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business battle plan

Build your Corona Business Battle Plan

After years of economic mismanagement, corruption, unstable power supply and business-unfriendly legislation, SMEs and private businesses have very few reserves to draw on.

Many of these businesses are struggling to figure out whether they can afford to sit out the Coronavirus lockdown and how they can survive in a new, post-lockdown world.

Aurik has put together a series of practical, action oriented webinars to help business owners to create their Corona Business Battle Plan.

Topics covered include:

  • Designing your battle plan
  • Negotiating with your landlord
  • Negotiating with SARS
  • How to deal with your people – on both a human and a practical level
  • Digitising your business, which has become essential in a world of physical distancing

Find all of these webinars and other free resources at www.aurik.com/corona

Scale: Before and Beyond Technology

Scaling is less about technology and more about strategy. Led by strategy, scaling is about business design and discipline. Its measure is found in the yawn between rising turnover and stabilising costs. It is a journey more than a destination. Getting it right reaps great rewards. Getting it wrong yields a life of grind and sweat.

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LISTEN TO THE PODCAST FROM THE MONEY SHOW ON 702 & CAPETALK HERE

1. Strategy first

Winning businesses are increasingly specialised around a well-defined customer segment. By this, they seek to understand, quantify and solve a well-defined problem being experienced by this segment and to provide a great experience in the process. It takes time, constant iterations and 1,000 mistakes to get this right, refine it and own it. Contrast this with being product-driven which makes attaining scale unlikely; and trying to be everything to everyone makes scaling impossible.

2. Systems next

Success in strategy must be executed by business systems. These are activities in a sequence that can be measured and drive a consistent, predictable outcome. Business systems also stretch across all functions and must integrate and orchestrate to deliver the customer experience defined in the strategy. Much like the organs in your body, each organ is expert in its function, but all work together sending data to the brain which controls your body, life and wellbeing. Scale is holistic not isolated to one or two functions. Investing and building an operational, fulfilment foundation without scaling lead generation and conversion capabilities is a futile exercise. A great heart with weak lungs prevents the body’s ability to walk, never mind run.

3.People follow

With systems in place, the right people doing the right things at the right time becomes possible. Instead of ‘jobs’, create system operator opportunities. It allows for more success in recruitment, accelerates capacitation of new staff and when people do what they have aptitude to do and succeed, they flourish and grow, helping execute your strategy.

4.Technology tightens

With a deep understanding of your business, measured performance and the right team, opportunities to digitise, mechanise and automate become feasible and viable. A good team recognises their role and understands their future; to get there, they themselves need to move beyond compliance, processing, repetitive work as well as gain the advantage of technologies to increase their performance in the systems they operate.

5. The yawn emerges

A scaled design resulting from the sequence above will see accelerated revenue growth with stabilising operating overheads. The result of the ‘yawning gap’ translates into free cash enabling self-funded growth. the moment the yawn begins to tighten, it’s a clear indicator that things have changed, either in the market or in the capacity of the business.

6. Repeat

Remedying the capacity or strategy is found through repeating steps 1-5. Scale is not a destination; it is a journey and the steps to achieve it remain the steps that guide its repetition.

7. Reap

A scaled business, generating a wide yawn will attract fantastic valuations. It makes a good time to exit should you not want to repeat the ‘refresh’ of this scaling system. The worse possible outcome is that in the face of a tightening yawn, complacency sets in because of comfort and the entire exercise of creating a scalable business is never rewarded with a handsome exit.

We work with established business to Sweat out a relevant, future oriented strategy; Scale a business to deliver on it and capture and own its chosen area of specialisation; and support the Sell, to lockdown and secure the reward for success in scaling. Any business can do it; do you want to do it? Work with Aurik and we’ll help you get there.

How to use your business to fund emigration

[vc_row][vc_column][vc_row_inner][vc_column_inner][vc_column_text]Many enquiries we receive are to do with business owners who want to sell their businesses and emigrate. They are frustrated. Mostly, they have set their sights on New Zealand, Australia, the UK or the US. They feel that the future in SA is bleak, their kids will suffer limited opportunities, there is no economic growth and that government is business unfriendly. So why then have they not done it yet? Mostly it’s because they cannot sell their businesses for a value that will support their emigration and are struggling to find buyers to boot.

If this is you, you’re left with two options.

You can blame someone. That feels great for the first 5 minutes, but it doesn’t resolve your frustration or predicament.

Alternatively, you can get your s**t together, act and turn your frustration around. If that sounds good to you, here are the steps to get it done right.

Listen to the podcast HERE[/vc_column_text][/vc_column_inner][/vc_row_inner][vc_row_inner][vc_column_inner][vc_column_text]

1. Be Grateful

The fact that you have a business places you in the top 5% of economically active people globally. Having a business gives you control over your future. Corporate life has been hell for most of the last decade and will get even worse over the next one. A business owner is cross trained out of necessity and through that can create economy for himself independently.

Be truthful that you have been on a tax strike for the last 5 years. it’s normal. Greece, about a decade or so ago, had a government and leader like Zuma and his administration. As they stole, so too did everyone else. Most private business owners live through their businesses in protest to the corruption and broken service delivery brought to SA by the Zuma administration. This fact harms your business valuation.

Good valuations require healthy profits. Most businesses operating in SA should be generating around a 22%-36% pre-tax profit when in steady state and if built right. In crude terms, your valuation is attached to that number. As it falls because of other non-business expenses flowing through the business, so too does your valuation.

Many argue this case successfully and reconstruct their income statements to reflect the real value of the business. The buyers respond by agreeing then to buy the business over a period of 1 to 3 years and attach the valuation to the generation of the profits over that period too. For example, you secure a valuation of R30m, it gets paid in 3 x ten million Rand chunks after each future year end and upon hitting certain profit targets. If you get it right, you get paid, if you don’t, your purchase price diminishes. In all cases, you are tied in for three years and your emigrating-next-week plans are put on hold.

2. Rebuild

Accepting this reality now sets you on a 3-year path. It’s more than ample time to rebuild the business to a valuation that you can set today, for the future, and build towards it. Three years fly by fast. It’s also an opportunity to ensure that not only can you get the price you want, but that you can get your business sold. Building it right means building it into an Asset of Value.

3. Be patient

This is hard. It’s hard because as you rebuild the business into an Asset of Value, it will generate more revenues and it will spit out more profit. It will also see you spending more time on growth rather than putting out fires in daily operations. You will begin to realise that the low growth economy is irrelevant to your businesses performance. Besides making more money, you’ll start having fun again, enjoying the business and its growth. The bad news is that this is the right time to start finding a buyer. Your positive frame of mind, the growth in the business and profits and the fact that you are doing the work you lovee is what will attract a buyer and a premium price for the business you’ve built into an asset.

4. Reconsider

Before committing to the sale of the business, do an evaluation of the destination you’ve chosen. The 2020 forecast places SA with the second highest growth forecast behind America and ahead of the 3 others. It also has the lowest competitive index of all 4  countries and that makes you and your skills more valuable here too. For example, a simple coffee shop and bakery in SA with, say 30 tables, would employ around 9-13 people including yourself. It would generate, on a clean income statement, a pre-tax profit of around 22%. In any of the other destinations, the same business would only be able to afford a staff of around 5 people and it would generate pre-tax profit around 5-8%.

Be sure of this: Emigration costs big money. Depending on your circumstances, success in emigration requires you to exit with real money on hand. It takes about $1m to settle, whilst renting, in a new location. Educating a kid comes in around $1.5 and a very ordinary, small home for 4, depending on where you live, starts around $400 000. In Rand terms, to give yourself and your family a fair start, you need to have R20m in the bag and the prospect of economic opportunity either in a job or in a business. The best way to get this sorted is to build your business into an Asset of Value. But again, be warned, you run the risk of then wanting to stay, because a business built right, that makes good money, is a business you’ll want to keep.

At Aurik we work with business owners who want to stay and want to go. We work with you to build your business into an Asset of Value leaving you with options and choices that you might not have had before.[/vc_column_text][/vc_column_inner][/vc_row_inner][/vc_column][/vc_row]

Lessons from a muddy island during Brexit troubles

[vc_row][vc_column][vc_row_inner][vc_column_inner][vc_column_text]Having recently returned from a trip to the UK, I reflected on the comments leading up to it, from people that I was scheduled to meet. “Don’t come now, rather delay to November or next year,” they said.
“Why?” I asked.
“Because the Pound has been pounded and our politicians are making a real mess of things and our country is socially divided and our business confidence indexes are at an all time low,” they said.
“That’s everyday life in South Africa,” I responded “and, in that environment, our clients enjoyed an average annual revenue growth of 28.9%.”
After a brief pause… “Come they said, come and let’s understand how to grow a business in choppy waters.”

Listen to the podcast HERE[/vc_column_text][/vc_column_inner][/vc_row_inner][vc_row_inner][vc_column_inner][vc_column_text]n all this chaos, London remains a vibrant, exciting place of business. the government, besides the politicians, work hard to constantly create an inviting place to do business, thrive and grow to maintain the status of the UK’s economy on the leader board. It’s rated as the 5th largest economy globally with a US$3 trillion economy growing at 1.5% annually making it 8 times bigger than our economy growing at twice the rate.

What can we learn from this economy and where are the opportunities that lie within it?

Shape of the economy

With almost a similar number of businesses (5.7m compared to SA’s 5.5m), the UK has only 8,000 businesses generating more than $30m per annum. The rest are classified as small with more than 5.5m being sole proprietors and micro-enterprises. In SA, we have approximately 600 companies generating taxable incomes greater than R100m and about 5.3m businesses generating less than R1 of taxable income…but we don’t know for sure. The reasons is that in the UK, all businesses are registered and pay taxes. There is little informal economy other than illegal traders. Unless we get all businesses in SA to formalise and contribute to the tax coffers, the funding of social services that many South Africans would want provided here, remains a fantasy.

Policy Focus

Given the weight of SME’s in the UK economy, policy makers across regulatory bodies and government have put real teeth into supporting this segment. In the banking sector, over 300 banks are in operation compared to our 10 or so. The rules in banking require the big incumbents to open API’s, deliver on the requirements of open banking and to encourage competition, offer different sets of rules regarding the prudential requirements between big banks and neo- or challenger banks. This has seen massive competition take place with the customer being the beneficiary. It has also stimulated the fintech market, attracting extensive investment and new business services that create jobs, lead innovation and open export markets. Xero, an accounting software is a great example of this. In that vein, the regulatory environment in the accounting sector has also loosened. Big audits must be revolved every 3 years, auditors audit each other, audits are only necessary beyond 10m in annual revenues. The impact has been to remove the red tape, which added no value, to the millions of SME’s and increased competition among accounting firms to find new services, means and ways to offer value in order to survive. This has further been exacerbated by the warmth with which digital services and SaaS solutions find a home in the UK.

Human Capital

The level of commercial understanding generally is significantly higher than in South Africa. People in business are focused on little else other than the business they operate in. How do we survive, thrive and excel is a constant mantra governing the engagement in all the meetings I had. In this, the people I met were smart, expert and progressive in seeking and creating opportunity. This enables business to happen faster, more efficiently and at a significantly higher level of opportunity.

Competition

The extent of competition in London is eye-watering. Not only are businesses competing with each other and the density of competition is fierce, but they are competing with their peers globally, making the pond bigger, but also very, very crowded. This has led to a number of requirements in all interactions. Specifically, if you are not tech savvy and don’t think in digital terms to services you render, you simply will not survive. The focus on removing cost from a service to deepen value is front-of-mind in an intensely service driven economy.

Pace

Meetings progress far faster in the UK than what I have experienced in SA. Because of the fierce competition, doors remain open to new ideas and services, but the engagements are aggressive yet very, very polite. For example, the first 5 minutes are platitudes and small talk. The next 10minutes are about what do you do and why should I care. The answer to this question then ends the meeting with 5 minutes of platitudes or moves into 15 minutes of how we could work together, ending with, can you start Monday morning 9am? In big business South Africa, the entire process takes significantly longer. Whilst we can argue culture plays a big role in this, London is fundamentally cosmopolitan and yet business culture operates separately from individual’s home cultures. It’s all about business and it’s all about value – fast.

Government

Fundamentally friendly to business, numerous policies have been put in place to stimulate, sustain and accelerate business. the one key measure that I found most interesting is a measure that has impacted significant policy changes over the last 3 years. It’s a measure that looks at the revenue per person employed across all businesses in Britain. It’s a measure used to understand productivity levels and one that keeps the eye of government on the competitiveness of British businesses assessed across the globe but also in the midst of the 4th Industrial revolution.

Funding

The Section12J provisions we have here, came from the UK. They launched a series of tax breaks to attract private investment in the SME environment. It has matured and is vibrant. Opportunity and access to raise up to $1m through a few rounds is relatively easy if you have a good idea, a track record and behave smartly. The logic was simple, early stage money is needed to stimulate start ups. Banks can’t and shouldn’t do it. Government can’t afford to. Turn then instead to the public. Create an incentive for people who’ve made money to invest money in the businesses in sectors that they have made their money in. it brings understanding, relationships and opportunity to new businesses and the risk is mitigated through tax breaks. In SA, we started with section 12J but slowly and surely, because of abuse by tax payers in part and legislation, written in uncertain language on the other, the single biggest funding source that could be available to SME’s is being constrained.

Rule of Law

Rules are rules as laws are laws. Step out of line and you will be prosecuted and punished. It has created a remarkably fair society and one in which, should you play hard, smart and persistently, you will succeed, win and rise. Today, we still wait for the prosecutions of state capture to begin.

Should South Africa wish to compete in the global arena, we need to lift our game dramatically. Our focus remains unclear as to what counts and yet we have a resilient, hard working ethic in the SME environment. We need to commit to growth, invest in it and create an environment where the best and the brightest would want to come and create their lives, their businesses and the futures here to the benefit of us all.[/vc_column_text][/vc_column_inner][/vc_row_inner][/vc_column][/vc_row]

How Aurik is growing in a no growth economy by investing in SMEs

[vc_row][vc_column][vc_row_inner][vc_column_inner][vc_column_text]Aurik’s move to bigger and better offices at the end of September shows that growth is possible in a no-growth economy.[/vc_column_text][/vc_column_inner][/vc_row_inner][vc_row_inner][vc_column_inner][vc_column_text]In addition to the opening of a Cape Town branch earlier this year, Aurik’s  Joburg office was bursting at the seams and on 30 September the team moved to a brand new site at BluBird Offices, 1 Park Road in Birnam.

“We believe that when you invest in SMEs, you invest in the future of South Africa,” said Aurik co-founder and CEO, Pavlo Phitidis.
It is SMEs who are growing, given their ability to respond to changes in the market; their adoption of new technologies and, by actively pursuing growth –  wrenching it from bulky corporates and slow competitors.”

“Our growth is through the growth of the SMEs we work with and the new premises demonstrates further investment in this sector,” said Phitidis.

The new premises have been fitted out with state-of-the-art facilities to enable high quality online engagements. This ensures that Aurik can deliver its service globally, in a way that meets their own rigorous standards, and allows for increased scale of their offering.

In addition to expanding and improving their existing offering, the new space includes new services for Aurik’s partners, in house.

“We are particularly excited about the new vlogging studio which will be available to all of our client-partners, as well as anyone else who is looking for high quality video production to tell the world about their brand,” said Phitidis.

Vloggit, as the new offering will be called, will make crisp, professional video content, optimised for digital marketing accessible to SMEs. Vloggit is a partnership between Aurik and video production company, Ellis & King.

Aurik’s focus on SME growth has driven the expansion of their offering, which will continue to be invested in SMEs.[/vc_column_text][/vc_column_inner][/vc_row_inner][/vc_column][/vc_row]

3 clustered sales propositions for a tough economy to speed up sales

[vc_row][vc_column][vc_row_inner][vc_column_inner width=”1/2″][vc_column_text]You might have noticed that it takes longer to get deals done in today’s economy. What took 6 weeks is taking 12 to 16 weeks; what took 3 months is now taking 9 months if not a year. There are many reasons for it, but the reality is that to get deals done, you have sell across three domains.

Today, you need product value propositions, mindset value propositions and economic value propositions. Missing out one of them will double up on the time it usually takes you to do your deals.

Listen to the podcast HERE[/vc_column_text][/vc_column_inner][vc_column_inner width=”1/2″][vc_single_image image=”760″ img_size=”full”][/vc_column_inner][/vc_row_inner][vc_row_inner][vc_column_inner][vc_column_text]

1. Product mindset value proposition

Products are great but seldom do they set you apart for a sustained period. There is simply too much competition to hold such an advantage unless you have patents. If you do, you’d better get a big bank account too. A patent is only worth your ability to protect it.

Read more on product and service based business HERE

Having said this, why do people buy anything? They do so to solve a problem that they have. A problem not solved is a cost to that customer. It may take the form of hard cash for example a dripping tap costs money for so long as it drips. It might take the form of time. A good example is an old, tired computer whose hardware has run too many miles and cannot keep up with the demands of updating software. Alternatively, it could take the form of an opportunity cost. A tatty old suit might not leave a funder impressed with your request for investment.

Be sure you have understood what problem you solve and for who. Not everyone has the same problem or put differently, not everyone experiences the problem in the same way. Once you have understood the problem, cost it out. A problem that cannot be quantified is not well enough understood. That means, you are probably still suck in a product, not problem, value proposition. In understanding the cost of the problem, consider the cost of your product or service. the gap between the two is the value you have to offer and that’s what people and businesses buy.

In stressful times and economic apprehension, people only act and spend in relation to their immediate felt needs. Identifying and quantifying a problem that you can solve for them means you become their priority on attention and spend.

Read more on getting positioning right with a problem solving value proposition HERE

2. External/economic value proposition:

In a zero-growth economy you need to find growth and make things happen differently to when the economy is growing. Here are three areas that you can find growth in.

Change your value proposition to be relevant

A tough economy means things change for everyone. Think about unemployment rising; its impact touches everyone in that economy. When people loose access to money, they turn to family and friends for support. This means those who had the money now have less to spend. That means that the things they budgeted to buy – from new furniture to holidays, educational support or home improvements – all go on the back burner. It feels grim but only if you are selling in one dimension, the product dimension. It’s a great opportunity if you are able, with your current product or service, to understand its value differently.

Think of a landscaping and gardening business. It booms in times of plenty and is the first service cut in times of stress. A proposition that says invest in your garden now is unlikely to work when cash is tight. Or is it? What if the proposition suggests investing in your garden now at a fraction of what the family holiday would cost since it means summer fun around the pool at home instead? A different proposition, solving a new problem, emerging from an environment of financial stress, that disabled the former proposition that worked in times of plenty.

Outcompeting your competitors

In a tough, stressed economy, all your competitors feel the pressure. Sustained negativity and apprehension disables people and businesses. Consumer and business spending has, like a tap of flowing water, switched on and off consistently, and almost immediately with each Brexit announcement. In South Africa, we have literally become immune to political announcements since they happen at such a ferocious pace. Most people have resigned themselves to any action. That’s where the opportunity arises. Your customers want to buy services from a company that is positive and is investing. Those customers being served by negative competitors are the customers up for grabs. Approaching them today will increase your marketing and sales response rates.

Read more on the power of acting, while everyone else waits for things to change HERE

Taking business from corporates

In this tough economy, the rate and pace of change from an emotional and financial perspective is seeing markets fragment. Corporates struggle in these instances. In addition, they are big, heavy, complex and slow-moving. Look at who your corporate competitors serve and approach them with a more flexible, faster-acting service offering and response. You will get reaction there.

3. Mindset proposition: Move from denial through anger, acceptance, change to adaptability

Who’s in control

Behind every business client is a person. Inside of every customer is a person. In a poor, negative economy you must add a psychological dimension to your sales activities. The best way to shift negative people is to help them see that they have full control over their futures. By far, most people are in the same space and by far, most are waiting for things to happen before they strike on deals. Whether it be for the elections to come and go or the sun to rise and set. Acting gives you power and acting over things you have control is extremely empowering. Have the conversation.

Fear versus gain

Loss carries more weight in cations than gain. It’s well known. Most people would rather act to first prevent loss, then act to attain a gain. Create an urgency by focusing on the cost of not having a problem solved. This spurs action far faster than promising a hoped-for utopian outcome in the future.

Logic

Finally, logic. Use logic to get people to act. This only works if you understand who your customer is, what problem they have that you can solve, what the cost of not having the problem solved is and how you can provide real value in getting it done.

Business today must stretch itself across all three domains. And it’s a great thing. You get better when you succeed in this. Your business grows and when the economy turns, you’ve developed habits and a way of working that sees you excel. After all, excellence is a habit.

Because we work with clients that come to us to grow, we are already in a good headspace. Because we pride ourselves in our ability to deliver growth, we eek out all the angles, arguments and opportunities to make it happen. Because we like to do so at scale, we work with you to build the systems to make this happen. It’s tough out there, don’t make it tougher. Let’s work together to take advantage of this period whilst it lasts so that when it fades, acceleration will be your norm.

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