Pavlo Phitidis studied building science, and at the end of his first year, his lecturer insisted that Pavlo spend his holiday working on building sites – digging trenches, mixing cement and laying bricks. Why?
Today, across the world, threats to businesses are escalating.
Floods in Germany and China, fires in Oregon and Siberia, riots in South Africa, France, Lebanon and Belfast all threaten the existence of lives and businesses. Years of investment, care and effort can be eliminated in hours.
Experience holds much promise. When you want to grow, experience can accelerate it. When you are facing challenges that overwhelm you, experience can solve it.
What does experience look like?
Grey hair, time in the game, a fancy car, connections and networks, a string of degrees, Harvard, titles and the list goes on. Is that the experience you want?
Onboarding experience into your business to grow or solve problems is valuable only if you get it right. It will otherwise be a costly mistake.
Listen to this podcast from The Money Show where Pavlo Phitidis breaks down what elements of experience you need to look for, to achieve clear outcomes.
How do you evaluate experience?
Time – Does someone who’s been in business for 20 years have more relevant experience than someone who has been in business for 5 years? Think of driving to understand the value of time. When you first learn to drive, there’s a massive, steep learning curve and within a few months, you quickly get the hang of it! Since then, how much have you improved your driving? Sometimes we don’t even remember driving to the shop – it’s automatic. And would you like to be driven to the shops by your 95 year old grandpa? No, even though he has 80 years of driving experience, it doesn’t make him a better driver.
But think of Lewis Hamilton, who spends every single day working on his driving. He’s got far fewer years in the driving seat but his constant attention to it sees him improve every day.
Context – Does the experience come from government, corporate, university or the school of hard knocks and is that relevant to your business?
Position – Chairman, CEO, CMO and everything else, what does their experience actually look like, what do you need them to achieve.
Function – Strategy, sales, ops or admin – where is your biggest need?
Activity – Were they alone, in a team, led by the team or leading the team, saying or doing?
Outcome – How is success and failure communicated, evidenced and truthfully expressed
How do you value it?
Onboarding experience should be preceded by need.
A need to grow – remember if you are not growing you are dying.
A need to solve challenges – some come from complacency, others come from growth.
Define what the problem or opportunity is. This means give it context, description, shape, and form and ultimately a measured outcome. Hire the right experience to deliver on that, and value it at the resolution of opportunity or solution to the problem.
If you are not seeking the outcome of experience in your business, it might be time to question your ambitions or purpose. Nobody knows it all and wisdom, the sum of insight and foresight, will never leave a growth mindset comfortable or complacent on status quo. It can always be better. You can always be better. If that’s the case, why not be better. Experience, well placed, can constantly close that never closed gap at being the best you can be!
Not all business growth needs funding.
There are two types of growth: organic growth and next-level growth. Listen to this podcast from The Money Show where Pavlo Phitidis unpacks both, and what the funding options are for each.
Organic growth sees your growth emerge along with the business’s ability to support it. Your organic growth rates will be governed by your working capital cycle, team, and equipment capacity and then outside influences like the country’s growth rates and economic cycles. See this as a marathon that requires a consistent, predictable pace to finish the race.
Next-level growth relies on you going beyond your weekly, monthly activities and requires trailblazing and a very deliberate, focused effort. Think of entering a new market, acquiring new assets or teams, developing new products or innovations, or even acquiring a competitor or aligned business. See this as a sprint within the marathon to get ahead quicker and faster than the rest of your former best time.
As you put more effort into growth, you need more oxygen or fuel to feed the increased activity. Accessing this funding is vital and failing to do so fails your effort of next-level growth.
Where do I go first for funding?
Depending on your life stage and stage of business. The further you are from retirement, the more risks you can take. A more mature and established business means your funding will be cheaper.
A younger business and owner may start by looking to banks for debt and likely fail. Next will be an external funder called an angel funder, who will look to take equity against a loan provided, or a pure equity stake as an early-stage investor. This means they become a shareholder and earn a seat in your future and direction. It is a marriage of sorts.
At a later stage, business owner and business can turn to banks for debt funding and likely succeed. A loan is granted and requires capital and interest payments to be made until it is settled and repaid in full. It will mostly be granted against the security of an asset.
When is debt best and how do I get the deal done right?
Debt is best and cheapest in all cases of organic growth. If you tick up the growth rates in your business, debt is still best. The reason is that you remain in full control of your business – this might be a good or bad thing! Nonetheless, it’s an easier source of funding to understand, evaluate and calculate, keeping things simpler for you.
But, it is unlikely to be granted in any meaningful amount unless underpinned by an asset.
Your business assets – plant, equipment, debtors, stock, investments – all act to cover the risk of the debt being provided by the funder. Earlier stage businesses will require higher risk cover than later stage businesses because they face a less predictable future. If you need funding to support your businesses growth and uptick using non-material assets like salaries, technology, marketing, and so on, you might get some through overdraft (costly), but it’s unlikely since there is no security against that spend. You can look elsewhere to get that funded, but it’s messy and complicated.
When raising debt, be sure to understand the cash flow implications. The next month you’ll be required to pay back the debt! Payments include principal capital amounts as well as interest on the debt.
Suppose your funding is an investment that will take time to yield an increase in revenue or profit to settle that debt. In that case, you need to negotiate a moratorium on capital or interest or both. This acts as a holiday on the payments you owe for a specified period but increases the debt’s accumulated value, which still accrues interest.
When is equity best, and how do I get the deal done right?
If you are ready to sprint, you need growth funding. Again, your first option should be from your coffers, followed on by debt if the amount is not too big, and you can manage the payments you’d need to make to the debt provider.
Alternatively, and most likely, if it’s a big sprint, you’d need to raise equity. The process begins with finding the right funder. More than money to invest, they should bring skills, relationships, understanding, and other benefits to help you attain your next-level growth ambitions. This would make them a strategic funder. If all they offer is money, they are simply a funding provider. This matters because the pricing of the equity will differ between the two options.
A strategic funder can get you where you want to be faster, safer, more reliably, and more efficiently. They can probably also get you there bigger. They will price it all into the cost of the equity. In addition, equity funders will also want a clear, obvious exit strategy.
Their business is about investing an amount of money with the intention to get out of your business in the future with more than they invested. How they extricate themselves from your business will be a key concern for them and you need to be able to convince them accordingly.
Equity is good to fund your business once you have exhausted your debt options and it stretches across all your growth assets, tangible, or intangible. It’s hard to raise, takes a massive amount of time and tests your intention behind why you do what you do. Seldom do we have time to think ahead into the future – equity.
The way we build businesses, and the way companies must be built to secure the right funding at the right time differs. Often, we bemoan the funders, blame others, and claim there is no funding in the market when we fail at securing it.
There is more money to fund business growth than there are businesses worthy of funding. Knowing that and adopting an Asset of Value™ growth approach will locate you in the heart of a deep oxygen pool to fuel your greatest ambitions.
A website is essential, so you invest time, care, and money into building one. Then you wait. You wait for something to happen. And nothing does. What now?
Listen to Pavlo Phitidis share a story about fishing, to make his point about reaching your target market, in this podcast from The Money Show
To get fishing right, you need to know what species of fish you want to catch.
Each species behaves differently and eats differently to almost every other species. Let’s fish for carp – a big, mud sucking, freshwater fish species. You fish for them using patience, rods, reels, line and bait. You fish for them in muddy water. Building a website is like carp fishing. You find a spot by the dam, set up your rod, reel and line. Add a big hook with bait and cast it into the water. Nothing bites.
It doesn’t bite because it does not know you are there. To let the carp know you are there, anglers mix special bait preparations. They add flavors, spices and condiments. They also cast 4 or 5 lines in all with more flavored baits. The carp smells it in the water and presto – you catch a fish.
Your website is like the hook in the worldwide ocean.
To catch a fish, you need to decide on your species, understand how it behaves, create a bait that it loves and let it know that you are there, baited hook and all.
In your business, this means that you need to build campaigns to reach, entice, draw in and hook your future customers.
Campaigns are your bait and are used to attract fish to your website to see if what you do and how you do it is valuable enough to them to become your customers.
Campaigns have several elements.
A message that you communicate that will get a response from your customers. It might establish and build your brand to create credibility and confidence in your customers. Or it might be a promotion with an offer to secure a transaction.
Your campaign needs to be formatted to a suitable medium. Is it a flyer, a social post, a billboard or advert? The format will affect the messaging and creative design.
Your campaign needs to be actioned. Email campaigns need to be sent to your audiences, radio campaigns need to be flighted in the appropriate shows and flyers dispensed at the relevant locations.
Your campaigns should be measured. See what works, what doesn’t, adjust learn, perfect.
Establish a campaign calendar and make the adjustments needed to suit the buying behavior of your customers. In hot summer months you might use flyers, in cold rainy months you might use radio.
More rods in the water create more attraction and familiarity. Campaigns are no different. Run multiple campaigns when you have the money. Do radio and flyers because done together, the chances of your fish seeing your bait increases exponentially.
Business is a dynamic system of activities. It never stands still. Bringing your website to life means letting customers know that it exists amongst the 480bn other websites clouding the Word Wide Web and about 10,000 or more competing for your fish’s attention.
Pavlo Phitidis identified 4 issue plaguing business owners and spoke to The Money Show about what to do about them. Listen to the podcast or read on
Rail to Road
On a recent journey along South Africa’s roads, particularly in the Eastern Cape, between Craddock and Port Elizabeth, Pavlo was struck by the incredible number of trucks trundling along, many transporting manganese, from north of Kimberly!
The roads are being destroyed, as they lie parallel to a railway line that is almost entirely empty.
Broken Supply Chains
Commodoties are booming right now, mining is booming, and the extensive net of industrial service businesses that supply and support these mines are struggling – to find steel, a key raw material to support mining activity.
Pavlo spoke of a large fencing business owner who he spoke to, who was desperately trying to find steel, to preserve his business.
This business owner had a strong sales team visiting customers, leaving them with R80 – 90million of business that they couldn’t service! And he was terrified that his clients would find someone else who could find steel somehow.
Pavlo’s advise to him was to put the customer at the centre of the decision. This business owner insisted that he needed the raw material to manufacture the fencing in South Africa, because to import the completed fencing material eroded all his profit on the deal.
Pavlo’s point is that at times like these, when you risk losing customers, and demand for you service could dry up, rather take the hit and do whatever it takes to fulfil the promise that you made to your customers.
When steel does become available again, at least you will have a customer base to work with, to build up your profits again.
Rather make no profits for the next 6 months, and hold on to your customers. It will also keep your sales team busy and motivated.
In the first 6 months of lockdown, staff went home and all of a sudden found themselves incompetent.
They had moved out of a workplace environment where staff would interact with their colleagues, bouncing ideas and problem solving together. When they were out of their context, they couldn’t do it.
For managers it showed up that they had been measuring performance on activity – being on site, attending meetings etc, rather than output.
Many companies needed to digitize their HR – communications and productivity software, which created great apprehension among many staff who weren’t sure whether they were being spied on, or micro-managed, or misunderstood why they were being monitored in a new way.
Engine Room Entrepreneurship
The shock of the lockdown brought leadership from the ‘bridge’ down to the ‘engine room’ where they were back into day-to-day matters, putting out fires and managing their apprehensive staff far more directly.
The crisis here is that new opportunities – and there are many that have come with the changes that Covid brought – are hard to see from below the decks.
How often are you ghosted after a positive, warm sales call? You were on fire; the client was positive and responding and it was clear that your offer was right on point. And then, nothing. You can’t get hold of the client. You’ve tried email, phone, social media even and nothing.
Getting this sales challenge sorted needs you to get a couple of things right. Listen to Pavlo Phitidis discuss this on The Money Show:
- Why does your business exist?
Whilst your purpose might be to make money, create wealth, support the economy, generate employment, or make a difference to the world, your businesses doesn’t care. Its only purpose is to solve defined problems through a great experience for its customers.
- Become expert at serving customer segments.
You hope that it is enough to have an excellent product or great service offering, with all the right features to solve defined problems. The problem is that your competitors have equally good offerings. Let me be clear, without a good product or service offering you wont even exist. But on its own, it’s not enough.
- Develop a sales engagement system.
Whilst your product or service offering can fix a customer’s problem, how you engage with the customer creates the experience. This includes how you market to them, engage them in the fist meeting and should they select you, how you deliver on your service thereafter. All these activities stack up to create the overall experience. Your sales engagement process is an essential element of the experience.
- Master your sales discovery meeting.
Often when selling, you spend most of your time talking to your product or service offering. This product-centric selling was valuable in the 1700’s to early 1900’s. It simply is not good enough today. A smiling, nodding customer (seemingly hanging on to your every word) does not mean that they are engaged at all. Polite yes, but not engaged.
- Understand the “why” behind the problem at an emotional level.
Problem-solving selling has 3 layers of sophistication behind it. The first is to engage with the customer in such a way that they tell you the problem that they have. This is where many sales techniques go wrong. Mostly, you jump in with how your product or service offering can solve it and…. deal done! A fatal mistake.
Once the problem is stated, you should transition your line of questioning to understanding how and why and when the problem comes about. Spend time on this conversation. Get into the detail. Let your customer really drill down into the detail. At this point, your customers would almost be living the cause of the problem, and then you transition into a line of questions to understand how it makes them feel. That is the gold in selling. The emotional outcome of not having the problem solved, creates the opportunity for you to solve it and remove that personal, emotional pain.
- Solve the problem and resolve the “why”!
Now talk to how your product or offering can resolve the problem. Be sure also to ask how, with that problem resolved, the customer would feel. Be sure that in your engagement, that feeling, attributed to you and your product, confirms the emotional outcome of relief and certainty.
We all buy emotionally and justify logically. Fitting your product or service features to a stated problem is a lost opportunity and matches you to any other competitor in the market. Turning the stated problem into an emotive need matched to a personal problem is what sets you apart and ensures that “yes” is very highly likely a real yes.
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