Author: Lindokuhle Ntombela

A commodity is something that is freely accessible, commonly available and wherever you look someone has something similar to it.

One example is auto insurance –  there is basically no difference, because underwriters and actuaries all use more-or-less the same data to determine the price or value of the insurance policy.

Another is hot cross buns – the features and benefits are similar and available from 50 to 200 to 20 000 providers.

In the United Kingdom, where the stats are really good, there are 15,277 printers servicing this tiny island, and most of them are still in existence even though the market is flooded.

The question we should be asking is how do those companies survive, and what do they need to do to set themselves apart from each other? Because that’s where the art of selling and differentiating what you do in a commoditized world becomes the art of business growth.

In this podcast of the Money Show Pavlo Phitidis breaks down the commoditised environment.

Consider one of the most basic commodities available… a bar of soap. There are hundreds of thousands of variants.

Pavlo recollects on a business owner who started a soap manufacture business 15 years ago – much to Pavlo’s horror as soap is soap is soap!

This business owner entered the hotel amenity business, where a single major corporation dominated as most hotel chains wanted the cheapest of the cheapest while still maintaining quality. Amenities and soaps were things that nobody wanted to pay attention to. In a highly commoditized market such as this, he had no choice but to think outside the box, so to set himself apart, he set about understanding the brand of the hotel.

He did a deep analysis and discovered that there were approximately 3200 activities that contributed to the guest experience. It’s an incredibly complicated activity, and much of it is outside of that hotel’s control, from the arrival, travel to the hotel and activities as well as the departure.

He nailed the essence of what would appeal to tourists going through that hotel. And he began to craft a collection of amenities that were designed to specifically encourage guests to be taken home after their stay, through their packaging, their fragrances, and the feel of the amenities being used in the showers and bathrooms. The baobab scented shampoo that reminded them of their safari or the amarula bodywash to hint at sundowners in the bush.

He had conducted genuine and in-depth study to demonstrate how the senses reproduced experiences, which was what made what he did and was what made the selling propositions he had devised for the hotels so ingenious.

He created an experience to set his product apart, beyond the commoditised features and benefits.

And he was able to persuade one of the main worldwide companies that if the guest had a pleasant stay, he or she should be able to experience the physical sense and scent of the product that he supplied. When the tourist returns home, they will remember the experience, and they will remember the vacation they had at that particular hotel group and wish to remain with the same hotel group the next time they visit another destination.

” And that’s the art of differentiating in a commoditized world. You’ve got to go the extra mile to create an experience that sets you apart, as opposed to the features and criteria of your product”.

“Build a better mousetrap, and the world will beat a path to your door,” said Ralph Waldo Emerson.

It was true when quipped around 1770. There were few products, and if you made something reasonable, customers did exactly that!

Today, every product or service is a commodity. There are thousands of providers and hundreds of thousands globally.

Now, the adage should be: “If you have a mousetrap, you need to beat a path to your customer’s door.”

So, what are your options?

There are three strategies that you need to have in play: fishing, hunting, and farming. You need to do them all if you wish to maintain your market share and grow.

In this podcast of the Money Show Pavlo Phitidis unpacks, “FISHING, FARMING & HUNTING” in a  business context.

Fishing

There are two primary fishing strategies used in industry today.

1. Net trawling: You pull a huge net behind a boat out in the open sea. It is indiscriminate and random enough that it catches anything and everything in its path.
2. Lure trolling: The species of fish you want to catch determines where you go trolling and what lures you use.

In your business, you should use both strategies. Your content is oriented around your company’s successes, failures, thoughts, and views on the industry’s future.

Your net trawling would be your social media posts that talk about achievements, successes, and failures that you have gained. They are unpaid and might be seen by anyone and everyone, depending on the content and virality of the post. Their purpose should be to create awareness of your company and build brand and familiarity.

Your lure trolling is more targeted. For example, if you offer products aimed at solving problems in the restaurant industry, you could post your marketing content into a restaurant owners’ group on the social platform you can access. It is more targeted but still a hit-and-miss affair. The purpose is to create awareness and build familiarity.

Hunting

Sticking to the fishing analogy, hunting is the equivalent of spearfishing. This is a very physical activity and requires you to dive under the water and actively seek out the fish you want to catch.

In your business, you actively go right to the source of your target, your customer. It means you need to know who buys your product, why they buy it, and where and when they buy it.

Farming

Again, using the fishing analogy, farming is where you identify a group of fish, hold them in a dam or lake, and feed them to fatten them up until they are ready.

In your business, this is the process of nurturing the customers you have engaged with, building relationships, creating familiarity, deepening education, and maturing them to the point where they are ready to transact and do a deal.

The three strategies work together to find, win, and hold customers—the essence of any business.

Turning this analogy into a system of marketing and sales is our job as business owners.

Led by your customer’s buying journey, which entails three broad stages: Awareness, Consideration, and Decision, you will use marketing (net fishing and farming), business development (lure fishing and farming), and sales (hunting).

The job of marketing is to:

• Reach stakeholders in your company’s success: future customers, suppliers, and employees
• Define you’re positioning in terms of the segments of customers you want to reach
• Elicited intrigue, curiosity, and interest from a broad audience but focused on the leads that fit  your business
• The measure of success is a lead that is familiar with your brand.

The job of business development is to:

• Generate a lead and build a relationship
• Elicit needs and wants and educate the lead, which will encourage them to engage further by closing the gap between the lead’s problem and your product as a solution.
• Raise and resolve objections
• The measure of success is a customer, educated and informed, who wants to buy.

The job of sales is to:

• Receive a lead and close the deal
• Close the gap between the customer’s problem and your product as a solution.
• Manage and resolve objections
• The measure of success is a transaction and payment.

All three play into and across each other as a system of finding, winning, and holding customers. It is what sets the winners apart.

Pavlo recently spoke with a well-established but frustrated business owner; this particular business owner is an engineer whose company is not growing as quickly as it could.

He has traction and a reputation after 28 years, but he can’t grow beyond an 11% growth rate. Every time he steps on the accelerator to expand, he takes one stride forward and two steps back.

Engineers are generally careful, as seen by the way their factories and manufacturing lines are constructed. For them, seeing what you’re doing makes it simpler to perceive progress, and when you can see something, you can delegate it much more easily because you can point to it.

Managing the commercial systems it is the tricky piece because how do you see marketing? How do you see sales? How do you see operations? How do you see administration? It’s there that everything was stumbling.

Think about what the commercial system is and consider the commercial elements of the business: Marketing and sales and operations and administration and managing people and managing money. All of them interplay with each other. They are all linked together no differently to the way your production process plays out.

As you run through the production process, the shape and value of the product you create, evolves. The same applies as you proceed from one business system to the next.

It operates in a methodical manner, with the first individual beginning with marketing and the second individual securing sales. The next step is operations, followed by administration, and we began mapping out this process since an engineer would enjoy it.

The business owner got this right and STILL was stuck at 11% growth – so what was the problem? People! He experienced that people disrupt the systems. Considering this, how do you get this issue of delegation right?

In this podcast of the Money Show Pavlo picks up on how to delegate right.

When you’ve been working for yourself independently, it’s easy to keep track of things. You don’t have to have meetings, and you don’t have to worry about other people’s lives and issues. You do it all yourself, and you end up burning the midnight oil. You’re working 16 to 18-hour days, ensuring that you’re up to speed with everything, but eventually you can’t do that anymore. You need other people to come in.

Pavlo runs a small exercise with business owners who are struggling with this:
This exercise depicts the typical amount of time spent by a company owner thinking about his business.

He sleeps around 8 hours per night and he’s awake for 16 hours. Some calculations tally that he has spent around 160,000 hours thinking about his business over the last 28 years. With all that contemplation, he’s ultimately got into deep, deep realms of complexity, which finally lead to a point when things begin to become simple.

With that in mind, the business owner is going to try to assign certain work to a manager in his company.

This business owner has five managers who are all well-established. They’ve each been there for an average of 11 years. So, we carried out a comparable calculation. 11 years… 250 odd working days at 8 hours a day. They are managers, and when they go home for the weekend, they are not thinking about the business. They’ve been pondering for an average of 20,000 hours.

You have 160,000 hours in the business owner’s mind and a total of 20,000 hours in the managers minds. Delegation becomes a tremendous challenge right away because you’re truly thinking and seeing things so differently based on how your team perceives and thinks about things. It starts there and only becomes a problem if the context isn’t set correctly and there’s no alignment in understanding what and how is being delegated.

The most common error that founders, owners, and CEOs make is assuming that the individuals to whom they delegate know what they’re doing and care as much as they do.

To overcome this gap, you have to delegate a complete, holistic SYSTEM, not just an outcome, and you need to revisit the whole system from time to time to ensure it is intact and functioning slickly.

Delegation doesn’t begin or end with an instruction. It’s an ongoing relationship with your team.

In a recent conversation with a global business broker, we debated why 94.6% of companies started failing to sell. This is despite them having survived the early years, grown into sizable mid-market businesses and provided nicely for their founders.

He shared a dreadful reality with me that he referred to as the 6 D’s. Most of his clients looking to sell their companies come to him because of the 6D’s.

Death – the death of the owner or a significant partner in the business

Disease –contracting a disease that prevents the owner or business partner from being able to work

Divorce – a divorce that leads to the company having to be sold

Debt – debt that the sale of the company can only settle

Disenchantment – essentially, when every day becomes and feels like a slog and a grind in which you lose your passion.

Disability – a disability from an accident or some other event that prevents the owner from running the company

Pavlo Phitidis breaks down the 6 D’s for business owners in this Money Show podcast

The antidote to these unfortunate drivers of business sale is the 7th D – Design.

Designing your wealth creation path as a business owner is seldom done, and nobody wants to face their fate. There are four simple steps that a business owner must follow on this path to have success based on their end goal.

1. Start with the end in mind – recognise that the ultimate destination is the sale of your business. Businesses are not bought. They need to be built to be sold.
2. Set a plan and a path – of the 10,000 companies we surveyed, most that wanted to grow had no growth plan. Only 14.9% of the owners spent an hour or so chatting about growth at a monthly management meeting. Growth is not “hope or luck”. It is architected and constructed!
3. Measure up your path so you can track and trace it – deliberately managing growth is your real job as a business owner. By far, most business owners are consumed by daily, weekly, and monthly operational activities; they have no time to lead and drive growth.

Time runs out for us all. Starting with the end in mind and building your business into an Asset of Value™ from the get-go is the best insurance plan you can hope to have as a business owner.