Author: pippa@aurik.com

Getting your marketing right in a shrinking media landscape

Written by pippa@aurik.com on July 13, 2020. Posted in Lead generation and conversion, Positioning, Trends.

One after another, media houses are announcing the closure of established magazines and print titles. There’s a saying that when you sail your ship in a storm, the faults in your hull and your crew become very apparent. Covid has been the storm that has accelerated the decline of these magazines.

A shrinking media landscape has a number of impacts, one of which is that smaller businesses have fewer and fewer channels to reach their customers. Small businesses that could affort to take out a couple of adverts a few times a year, to be seen and heard above the noise, no longer have that option.

What’s left? Digital but there’s a massive concentration of digital platforms globally – Facebook and Instagram, Google and Youtube, Twitter, Linked in and increasingly Amazon is where everyone is spending. It’s become a ‘CAC’ position for small and medium businesses as the Customer Acquisiton Cost is unaffordable to compete with corporate budgets.

We used to believe that good content would win on these platforms as it would serve the audiences on the platform. So businesses invested heavily in content to attract big followings on these platforms. But now when you post something, you get access to 10% of your earned following – to reach the rest, it is pay to play.

It is getting rougher and tougher in the marketing space.

A ‘spray and pray’ approach is no longer an option.

The number of competitors you faced 10 years ago are far fewer than the number today. To get seen and heard, you can’t focus on your product or service, you need to focus on the customer group you want to reach. You need to dig into the measurable aspects of your desired market. Location, socio-economic level, possibly job title etc. These demographics are a start, but not enough.

You also need to understand the psychographics of your audience. These talk to the psychology of the people or businesses you are trying to reach. How do they behave, how do they think, and how do they buy your product and service?

That’s still not enough – you also have to understand the dynamics. What are their problems, how do they come about, how do they experience these, what does it cost them to solve them and how do they want them solved?

Once you have these three elements: demographics, psychographics and dynamics, you’ve then got a persona – a characterisation of the business you want to reach.

When you can clarify your client persona(s), you start cutting through the noise in your marketing.

Pounding the pavement in a digital world.
In the old days you would meet people, knock on doors… how do you pound the pavement in a digital world?

First,decide which platforms you need to be on and then structure appropriate approaches for each. The way you would work with Instagram should be different to Google, LinkedIn etc. Each of these platforms have a particularstyle of communication.

When you have picked your platforms, then you have to start relationship building. People’s aliases are very guarded, you can’t assume someone’s profile reflects an accurate version of who that person is. You need to share content that attracts people who are within your target audience. The messaging to connect needs to resonate with the right people. Then as in physical discussions, you need to build rapport with small talk – a few messages to establish fit before you present the business opportunity. Get the engagement right first to get the transaction right.

It’s not easy but you need to constantly test and evolve your messaging to see what works, and keep measuring to ensure it still works.

At Aurik we focus on getting your positioning right first, to ensure your marketing strategy works. Contact us if this is something you need to get right.

Managing business partnerships to avoid stalling growth

Written by pippa@aurik.com on July 10, 2020. Posted in Leadership, Mindset, Team.

It is vital to manage changing intentions and goals of #BusinessPartners without stalling the growth of the business.

Recently, we have experienced many conflicts between partners that were formerly solid. These may be due to the additional pressures that Covid-19 and the lockdown have put business owners under. People are frayed. Resolving the impasse is vital for the business’s survival.

You may wait, time does not!

LISTEN: podcast

WHAT CREATES THIS CONFLICT?

We are seeing several factors drive the impasse between business partners:

Age differences

Many partnerships emerged when the founder, had to ‘bake-in’ skill and talent so he offered equity by way of performance or for sale to a productive and vital employee. The founder has then had to adjust to this new dynamic as does the employee, now shareholder and investor. The transition alone is hard enough and often carries loads of baggage that interfere in the partnership. However, if properly done and managed, these partnerships settle. Desirous of a change of pace and lifestyle, the founding, older partner wants to exit. How to exit, on what basis, at what price and what risk creates the impasses that we are seeing today. Driven by uncertainty of the skills loss from the exiting partner. Affordability to exit driving unrealistic valuations on the business. Ability to raise the capital to buy the exiting partner out. As well as a loss of identity and meaning from the older partner all cause ructions and rumbles in what was a formerly solid partnership.

Family changes

Either health issues or parent/kid issues change the dynamic in a partnership between the partners. Family changes can introduce disruptive spouses, or create a need to extract more money that would typically go to investments in the business’s growth, or shift working hours to an unfair balance, for example. The need to rebalance continuously is hard to negotiate and navigate and cracks appear in the partnerships.

Loss of faith in South Africa

Many current issues we deal with result from differing attitudes between partners on the future of SA. One partner may mix in a social circle where emigration is a frequent occurrence. Doubt around the country’s future seeds a short term, investment-resistant mindset and behaviour. Should the other partner see opportunities because of the same factors, their desire to invest and grow conflicts with the formerly tight partnership between the two business owners.

Low growth, slow economy

The shocking performance of the SA economy takes its toll on all business owners. In circumstances where partners are unable to agree on a new direction, the stress of low growth can harden perspectives and seed resentment between partners.

COST OF THE CONFLICT

It’s vital that the conflicts and ruptures get solved fast. You may wait to have it blow over, time does not. We see an increasing number of business owners invest today for tomorrow. They are growing and eating the lunch of their similar competitors. The cost of not quickly resolving the ruckus’s in a partnership will be seen in the business’s performance, and include:

Stalled growth

A business that maintains its turnover growth is dying. At a minimum, to stay ahead of the depreciating Rand and inflation, a business should be growing around 18-22% on a compounded annual basis. If it’s not, its regressing and in that, losing market share.

Loss of talent

Already, SA is talent scarce. Losing good people is the fault of the business owner. Employing good people and holding onto them means progress, positivity and opportunity for them. you hold good people by offering careers and opportunities for them to improve their lot. This includes skills, talent, professionalism, opportunity and more. These are all features of a growing business that has a vision, is executing on it and solid business partners leading from the front.

Leadership loss

If you aren’t driven to succeed and get to the front to compete for the customer, the likelihood it’s unlikely that you will be the first in line to spot new opportunities, changing customer behaviours and the like. This places you in a follower position and your arrival at new pricing models, business models, products, services and more that the market demands will be late.

ACTIONS THAT CAN BE TAKEN
Several remedies are on offer to solve these challenges. A few examples include:

Buy-outs and sales

Having a partner sell out in full or in part can provide relief for the business. Careful consideration on what this means for the business is needed. Should the partnership be well-balanced, it means that there will be a skills gap in the business with one exiting and the other remaining. Resolving that through either bringing in a new partner or employing talent must be included in this remedy. In the interests of the business, this might well take place over time. knowing that there is a resolution is often sufficient for the partnership to remain positive and productive.

Re-envisage the business

An exercise of re-visioning the business, in effect, resetting the business is very helpful. It enables partners to see what they have and how they can use this to reshape the business for success. It effectively resets the business based on the partners’ current goals rather than build the business based on their founding goals. Goals, vision and strategic intent in all business should be an annual event, something often omitted because of the busyness of business and everyday life. Partners forget to communicate and speak to each other in a business. This process, properly facilitated, will remind partners why they are partners, what brought them together and what they can do to find resolution. Most valuably, they will see and hear each other for the first time in a long time and in that, de-personalise their changed focus in relation to each other and the business.

Wear the right hats

Changing workloads and responsibility can be easily accommodated through business performance incentives. A partnership based on a 50:50 basis for example, does not mean salaries are equal. Splitting out shareholding/investing thinking from director/day-to-day thinking is crucial. Shareholding drives dividends and the dividend policy of the business. Director responsibilities and performance drive salary and incentives.

Partnerships are often loaded with emotion and history. Resolving conflict, fast and fairly is extremely hard for this reason. The risks are that the business suffers irrevocably.

We frequently work with established business owners to resolve partner conflicts. Our approach seeks to serve the needs of both parties but with a firm intent on saving, stabilising and growing the business born from the fruit of the partnership. In this way, all parties win.

Create more time to focus on growth

Written by pippa@aurik.com on July 8, 2020. Posted in Creating time, Leadership, Mindset, Operational systems, Positioning.

Time is our most precious resource, but it seems like we never have enough of it. The second entrepreneur Aurik ever gave guidance to, was a bakery business owned by a 54-year old man, who had initiated the company at 27. It was highly successful, but he’d not been able to focus on its strategic growth because all his time was tied up in operations. Fourteen years after we rebuilt the business with him, it now creates more than a Billion Rands’ worth of business.

As the owner of a developing business, you can, and should create time to grow the business, and work on it, instead of in it. We’ll examine seven strategies that help you create more time, and spend it wisely.

Listen to the podcast from The Money Show:

Positioning Your Business

It can feel all too tempting to try and be everything to everyone. For a growing business, there is extreme value in specialisation, where you provide a specific kind of service to a defined type of customer. By specialising and positioning your business, you’re able to focus, learn your industry, and exploit your business’ unique aptitudes.

Build the Right Systems

The systems you build become the delivery vehicle for your customer service. By building simple, effective systems that positively serve your customers, you will create time to focus on your company’s growth.

Take the Right Action

A growing business must go through its developmental stages to be successful – there is no such thing as a true overnight success. Identify which stage your business is in, and take the right action for your company. The stages of your business’ lifecycle are:

• Start – where you’re focused on selling your product/service & attracting customers

• Build – where you’ve had enough success to start building effective systems, to ensure you can keep up your level of delivery

• Grow – where you’re able to hire the right people to cater for increased customer demand

• Accelerate – where your business functions so well operationally, that you’re able to innovate and move towards becoming an industry leader

Outsourcing

Outsourcing is a great way to carve out the right kind of focused time. Here’s how to choose which tasks you can outsource:

• Which tasks are part of your core business and strategically important? Do not outsource these. This is your work.

• Which tasks are part of your core business but not strategically important? For this, you can collaborate with a service provider.

• Which tasks are not part of your core business, and not strategically important? These tasks can be outsourced.

Use Technology Smartly

Using integrated technological systems will help you create more time for your team, and thereby create more value for your company. For example, your accounting software should directly integrate with your banking facilities, otherwise you’re adding unnecessary steps to administrative processes.

Touch Things Once Only

Research has shown that, when we multitask, we experience a 38% drop in intellectual capacity. That’s why focusing on a single task at one time leads to better results. Set your priorities and work on one task at a time, without distraction.

Choose the right collaborators

In uncertain times, you may find yourself desperately seeking a collaborator, but choosing the right one is key for your company’s success. Select collaborators who are close to your business’ function, and who will help you to build it, not take time away from it.

When your time runs low, so do your inspiration levels. At Aurik, we help you build systems that curate, construct and craft your time, so that you can build your business into an asset of value. Get in touch with us and let’s start building, together.

Attaining excellence in business starts with you

Written by pippa@aurik.com on July 8, 2020. Posted in Innovation, Leadership, Mindset.

In a crisis, being one of the last businesses standing is the best outcome for many. And to be the last one standing requires us to strive to ever-greater excellence.As the owner, being in business, doing business and building a business tests your sense of self.

Listen to Pavlo Phitidis discuss excellence in business in this podcast from 702 and CapeTalk:

Business is conflictual. Starting one requires you to take away business from someone else. Looked at differently, it means you have to fight for your piece of the pie and the established incumbents won’t want to share any of it with you. Your success comes at a loss for your competitors.

Making the pie bigger because of a disruptive business that you are building is mostly a nice way of saying that you will take the pie away from indirect competitors and they won’t want to give any of it up.

Then there is selling and selling has a firmly conflictual element to it. You are trying to separate a customer and their hard-earned cash and mostly, they are trying to hold onto it. Should they really want what you have, then it’s a discussion around price; conflict again.

These many daily battles that you fight to build a business have two sides. The one is crushing you. The other building you. Every fight that you have that you persist with, depersonalise, and complete either leads to success or, if the deal is not done, new insights and lessons learned, that builds you. It makes you better but only if you can learn AND change your behaviour. If you win a deal and don’t question why and how or if you lose it and in that find yourself wanting to give up, then business and its many fights will crush you. You will emerge full of self-doubt with eroded confidence and a waning sense of value.

So, say things are going well for you and your business, how do you rate yourself. We always act within the purview of our own psychologies. How we see ourselves impacts greatly on how we behave in business. Many CEO’s of businesses adopt a view of themselves that is linked to the turnover of their business or the business that they are CEO’s of. Does a big, hefty, multi-billion Rand turnover mean that you are a genius, supremely gifted and superior as a human being? Many Presidents think so and many, many CEO’s and senior corporate executives do too. Some business owners certainly do. If that is so, I think you’re in for a nasty surprise. Here is why:

How did your big turnover come about – many businesses in South Africa operate with very little competition. In almost every sector, there is a big 3 or 4 or 5. Be it financial services, automotive, hospitality, food services, pharma and so the list goes on. This highly concentrated environment often means that competition between these big businesses is limited. They may be protected by government issued licenses limiting the number of players in a market; or require extraordinary amounts of investment to simply start because of such licensing and compliance requirements, which limits your competitors. It also limits what you as a corporate giant can do. Perhaps, given that, the hefty turnover is a consequence of that, rather than remarkable genius.
Who is the dream team – That the emperor has no clothes is a well-worn and very useful condition to consider. I’m always sceptical of a team member’s agreement with me. Not that a business is or should be a democracy. The owner carries all the risk and must make the calls to action for the business and the team. Recently, in an interview with George Stephanopoulos from ABC News and President Trump, someone coughed. He was impatiently admonished by the President and humiliated in front of White House staff. Do you think he will ever share an honest thought about an issue he is questioned about from Trump? Or will he simply agree with Trump for fear of reprisal? A further consideration is the risk of group think. It happens to us all where, as a team you might find over time that you all begin to think alike. Remedies to this include actively embracing diversity in the team and the adopting third-party collaborators and partners. These could be board members or business growth service providers. Perspective and ground-truthing are hard to maintain, but critical to not finding yourself blind-sided. Ask Kodak!
How does funding work – If your funding stream comes from established financial institutions that, because of very long relationships and their own hunger to do business, make access to that funding a formality. The fight for funding is sobering and beyond valuable. Understand that a funder does not want to lose money and in so doing, questions and double guesses your every activity. Then use this free ‘battle testing’ aggravation as a fantastic tool to ensure your own thinking and approach is valid and the best it can be. Most funders are not ‘stupid’ actually!
How is excellence measured – is it favourable comments from friends and family? Or is it fawning, for fear of reprisal from your team members or staff at work? If something cannot be measured it cannot be managed. Far too often we rely on anecdote to evaluate and assess ourselves and our business performance. Measuring something like excellence is hard. It requires a standard to be set first and the question is what you set it against. Competitors or your own standards? If your own, how do they come about? This is when it’s useful to have an obsessive-compulsive perfection disordered person on your team. As annoying as they are, they hold value in this regard. Once the standard is set, how do you measure it, consistently and reliably? Unless you have understood how to do this and thereafter, how to digitise it, it’s hard to maintain and impossible to maintain as you grow.
Who are your customers – do they want you or need you. Certain services like electricity and banking services are a necessity in life. Without them you’d suffer greatly. Does that make consumers of these services customers, suggesting that they willingly engage with you to buy your version of the service or product? To the extent that your customers cannot do without you, you run the risk of assuming the credit for the business you run or have built. It creates a fundamentally false impression of your own capability and sense of self confidence. The remedy for this is to expand into a new market where a greater number of competitors reside and learn to fight for your piece of the pie in that environment. It is the litmus test of your grit and capability.
Who are your competitors – are they matched in size and are they many? In South Africa, for example, banks enjoy a ROE around 22-25%. Failure to deliver this is upsetting for the executive teams whose incentives are measured against such metrics. As a comparison, in the UK, with over 300 financial services licenses, banks that return single digit ROE’s above 7 or 8% are lauded as brilliantly built and run businesses. Competitors bring out the best and worst in you. To rate yourself in a ground truthed reality to avoid the hubris of your future fall, surround yourself in a competitive marketplace since iron sharpens iron.
What drives you – are you driven by an internal or external locus of control. And nternal locus of control is a true gift. It means you are mostly always in a competition with your former self; the person you are from last year or an hour ago. That self-drive in a positive psychology remains the single biggest gift in helping you strive towards excellence. It’s unlikely that you’ll ever rate yourself too highly since the best you delivered yesterday sets the standard to beat tomorrow.

Excellence is a word too seldom used in South Africa today. We tolerate and excuse everything from shocking behaviour of politicians, business leaders and governance, compliance, big brand service providers (who ironically are in service of excellence), educators and consumers. 30% for maths literacy is a commitment to failure in the future. A word without action, is a commitment to defeat.

We talk of the 4^th industrial revolution with concern and intent to play in it, yet choose not to make the hard sacrifices today needed to achieve it. Words than never turn into action about creating a better future for yourself and your business seed the cancer of cynicism and self-doubt in your future self. Aristotle said: “If behaviour leads to excellence, then excellence is but a habit.”

Our habits are formed by our behaviour which in turn is driven by our attitude. Adopt excellence as a new standard in your business and the results will see you grow in a no-growth economy where the average standards of service are dismal.

Working with you at Aurik, we will strive for that excellence both in our business and most importantly, yours. It’s simple, your success is ours.

What is your business worth?

Written by pippa@aurik.com on July 6, 2020. Posted in Exits, Leadership.

Firstly, this only matters for 5.4% of all #businessowners since 94.6% of all business started fail to sell. They close at great cost to the business owner, their family, employees, the sector and industry they are in, customers and suppliers and the economy of the country they operate from.

The second part of the answer is “not nearly what I thought or hoped it would be worth” or “not enough in terms of what I need”.

Start now to prevent these fateful outcomes by taking control of two things. Understand how valuation of a business works and start building your business differently today to secure the valuation you want in the future. It can be done, and this is how.

1. Understand your business

The type of business you have, how long its been going, the historic performance and current investments you make in it, the maturity of the industry and sector you are playing in and the timing of a valuation all play a role. For example, a well-positioned business in the competitive marketplace with steady revenues earns higher valuations than a project revenue business.

2. Understand your choices

If you have lived through your business and have very different income statements, you will pay the price in valuation at the end. If you have run thin and held back on investments needed to sustain the growth in your business, it will be noticed and evaluated and hurt the final price. Build with a view to create an Asset of Value and your exit and price options will be vastly superior since smart money wants assets not promises nor potential.

3. Understand your buyer

How competitive is the market for your business? Are there many buyers who have a cool $280m.

4. Understand valuation

There a many methods of valuation. Let’s look at 3 common methods in this blog.

DISCOUNTED FREE CASHFLOW (DCF)

This requires you to build a business into an asset. An asset is something that can be sold, that a buyer wants and wants it because it will provide two types of return. A capital return i.e. its equity value will grow and a cash return i.e. it will generate dividends. There are cases where certain assets only ever offer a capital return but that is seldom the case with a business as a living breathing thing. Capital returns are mostly for inanimate assets like art or diamonds etc.

There are essentially three levers that a business owner can control to improve the valuation of a business using the DCF.

THE RISK RATE LEVER

A high-risk rate drops your valuation. The risk rate seeks to measure the risk the business carries. Essentially, it looks to understand what makes your business special. It measures this against competition mostly and how sustainable your business is. For example, if you think that what makes you special is your product or service or price, you’re in for a big surprise. 100 years ago, your product could have set you apart but today, your competitors mostly have something similar and if not, will have it in the very near future. However, if you have a patent, this might set you apart but mostly not. There are millions of patents and very few in the world of the SME have any true, sustainable product feature advantages. Today, what makes you special is mostly linked to the specialisation of your business measured in terms of the problems you solve for well-defined customer segments.

THE DURATION LEVER

How long can the business continue without you – a year, five years, more? The longer into the future your business can operate the way it does, but without you, the higher the valuation. Get this right by building your business into a System of Delivery. That means your business functions are systematised to deliver a consistent experience in solving a problem for well defined customers. It links tightly to the point above. Your System of Delivery is the precept to getting a good team on board and these factors together reduce the demands and time the business places on you.

THE FREE CASH LEVER

How much free cash does the business produce now and into the future. The thicker the seam, the higher the value, The more diverse the seam, the higher the value. Getting this right need discipline. All your innovation and growth acceleration efforts need to align to the points above. This is where all these efforts need to be sure that you do not disrupt the organisation and efficiency you have developed in your System of Delivery. You want new growth to divorce itself away from operating overheads. The more they separate, the greater the free cash. Finally, you want to generate your growth across a spread of customer segments and sizes. Avoid having all your eggs in one basket – it’ll crash your valuation.

NETT ASSET VALUE (NAV)

This is commonly known as your book value. It looks at the net asset value of your business. that is, all assets depreciated plus all other assets less all liabilities. In well-established business it’s a horrible number mostly because all assets have been written down. This valuation method often results in a net realisable value NRV valuation instead. This is the cash value of disposing of all the assets through, for example an auction and offsetting the liabilities from there. Its mostly a depressing valuation method since it looks at

MULTIPLE OF REVENUE

This method is used and most useful in cash businesses but only if there are reliable benchmarks for that business. you apply a multiple on the revenues and then hope for the best. With good benchmarks of, say for example, a restaurant, you can evaluate the true worth of the business using the benchmarks. Food costs, rent, labour etc are well understood and even though the expenses are hard to calculate (it being a cash business) you can forecast the value from there.

5. Understand your terms

I’ll leave you with one thought. A JSE listed company, EOH went on a wild SME buying spree for about 6 years until a year ago. Their share price was growing and full of heat and they did deals that split the purchase price between shares and cash. Mostly shares. Sellers sold and got paid in some cases with up to 80% shares. At that time, the shares were valued at around R150. Today, they sit at R14.50. Say you sold your business for R30m on an 80% share split. At the time you got R6m cash and 160,000 EOH shares. Today, this means you sold your business for R8.32m!

Build with passion and purpose. Your purpose should be to build your business into an #AssetofValue. This will safeguard your future, put you in the minority of businesses that sell with success and get a premium value at that. At Aurik, we’ll work with you to get this done. Its what we do and love making your success our moments of pride!

The Onion Peeler

Written by pippa@aurik.com on July 6, 2020. Posted in Leadership.

Pavlo Phitidis has a method to make decisions in any business that he calls: The Onion Peeler. Listen to the podcast of his discussion about this on The Money Show on 702 & CapeTalk

The backstory:

Some years back, Pavlo was introduced to the CEO of one of the biggest mining companies in the world. When asked what Pavlo thought of his mining company, Pavlo replied: It’s like a giant onion!

The mining boss was unsettled and asked what he meant and Pavlo unpacked his theory that uses the analogy of the 3 major parts of any onion:

The inner core where the flavour lies
The middle layers where the burn comes to life
The outer layer – the skin

Applying it to the mining business evolved a theory that Pavlo has been using ever since to make decisions quickly when a snap evaluation is necessary to take advantage of an opportunity.

Value stack

Before you apply the Onion Peeler, you need to understand your value stack: It’s everything you have hold and possess. This includes:

Relationships: There’s value in the relationships you’ve built with staff, suppliers, customers, institutions, even competitors.
Assets: plant, equipment, stock, cash, property and anything else you own.
Momentum: Ideally these would be recurring revenues, but all businesses should be bringing some cash in.
Time in the game: your experience is invaluable, if you stay within your industry and deepen your understanding of how it works and who to work with.
Your team: There are so many stories of employees who have done things for employers that no-one knows about. Those credits are earned.
Experience: Every crisis you lead your business through enriches and empowers you as the business owner in a different way.

THE ONION

Once you understand your value stack you can apply the method.

The core: Strategic and core

Everything strategic and core to your business’s existence.
Example: A business intelligence business needs two fundamental skills: One is the ability to slice and dice data, to be smart with numbers. The other is a competency in data visualisation and presentation to communicate those numbers meaningfully to clients and audiences.

Everything else sits in the other layers. When you look at an opportunity you need to know what is core and strategic to your business, and know that everything else is not.

Middle layer: strategic but not core.

Example: the hardware that you use – computers, printers, software even. This is necessary to deliver your solution so it is strategic, but it is not core to what the business is or does, so you do not need to own it. This can be hired or outsourced.

Outer layer: Everything that is not strategic or core.

This is everything you can discard and still function. It includes the pencils, coffee and tea, maybe even offices now that we have all adapted to working from home.

These things make things more comfortable and easier but you don’t personally need to invest anything more than the minimum in them. It’s a pricing game for everything in the outer layer.

So how does this apply to decisions?

When you’re considering a service, for example: advertising and marketing – if you think it is core and strategic you would hire in-house. This moves those functions from the middle layer to the core.

Anything that moves from the middle to the inner layer expands the core, increases costs and dilutes the focus on the core of the business. In times of crisis, if the core is not lean, you carry significant costs here.

If something is not strategic and core, it needs to be kept in the middle and outer layers. It is that simple, but the process of understanding your value stack, what is and isn’t core may take some time and effort.

If you need to decide what is core and strategic in your business, contact us.

3 clustered sales approach to speed up sales in a tough economy

Written by pippa@aurik.com on July 2, 2020. Posted in Lead generation and conversion, Mindset, Positioning.

Even before Covid hit, you might have noticed that it takes longer to get deals done. 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:

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.

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.

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.

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.

Why, when and how to sell your business

Written by pippa@aurik.com on July 2, 2020. Posted in Exits.

Every business only has two destinations: it closes, or you successfully sell it. Globally, however, 94.6% of all businesses that begin, never get sold. This is tragic for business owners, because they pour their life, energy, and attention into a building a business that should serve them and offer them financial security. But why would you sell your business, and when is the right time to do so? On The Money Show with Bruce Whitfield, Pavlo Phitidis outlined a plan for how to sell your business:

Listen to the podcast here:

Join Pavlo for an online forum to discuss business exits on 12 August 2020. Register here

WHY DO YOU DO WHAT YOU DO?

Starting and building a business isn’t something you enter lightly. Adopting an entrepreneurial approach to your business, and building an asset of value, with the view to selling it at some point, is essential. If you’re concerned as a business owner that you need to reconfigure the way you’ve built your business, so that you can look towards selling it and securing your future, now’s the time to return to the basics of your business and remember why you do what you do. You may have discovered an opportunity that was the catalyst for building your business, or you opted to create a business out of necessity. Either way, the passion you felt for your business in the beginning serves as a guide for helping you ready your business for sale and plan your exit strategy, but it cannot be the sole shaping force. If you began your business out of necessity, it forces you to fully engage with your business, digging deep into it – I often find that the most driven business owners are indeed the ones whose drive was borne out of necessity. Passion, in and of itself, is not enough to build (and then sell) a successful business. You may be deeply passionate about a sector or industry, or you may feel inspired by the momentum within building a business, but passion alone is not a sustainable business building tool. It may help you to drive momentum within your business, but it can also make you blinkered. Passion may get you started, but passion combined with purpose, will enable you to build an asset of value. Your business should be built to sell, rather than built in the hope of one day selling it. Plan your exit strategy at the beginning, and you’ll be relatively assured of a successful sale, when the time is right.

WHEN DO YOU SELL?

The right time to sell your business doesn’t just come around by accident. There are several variables that drive that process, and they often influence your plan for how to sell your business. Because your business is an extension of yourself, changes in your world view, health, energy levels, attitude, or other circumstances, can directly influence your decision to sell your business. Factors somewhat external to your business can also directly influence your plan for how to sell your business. Changes in your sector or industry, or shifting trends in technology and legislation, can lead you towards wanting to end the cycle of breaking and rebuilding your business to stay aligned with your customers’ changing needs. Moreover, the lifecycle of your business plays an important role in helping you choose the right time, and how, to sell your business. As your business grows, so too does its value change and grow. Your business’ lifecycle is not driven by how long it’s been in operation – some businesses reach their peak early on, while others take longer to mature: the peak of your business’ life cycle is always a good time to sell. The lifecycle stages can be influenced by the size of your business, the arrival of new competitors, a shifting customer base, or new buyers taking interest in your business. An interested corporate buyer will have a completely different budget and purpose for wanting to buy your business, when compared with a private buyer. Particularly, the size of your business will influence buyers’ interest in, and ability to, buy your business.

HOW TO SELL YOUR BUSINESS

As a business owner, you should always be building an asset of value, enabling you to ensure that your business can be sold at any point. Make it a habit to investigate and consider what you want for your business, and what you need to extract from it. For the former, consider what you’re still equipped to give to it, and for the latter, undertake a financial valuation or assessment of your business, at least once a year. Consider how much money you would need to maintain your lifestyle once you sell your business and to cover your retirement, and then assess how much money you would like to make from the sale of your business. Those two figures will help you to define how much you would like to sell your business for, and how close you are to achieving that goal. Thereafter, consider the current financial valuation of your business, including the three levers of valuation, each of which can be built into your business:

What makes you different to your competitors?
How long into the future your business can continue to grow?
What seam of free cash flow can your business generate?

Once you’ve built those levels of valuation into your business, and been able to assess your financial objectives, you’ll be equipped to build your exit strategy, and define how to sell your business.

Are you considering how to sell your business? Aurik can help. Let’s start talking, and we’ll help you build an asset of value.

Now is the perfect time to build an international business out of SA

Written by pippa@aurik.com on June 26, 2020. Posted in Aurik Business, Innovation, Leadership, Positioning.

Covid-19 has brought together 7 elements that Pavlo Phitidis says create the perfect opportunity for mid-size South African businesses to take advantage of, to service markets beyond our borders.

Listen to his discussion about this on The Money Show on 702 & CapeTalk:

Resilience

We have a resilience in South Africa that comes from years of operating in a no growth economy, and living with constant political and energy uncertainty. It’s been a business-unfriendly environment, yet the business owners we work with aren’t even aware of it! It has become normal and we overcome these challenges without even thinking about it. When Pavlo compares South African business owners with those he has worked with in the UK, USA and Europe through Covid, he’s noticed a stark difference. There, they are waiting for economic policies and remedial plans to roll out, here we are battle ready, fit and capable both mentally and emotionally to cope with an uncertain environment.

It’s not personal

The Covid crisis is not personal! Pre-Covid South Africa’s crises hit one after the next, from all the scandals of the Zuma administration, to load shedding, to downgrades – they all felt personal as other economies were growing, and even booming in some places.

Covid is universal. Every country has suffered under lockdown. It has forced change in the way people behave and businesses engage. It’s creates a whole new set of problems and whoever served those customers before, needs to change the way they serve them now, or they won’t be relevant. People are primed for change.

Our dual economy:

South Africa has both a well-developed and informal economy. In our developed economy we have the ability build products and services suited to other developed economies, and we can do it in the tall grass of SA, where no-one is paying us any attention, so we can test it and get it right. This is in contrast to high profile economies where competition springs up overnight to compete with any new offering.

Exchange rate

The weak currency at the moment means we can export very cost effectively.

World class tech skills

We have global standard technology skills, which means we can build out global standard tech solutions. Why this is so important now? Because crises always accelerate digitisation, and Covid has been no different. We have had to work remotely, which has shown us we can work from anywhere in the world, with anyone in the world. And we have the added bonus of speaking English, which is the language of international business conversations.

Necessity is the mother of invention

Pavlo compared businesses he’s working with in South Africa with those in the UK, EU and USA, where he has also been active through lockdown. The amount of economic support offered to SMEs in the UK in particular is eyewatering. For example, furlough in the UK allows businesses to put their staff on ‘leave’ during lockdown and the government pays 80% of salaries up to a certain threshold. And they mandated that landlords could not evict tenants for 3 months.

This meant the business owners had little motivation to do anything but take some time off during lockdown.

In South Africa, because we have no social net and SMEs bore the brunt of the economic shutdown – we had to keep going, we had to re-strategise, and find new opportunities, and these businesses are emerging now with different capabilities and opportunities to take advantage of. We haven’t been slowed down by the comfort of social support.

Mindset

The Kubler Ross grief curve is still relevant – and it shows that you need to ACT to get through the depression stage. You will never see opportunities in this stage. Most business owners in South Africa have had to just get on with it. That action has forced them through the grief curve, to a point where we are able to see possibilities that those who were furloughed, could not.

If you’re looking to grow your business across our borders, get in touch.

Conflict resolution in times of remote working

Written by pippa@aurik.com on June 25, 2020. Posted in Aurik Business, Leadership, Team.

Remote work and its dependence on digital engagement have changed the way we communicate with customers and with our teams. Add to this the sheer hours we now spend in online meetings, the stress of living through a pandemic, and the stress of living, working and schooling from one place – we need to give a lot more thought to how we manage conflict, digitally.

Listen to Pavlo Phitidis discuss this on The Money Show on 702 & CapeTalk:

Customer conflict resolution

Pavlo described a personal experience he’s had through the lockdown, as his computer had an actual meltdown, necessitating the purchase of a new one. The first one froze repeatedly in the first week, and was replaced with another within a few days. The second one had the exact same fault, and a quick search revealed that customers across the globe have experienced this same issue. However, Pavlo had to chase repeatedly to secure a meeting with a complaint resolution manager who then refused to switch on her camera for the meeting, and left him with no resolution whatsoever.

This is generally our experience of dealing with big corporates – we have to invest our time energy and resources to secure an engagement, and even more time, energy and resources to achieve the outcome we believe we have earned.

As business owners of small and medium sized businesses we have an opportunity to compete and win on conflict resolution, and understanding how to get it right, online is necessary for a social distancing world.

Using Pavlo’s recent experience, there are 2 immediate lessons to be taken:

Be seen. Turn on your camera so that your customer can see you on the other end of the screen. Through the camera you can create empathy, show care and concern.
Prepare for the call and frame the experience for the customer. Send them a confirmation of the appointment with an agenda for the meeting, so that they understand that there are certain steps that need to be worked through in order to reach the resolution. It also shows that the desired outcome IS a resolution.

Team conflict resolution

Pavlo shared an example of an operations manager who, instead of speaking one-on-one to a team member who had done something incorrectly, chose to write an email, copying in the whole team of 8 members.

This email made its way into 8 homes, where 8 frazzled individuals had been working tirelessly through lockdown, often while homeschooling and homekeeping, during these stressful times. The impact of a negative email like this affected the whole team badly, not just the individual it was intended for.

In an office environment it would have been resolved in a 2 minute chat, but on email it created more strife than the underlying issue was worth.

Pavlo recommends restructuring team engagements, understanding the different types of communication that are necessary:

Strategic comms: The once a month meeting that used to happen in the boardroom must still happen online. Even if there is no news, it reassures the team that there are no major changes, and in a time when retrenchments are very common – their jobs are safe.
Tactical comms around specific issues: We have successfully gotten most of our clients to use a ticketing system for task allocation and issue resolution. The system ensures the messages are clear, through structured fields, rather than open to emotion. It also helps you to manage the output of a team that is working remotely.

Why no email?

Emails are easily misunderstood, there’s a gap that doesn’t convey humour or sarcasm.

There’s also the issue of copying in – both up and down the hierarchy. Pavlo notes that ‘CC’ indicates that the team has lost the ability to communicate – it says ‘I need help because I’m not being heard, I’m not being obeyed, and I need your intervention to resolve this.’

If you’re struggling to get your communication strategy right in an online world, contact us.