity drives the successor, an enthusiastic mindset and positive approach to learning, engagement and the business sets it for a smoother ride into the future.

Strategically, the successors need and want the following, but may struggle to express it because they are not yet aware of what matters and what doesn’t.

If reluctant:

  • Impatience in getting to the ground and making the changes that they believe will have the quickest impact
  • A view that this is short-term and their objective is to build it and sell it
  • A salary and position that will compensate for the sacrifices made to support the family business
  • Low empathy for staff that have been in the business for a long time and may be part of the problem
  • Disregard for the history whilst focusing on the future alone
  • Getting the job done and minimising sacrifice

If opportunistic:

  • Recognition that you start by sweeping the floors
  • Active engagement with suppliers, staff, customers with a view to learn, earn and attain knowledge and through that, respect
  • Patience with the founders and active engagement to understand the history of the business
  • Immersion in the product and service to deeply and quickly understand it.

Both the above scenarios give insights into the backdrop for negotiations between the founders and successors. Understanding this will ease and de-personalise the negotiation between the parties and open the opportunity to get the relationship built right in service of the business. Either way, the following approach has yielded the most sustainable and successful outcomes irrespective of the nature of the successor – reluctant or opportunistic.

  1. Agree to reset the vision of the business after a 3 to 6-month period of the successors entering the business. Until then, status quo must be maintained.
  2. Agree how the successors will accelerate their understanding of the business to support their contribution to the new vision of the business.

This will provide enough time for the successors to understand the dynamics of the business and environment.

  1. Embark on a facilitated strategy session with a view to include the experience and history of the founders with the new energy, perspective and desires of the successors. It must be facilitated since this will allow all ideas to be ventilated and the parties will feel heard.
  2. Concretise the strategy and vision through a few measurable objectives and actions.
  3. Agree on where to start – it should always be in the market first – and where to end in the collaborative rebuild of the business to meet that vision.
  4. Be very clear on the basis with which control will migrate from founder to successor.

This process will not necessarily defy the fact that 72% of family succession efforts fail. But it improves the chances of success dramatically. Family businesses are clouded by assumption more so than management succession and new partner succession. Families tend to hold fixed views on each other, carry resentment because of history and, if conflict avoiding, rely on assumption in the decisions made in succession.

We work with family businesses across all sectors of the economy. With personal history in this space, we have developed and deepened our interest in how to manage the dynamic and more importantly, establish a structured process of engagement that will serve the businesses first and the family as a result. Should your succession efforts stall, reach out to us and we facilitate the engagement to ensure your business becomes an Asset of Value.

SME matters

EVENT: Market your business to generate revenues

You’ve structured and finally launched your e-commerce website – so what’s next?

Marketing your business to generate revenues needs to become a key element of your strategy today.

If you want to become part of the rising tide of e-commerce success stories, you need to find ways to stand out.

Join business growth expert, Pavlo Phitidis as he chats to a panel of experts on smart marketing strategies that will set your business apart and help you attract customers in the e-commerce space.

Speakers include:

  • Kathryn Sharfman, chief platform officer and chief marketing officer at The Sun Exchange
  • Musa Kalenga, Executive at Bridge Labs, The Brave Group of Companies and African Tech Roundup
  • Aidan Baigrie, CEO at Expert Opinion Md

22 September 2020 from 13h00 to 14h00

Register at: https://bit.ly/3hCrwiV

This is part 3 in a 4 part series on Digitising your Business brought to you by Business Day SME Matters and Payfast.

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