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[vc_row][vc_column][vc_row_inner][vc_column_inner][vc_column_text]As a body grows and develops it also slows down. The years of life and living bear down on it and lying in bed for an extra 5 minutes rather than springing into action the moment the alarm sounds becomes tempting. An extra slice of cheese or a spoonful of ice-cream after dinner and a hard day also feels like a well-deserved reward. Cholesterol builds and if not checked, it’s the death knell that you often regret most when it’s too late.

It’s a terrible analogy to contemplate when building and growing a business, especially if you plan to exit it one day for a capital profit as your just reward for all the risk and sacrifice it took to build.

LISTEN TO THE PODCAST FROM THE MONEY SHOW ON 702 & CAPETALK HERE[/vc_column_text][/vc_column_inner][/vc_row_inner][vc_row_inner][vc_column_inner][vc_column_text]

HOW DOES CHOLESTEROL BUILD IN YOUR BUSINESS?

1. In the beginning

In the beginning, you are in control of everything. You especially keep your attention on all things that bring money in and take money out. Sales matter enormously as do expenses. All your suppliers that you work with you get to know personally. Who are they, what value do they offer, what is the deal that you have with them and most importantly, spending as little as possible for as much as possible is as vital as getting sales into the business.

2. Then you grow

As sales come in and you get traction in the marketplace, complexity and activity both increase. Your attention moves onto the bigger cost items. Rent, people, vehicles, computing, software and the like. If you are in manufacturing, machinery and equipment as well as stock and inventory in other businesses. This matters because if you don’t buy right, you can’t sell right…right? The smaller ancillary expenses and consumption items fall out of your purview simply because you don’t have enough time. they are also hard to find in the avalanche of admin that governs and everyday growing business. In your mind, they are small costs and often difficult to understand. Do you truly understand your medical aid or cell phone contract? Such services are deliberately bundled and complexified to keep your attention on the idea that it’s just, say R52 per month. When you are spending R300k per month, you must focus on the big-ticket items. People tell you it’s the pareto principle, the 80% of your costs lie with 20% of your suppliers – focus on that.

3. Complexity builds stress that narrows your focus further

Nobody ever built a business by focusing on the pennies people will tell you. Unless you are Sam Walton, founder of Walmart or, Phil Knight, founder of Nike or, Jeff Bezos, founder of Amazon. And the list goes on because many pennies make a pound and so it grows from there. But the problem remains this. With more growth comes more complexity and opportunity and that, if managed well becomes more growth leading to further complexity. This cycle stresses you out because it’s a lot more to deal with in far less time than you ever had. You try bringing in people to help and even software too. Often that serves only to increases stress and complexity. Oh, and with your growth, where you now sit 50 times bigger than you might have been a few years back, those small expenses have grown too, not only in size, where the R52.38 is now R552.38 but there are more of these small, noisy little expenses. Your time scarcity sees you double down on the Pareto principle further feeding a false sense of belief that the leak is just that, a small leak if it exists at all. After all, it’s just one tiny spoon of chocolate ice-cream or a small slice of cheese, you say in the back of your mind!

4. Cholesterol, unchecked, generates the heart attack

With further growth, the cholesterol builds and as it does, it slows your body. The many, many small expenses, many for services you no longer need nor use add up to a chunky R50,000 monthly. Sure, your business now generates 100 times what it was several years back, but that bleed is a shock to you. You are furious and angry both at yourself and your team who are now largely looking after all the costs outside of the pareto margins. An investigation begins and you further discover that your team involved in procurement are missing obvious negotiation advantages that could have saved over R500 000 over the last 18 months. The cholesterol has built and set in and a makeover is needed before it kills your business, and you in the process.

This happens to most fast-growing businesses. Especially if its leaders have a big vision and are driven to grow and manifest the vision. The pareto principle is used as a constant reference to focus on what matters. Don’t sweat the small stuff is what most would say and often, those who say it, well, it’s not their money that is bleeding out the business.

HOW CAN THIS BE PREVENTED?

1. Develop a procurement strategy

Allocate all your procured items into one of three buckets – strategic and core, strategic and non-core, non-strategic and non-core. Once done, set quality, delivery and risk measures on them all.

2. Turn it into a system

Determine the times and activity schedule along with checklists to procure the inputs across the three buckets.  This includes how often you buy, at what standard of quality, from who, on what contractual terms and how often will you review it.

3. Train and capacitate

Train your staff in procurement on the system because now you have a system to train people on. Remember, staff have mostly not been through a process of starting something with nothing and so their skills in negotiation and understanding of its importance in cashflow will be limited, you need to pick the right staff in procurement and mentor their performance.

4. Structure and motivate

Create incentives by setting budgets and link the procurement buckets. If you have well-defined standards and performance expectations in procurement, any outperformance might well be incentivised but beware, the wrong behaviour within the wrong bucket can harm the business. for example, squeezing your insurance costs by dropping the standard of cover can cost you your business.

5. Hire and fire

Hire the right staff in the first instance and fire those that break with system. Procurement is prone to corruption and a well-designed system to bring your procurement strategy to life should be severely enforced.

We work with established business to build business systems across the entire scope of business activities. Systems deliver certainty, without which cholesterol can build. If it doesn’t kill you, it will slow you down and in the fast paced, competitive economy we live and play it, that could see your business being one of the 94.6% that are started but never succeed in a sale.[/vc_column_text][/vc_column_inner][/vc_row_inner][/vc_column][/vc_row]

[vc_row][vc_column][vc_row_inner][vc_column_inner][vc_column_text]4IR was a huge topic before covid-19 hit, and the lockdowns forced us to face the digitisation of our businesses, urgently.  Working remotely has accelerated the pace at which we 4th industrialised our businesses and if you aren’t quite sure what to digitise or how to do it – read on.

LISTEN TO THE PODCAST HERE[/vc_column_text][/vc_column_inner][/vc_row_inner][vc_row_inner][vc_column_inner][vc_column_text]

It’s about technology enablement.

In its simplest form, it’s about enabling the performance of your business through technology. This includes software, hardware and connectivity. Technology doesn’t make anything happen. Technology enables something to happen. To do so, its needs to be developed, programmed, connected and ‘switched on’! Imagine you have a bakery and make 1,000 loaves of bread a day. You have three options in your baking process.

A: Get up at 3am to mix the dough, switch on the oven, load the baking trays, put them in the oven, take them out at 6am, pack them onto your shelf and serve customers from 6.30am. Or….

B: You can instruct staff to do it for you but run the risk of wrong ingredients, missed steps in the baking process and enidng up with either inconsistent quality or the bread being late for the 6.30am deadline. Or…

C: Program the oven to switch on automatically at 3am, have the ingredients to make the dough decant into the mixer in sequence. The mixer blends and produces the dough which automatically empties into baking trays that slide into the oven and remain there until the bread is baked. At that point, the bread is conveyed into a vending machine that allows customers to pay using their debit card or phone. With each sale, your bank account linked to your accounting software updates your financial position in the business.

Technology, properly designed and connected, automates the entire process using software and hardware (baking equipment, conveyer belts, vending machines etc).

Importantly, understanding how your business works is the first step to understanding how to use technology to make it work better. Read more on embracing technology in your business.

It’s about connectivity.

Affordable, reliable, super-fast connectivity like that promised by 5G, is vital to the 4th industrial revolution. The many devices’ communication with each other through software and algorithms all require connectivity at speed to create a smooth, frictionless experience for a customer.

It’s about creating scale.

Scale means that you can do a lot more of what you are doing at a consistent level of quality, experience and certainty. For example, if you are a baker making 1,000 loaves of bread a day. Scaling will allow you to make 10,000 loaves of bread a day. To get this right however, it means that not only should you be able to bake an additional 9,000 loaves of bread a day but also sell them too. It also means you need to be able to fund the growth you achieve through scaling. Scaling goes beyond technology; it needs the entire system of business to scale too.

It’s about predictability and certainty.

In the baking example, it’s easy to see where the most predictable and consistent level of performance would be achieved. These outcomes allow any business owner to focus on growth rather than daily operations dealing with a litany of relentless urgent matters.

It’s about specialisation.

Given the intimate understanding of your business required to enable its performance through technology, a narrow focus on who you serve is important. If you are trying to be all things to all people, the likely automation of your business processes will be limited. A comprehensive adoption of technology means that you specialise on a niche customer group, understand them deeply, design your business to solve problems and then, invest in automation to execute that solution.

It’s about a business environment conducive to technology.

None of this can happen in an environment that has unpredictable power supply, scarcity in skills, weak business growth funding and understanding and unworkable and or inconsistent legislation. Getting this right requires stability in the business environment given the investment required to get it done. Legislation, standards setting, and policy need to support and enable the process. In addition, business needs to be allowed to do it. I was speaking with an Uber driver who said technology is the thing that will cost jobs for those being retrenched and the same technology created one for him and his family. Tolerating this uncertainty, accelerating policy to make the 4th industrial revolution possible are vital features in this environment.

It’s about starting.

In its simplest form, start with a social media profile that works for your business. Build a website. In these two acts alone, you have tech enabled your shopfront and a path and journey to it. You can make all the bread you want but if a customer doesn’t know about you, it’ll never turn into cash. If you don’t know how, ask Google or YouTube, many there do, and share the information freely.

At Aurik, we embraced technology and have digitised over 289 processes in our services businesses. We grew, staff whose functions were replaced by technology were relocated to other parts of the business that needed their skills and time and our clients have enjoyed a service experience that is rated consistently above 94,2%. It is a vital component of building an Asset of Value and beyond doing it for ourselves, we do it for over 500 businesses today. Let’s work together to get your business built efficiently so that you can scale, grow and exit with a tidy capital profit sometime in the future.[/vc_column_text][/vc_column_inner][/vc_row_inner][/vc_column][/vc_row]