Working with You Archives - Page 4 of 8

Business Leader: Inspiration from an onion – Reset and rebuild your business model to reignite growth

Written by pippa@aurik.com on May 17, 2023. Posted in Insights, Leadership, Scale & Grow.

In this article, first published in Business Leader, Pavlo shares a simple tool – the onion – to think about your business, and identify your strategic focus.

Our inflationary, high-interest rate and low-growth economy will see companies with high overheads struggle to maintain the performance demanded by shareholders and executive bonus calculations.

As inflation and interest rates shrink local market value, access to established and new markets offer growth alternatives. Additionally, resetting and rebuilding a business model to increase productivity and performance will become a strategic imperative.

Market access

Expect mounting challenges accessing foreign markets. Brexit increased expenses and obstacles to trade with our closest £300 billion market. The array of ratified trade agreements might offer alternatives, such as the recently trumpeted CPTPP trade agreement which is worth a theoretical £37bn. Our challenges will be many. Our strengthening currency, significant differences in labour costs, and rapidly closing gaps in digitisation and technology competitiveness all weigh in. For products, add the cost of inputs and transport, set to increase further as we comply with our laudable commitments to Net Zero and other climate-friendly policies and regulations. All add to the cost of doing business, making our products less affordable than alternatives. For instance, imagine the cost of competing with a chocolate manufacturer in Chile or Malaysia, where our labour and transport costs are higher, before factoring in compliance with legislation and policy.

To overcome these challenges, we must increase productivity significantly. And since 2008, we have struggled to get this right! It can and will be done by those leaders intent on preserving their company value and remaining steadfast in growth despite all our economic ailments.

One way to get this right is to take a lesson from the simplest of vegetables: the onion.

Reset and rebuild your business model to reignite growth

An onion has three layers – the sweet inner; tangy middle; and outer protective skin. Applying this metaphor to your company offers up many opportunities.

Your inner layer is about understanding what is core and strategic to your survival, growth, and domination. You must own, deepen and protect these elements. Your middle layer includes everything non-core but strategic to the business. Outsource these elements to reliable partners on medium-term contracts. Your outer layer comprises everything non-core and non-strategic, where products or services are commoditised, and price wins the deal.

We recently used the onion to reset and rebuild a business intelligence company we work with. At its inner core, it must excel in analytics, interpretation, design, and presentation. It must own its software and skills in analysis and presentation. Its middle layer requires hardware, connectivity, and brand and marketing service providers. They are strategic but non-core to success. We established medium-term partnerships with providers whose services are their core strategic foci and intent. Their outer layer includes stationery, accommodation, refreshments, and other non-core, non-strategic products and services.

Today, they enjoy several benefits. A honed, simplified understanding of what matters most to grow and dominate their industry increased their productivity and market responsiveness. It has also allowed leadership to spend almost 70% of their time leading growth instead of managing operations. The company’s newfound growth has come increasingly from big and corporate clients. Out of necessity, these corporates have had to equally tighten their foci and shed costs by outsourcing previously insourced services such as business intelligence.

As business leaders, our company growth will increasingly come from excelling at how we position, win and lock in our services as middle-layer onion specialists.

Elite Business: Two halves make the whole business

Written by pippa@aurik.com on May 5, 2023. Posted in Insights, Leadership, Operational systems, Positioning, Scale & Grow, Team.

In this article, first published in Elite Business, Pavlo explores why a brilliant product or service is not enough to build a brilliant business.

What you do is not enough; how you do it matters more. You have talent, are skilled in your vocation and have built competitive products, but customer acquisition is a grind and even stalling – Why?

Recently, a vociferous and highly talented founding team convinced me (and themselves) that they had built a globally competitive product. Yet, sales were stalling, and the grind needed to land a new client was bleeding their and their team’s passion dry. As exhausted as they were, so was I until the penny dropped: A great product does not build a great business.

Sometime during the late 19^th century, a moment of inspiration came to Ralph Waldo Emerson, the American founding father, essayist, and poet. After witnessing a mouse escape a botched mousetrap, he wrote,”Build a better mousetrap, and the world will beat a path to your door”. In the late 19^th century, he was probably right. There were relatively few products, and of those in the market, quality varied magnificently.

Emerson’s ghost visited me recently. It was the central thought in my brain as I listened to one of the founders give his take on why their product was exceptional, innovative, and globally competitive. Another founder shared her take on the market problem as one of education. “How do you convince customers of the value of our product when they don’t even know about us or understand how brilliant our product is?” she bemoaned.

It’s a common problem that many company owners contend with. Understanding why and how this problem occurs is essential to scale, grow and dominate niches within your industry. It’s vital to distinguish your brand and build your business into an asset that you can monetise through a premium exit in the future. And a great, world-class product is not enough to get this job done.

Every business has two fundamental parts to it. Both must be optimised, linked and integrated to create the complete experience any winning business offers. One without the other will fail your efforts repeatedly and eventually drain the passion and optimism that feed the drive and commitment that growth demands.

The first part is your product or service suite. And Emerson’s quip remains constant here. Every industry is overcrowded, and out of necessity, most of your competitors have built solid products and services. Trying to attain a product advantage by creating more features for your product or service won’t last or get you into a market on a sustainable basis. The primary job of your product is to solve a problem. A drill that cannot drill a hole will not build a world-class business!

Solving a problem needs tighter definitions in competitive markets. It requires a solid understanding of whose problem you are solving. For example, a drill used by an urban, single professional for hanging the odd picture needs a different proposition to a drill that aims to solve the problem encountered by a professional handyman.

This brings us to the business’s second half, which is essential to scale, grow and dominate. The product or service that solves a well-defined problem for a well-defined market segment must couple with a commercial system led by a motivated team to create relevant, well-defined customer experiences.

The question is, what creates a great experience? This, too, will differ depending on who you serve. Back to the drill. How a young, urban professional wants to learn about a drill, understand its capability, match that to the problem they want the drill to solve differs dramatically from the professional handyman. Additionally, how the engagement, buying, fulfilment and administration process works to deliver the product would differ between the two customers to create a complete and ideal experience.

Curating this experience requires a deep understanding of which customer segment you want to own. Then, narrow it further to understand precisely what experience they want to select your service above the many contenders. This creates the blueprint for your second half. It guides how you design, optimise and integrate your commercial functions into a repeatable, predictable experience. It is the key to accelerating your products and services to that market. This half of the whole business is arguably the hardest to build and the essence of a scalable service platform. Without it, scaling, growing and dominating a segment or three in any industry is a dream.

I recently reached out to Emerson’s spirit to update his coined phrase. “When everyone has a good mousetrap, you’d better beat the path to your customer’s door”. I’ll let you know his decision as soon as he responds. Meanwhile, the founders and their 48-strong team took it to heart. While it has taken some time, they are on a 17.6% annual revenue growth run rate, which seems unlikely to slow anytime soon!

Business Leader: Adopt a growth mindset to grow your company in an inflationary economy!

Written by pippa@aurik.com on April 25, 2023. Posted in Insights, Leadership, Mindset, Scale & Grow.

In this article, first published in Business Leader, Pavlo looks to the white ant or termite to make a point about how inflation eats away at your business’s value.

The white ant, otherwise known as a termite, it’s a formidable little creature with an impressive set of jaws. They eat wood at a voracious rate and do so through the inside, not on top. Spotting them at work is only discovered when your foot lands on a floorboard and crashes through. It earned the term “white-anting”, analogous to how unforeseen forces unravel and disassemble efforts to create, build and sustain whatever it is you are doing.

White-anting aptly describes the corrosive impact of inflation on a business. Having last seen sustained inflation levels, in tandem with their ugly partner, rising interest rates, over 44 years ago, most of us would be far too young to remember the antidotes and counter strategies we can deploy across our business to sustain and, in fact, grow during such periods.

In this series titled ‘The inflation white ant‘, I’ll share six practical strategies to counter the corrosive effects of inflation on our companies and our state of mental well-being. I’ll draw the insights from companies I work with and share practical strategies and tactics to counter the value destruction inflation brings and the growth opportunities it opens.

Approaching inflation with a growth mindset is imperative

It anchors you in the reality of the economy rather than a wait-and-see hopeful one. It also lets you see, feel and understand the changes inflation ushers into the economy, allowing for inspired and bold action.

The shock of our stubbornly high current inflation rate and the ongoing litany of dire economic news feeds uncertainty in decisions and actions. Yet, he who hesitates is lost, and the decision, no, the discipline of maintaining a growth mindset, yields inspired positive actions. It’s the difference between leading or following and stepping boldly into this economy on the front foot with the advantages that it brings.

Inflation erodes what you have at a compounded level. Hesitating to invest in growth today means the same investment will be more expensive tomorrow. Add to that the opportunity cost of hesitation or indecision.

I recently met a business owner considering investing in a new lathe. We ran the numbers, and the acquisition would collectively increase productivity by almost 7%. That increase lent itself to more competitive pricing, improved quality, and the opportunity to outbid competitors and grow market share. At that time, the media was filled with dire forecasts of Russia’s invasion of Ukraine, further driving energy and food costs. Doomsday Sayers weighed in heavily, accurately forecasting the inflationary prices we’d all have to bear. Hesitating, this business owner opted to wait for a more certain economic forecast.

March forward eight months, interest rates rose, and any possible debt funding dried up. The lathe’s price, including transport and commissioning, has increased by 15,8%.

The same month, a client in a similar industry took a different approach

They opted to invest in a new fleet of delivery trucks. The numbers showed us that the new fleet would increase productivity by an estimated 6% due to increased fuel efficiency, amongst other gains. It would also improve the company’s “green rating”, opening doors to EU-based clients that required such accreditations before accepting them as a new vendors. Nine months on, productivity improved by 4%, and they landed five new clients.

The differences between these two business owners are stark and lie in their mindsets. Both business owners live and breathe in the same economy. The growth mindset saw the future economy as an opportunity to act and grow in the face of the rising costs customers would face by getting ahead to improve productivity. As costs rose, he maintained pricing off the back of his reduced cost base. It earned him new clients, many at the cost of his competitors, that had to raise pricing. Literally ‘across the road’, the hesitation of the passive mindset lost the productivity gains that the investment would have ushered in time to meet the demand for improved pricing from customers under pressure.

A growth mindset is half what you need to thrive in an inflationary economy. The other half is a growth plan designed to capitalise on it.

Triggers and Indicators of Growth Focus: Understanding Revenue, Profit, and Asset Building

Written by Lindokuhle Ntombela on April 5, 2023. Posted in Asset of Value, Insights, Lead generation and conversion, Scale & Grow, Trends.

When it comes to business growth, it’s important to shift our focus away from revenue and profit as mere indicators of success. Rather, revenue and profit should be seen as crucial triggers and indicators of change in a business’s development lifecycle. This is especially true if your goal is to build an asset, not just a job.

So, what are the criteria for building an asset? First and foremost, leadership plays a pivotal role in this regard. You need to understand what you want to achieve, why it matters, and how you can direct your resources to make it happen.

But how do you position growth within this framework? One way is to ask yourself the following questions: When should you pursue growth? Why is growth important to your business? What kind of business are you in? Let’s explore these questions in more detail.

Positioning Growth: When, Why, and What

Figuring out what business you’re in is essential for understanding how to grow. Take the example of Jack the Baker. Is he in the business of selling croissants or or providing a solution for fresh baked goods 356 days a year? Once you’ve determined the answer to this question, you can start to focus on the right kind of growth.

In this phase, revenue growth matters most, not profit

For businesses that are just starting out or looking to establish themselves, revenue growth should be the primary focus. It’s a crucial indicator of demand for your product or service and can help you build a solid foundation for profitability down the road.

Organic Growth: When, Why, and What

Organic growth is all about creating time to focus on growth without getting bogged down in daily operational activities. The goal is to achieve steady-state revenue growth that matches profit growth and tracks with it over time.

Accelerated Growth: When, Why, and What

Accelerated growth is all about dominating your positioning within a well-defined segment. This requires a strong understanding of your target market and a focus on profitability within that segment.

Next Level Growth: When, Why, and What?

Next level growth is all about de-risking your business by scaling profitability. It’s not just about profit quantum; it’s about ensuring that profitability is sustainable and that you’re not relying on one-time windfalls to achieve growth.

Capital Growth: When, Why, and What?

Capital growth is all about raising capital or looking to exit through a sale. It requires a focus on both profit volume (as a risk indicator) and profitability (as a growth indicator) to ensure that you’re building a strong, sustainable asset that’s attractive to investors.

When it comes to growth, it’s essential to understand the triggers and indicators that drive change in your business. Revenue and profit are crucial indicators of change, but they should be seen in the context of building a sustainable, scalable, and profitable asset. By positioning growth in this way, you can achieve long-term success and build a business that lasts.

Antidotes to the Tyranny of Project Revenue Models

Written by Lindokuhle Ntombela on February 28, 2023. Posted in Asset of Value, Exits, Insights, Operational systems, Positioning, Scale & Grow, Team.

Running a business based on project revenue models can be a roller coaster ride. Money comes in only when a project lands, and business owners are sucked into high-risk projects that make it difficult to budget, plan, hold onto skills, stabilize suppliers, and scale. Every project feels like a game of roulette due to factors beyond your control, such as weather and the availability of resources.

To build an Asset of Value™ and escape the tyranny of project revenue models, some businesses have changed their approach. Let’s take a look at a few examples:

Construction Firm: This 2nd generation family construction business was hit hard by COVID-19 as big developments stalled. They responded by creating a designer-shack that was quick to erect, multi-functional, and aesthetically pleasing. It could be used for versatile spaces including a home gym, an office, a bar, a DIY workroom, garden shed or a kids’ playroom.

They found opportunities in multiple channels to market, such as website sales, retailers in hardware and building supplies, gym equipment distributors, realtors and estate agents, office furniture stores, architects, furniture stores selling bar-related furniture, liquor stores, and overseas markets for flat-pack, easy-to-erect versions of the product.

Software Developers: Two partners in a software development firm solved problems for big-brand corporate clients that the big-brand tech companies could not. They analysed all of their past projects and identified localsation trends, orienting their business around software solutions to manage complex SME value chains. .

Advertising Agency: Two partners in an advertising agency prided themselves on bespoke, thinking-outside-of-the-box solutions, but they struggled with a project-driven business model.
After positioning their service to zone in and focus on developing and producing brochures for vehicle manufacturers, their understanding as to how the brochures were used to promote, educate buyers and support the sales and marketing efforts of dealers allowed them to secure a consistent and reliable stream of projects. This flattened out their event based revenues into a steady stream of revenue, allowing them to hold onto talent, increase their return on marketing spend, build distinction and competence, and secure a capital buyout.

To get it right when changing your approach to building an Asset of Value™, you need to understand your purpose and intent, make a commitment to achieve that, create a path to exit, focus on a single goal, dedicate the first 90 minutes of every day and the last two hours of every Sunday to this goal. you may need to split responsibilities and fund one from the other, set milestones that shift time, attention, and resources, hire with the end in mind, and chase the transaction in the old business while building relationships in the new one.

Unfortunately, not every business gets it right. The construction firm sold two of their designer units and got sucked back into a new project, and nothing has changed. But for those who succeed, the rewards can be significant. The software firm has built a product that aligns with current trends and now generates approximately 85 million in annuity revenues across 350 clients. The advertising firm specialized in motor vehicle brochures and POS, created a repeatable, teachable process, built brand and reputation, and sold out in 2017 to a big agency for R23m.

In conclusion, by changing their approach and building an Asset of Value™, businesses can escape the tyranny of project revenue models.

However, it takes commitment, focus, and a willingness to take risks to make it happen.

ChatGPT: friend or foe, and what does it mean for a business owner?

Written by Lindokuhle Ntombela on February 2, 2023. Posted in Innovation, Insights, Lead generation and conversion, Operational systems, Pavlo Phitidis, Positioning, Scale & Grow, Team.

“ChatGPT: The AI Language Model Taking the Business World by Storm”

Artificial Intelligence (AI) has been a topic of interest for decades, but with the advent of cutting-edge technology, AI is now more accessible and applicable to the business world than ever before. One such AI tool that has put the business world on red alert is ChatGPT, an AI language model developed by OpenAI, a private AI organization founded by Elon Musk, Sam Altman, Greg Brockman, Ilya Sutskever, and Wojciech Zaremba. With Microsoft among its investors and a $1bn investment, OpenAI is a driving force in the development of AI technology.

So, what is ChatGPT, and why is it so significant? Essentially, ChatGPT is a tool that helps businesses and individuals to communicate and engage with their customers and audiences in a more effective and efficient manner. However, it is important to note that ChatGPT is not a solution in itself but rather like an exoskeleton, providing support and enhancement to human capabilities.

The rise of ChatGPT has caused concern among some, who fear that its widespread use could lead to a homogenization of language and a loss of creativity. While there is some truth to these fears, ChatGPT has the potential to free up time and energy for individuals, allowing them to focus on more important and creative tasks. Moreover, the technology is still in its early stages and will likely continue to evolve and improve, offering even greater benefits in the future.

Pavlo expressed interest in his perspective on ChatGpt in a recent Money Show podcast.

So, why are we talking about ChatGPT now? As the first of many AI tools set to enter the public domain in a usable format, ChatGPT represents a huge opportunity for businesses to get ahead and use it to increase their performance.

Looking to the future, ChatGPT has the potential to create a range of new careers, including language model experts who will be responsible for fine-tuning, teaching, and optimizing the technology. Content creators who can step up and go beyond the vanilla will also have a key role to play, as will project managers, who will be required for all projects utilizing ChatGPT.

In terms of competition, it’s inevitable that it will come. However, the opportunity to use ChatGPT across all business functions is simply too good to ignore. From marketing research and communications to sales, operations, accounting, procurement, and recruitment, ChatGPT has the potential to revolutionize the way businesses operate.

Marketing departments, for example, can use ChatGPT for research, with the ability to ask and get an answer, without having to spend hours searching across websites looking to upsell. ChatGPT can also be used to improve the quality of communications and product descriptions, as well as translate website content into different languages.

In sales, ChatGPT can help to understand customers and markets, and improve engagement with relevant messaging, even in second languages.

In operations, ChatGPT can automate repetitive tasks and provide consistent product descriptions across all media. In accounting, ChatGPT can help with benchmarking and interpretation, while in procurement, it can aid in research and negotiation. And in recruitment, ChatGPT can be used to create job descriptions and KPIs.

ChatGPT is a game-changer for the business world and represents a huge opportunity for businesses to improve their performance and stay ahead of the competition. The future is here, and the time to act is now.

A growth mindset and a business design that creates resistance and agility

Written by Lindokuhle Ntombela on October 5, 2022. Posted in Asset of Value, Insights, Positioning, Scale & Grow.

We recently surveyed a few hundred business owners, asking each what they saw as their biggest growth impediment.

The top 3 are

Scale – how do you build a system of growth
People—how do you find, manage, and lead your people?
Growth mindset—how do you maintain an inventive, positively inspired outlook and action in the environment of business that we face today?

In this podcast of the Money Show, Pavlo unpacks an approach to deal with each of these big challenges to growth:

Scale

This is about business design. Like a ship, building, plane, or train, it is designed and built to serve a particular need. An office tower is designed differently from a shopping centre. They serve different audiences and fulfil different needs. They are designed to optimise their ability to meet these needs most efficiently.

The design of your business, too, must be thought through. What’s different in a business is that the design needs to shift and change as the business grows. Most companies I’ve seen operate with a business model suited to half or even a third of the current revenues of the company. It’s as if the businesses are stuck in a start-up or early stage of business design even though they are achieving revenues 2 to 3 times their maturity. It’s unsustainable and eventually kills you or the value you have created over years of effort.

People

Finding the right people to do the right thing all the time is a global challenge. Talented people are essential to growth. If talented people occupy a growth mindset and work on a business built for scale, you create a nucleus of growth in the industry.

Skilled people look to innovate. That means creating more value. If coupled with a scalable business, that innovation leads to growth. Competitors with talented people respond, and the competitive cycle kicks in, attracting funding, talent, and more innovation. It creates vibrancy and growth across and through the industry.

In an environment where talent is draining away or cannot be afforded because of its scarcity, the design of your business is key to getting your people element right. A simple business is scalable and needs a design that changes as the business grows.

The other impediment to getting the people piece right is delegation. Suppose you do not develop a delegation framework that lets you delegate effectively. In that case, you will always be pulled back into the engine room of the business. You eventually get worn to the bone, lose all inspiration and passion, and slowly erode the value you have created. Getting delegation right is about two things.

You and your attitude to delegation and what and how you delegate.

As a business owner, delegation should be your primary function. If you don’t believe in people, you don’t think anyone can do it as well as you or as fast as you. Suppose you harbour deep in your unconscious mind a fear of success that sees you erode the passion and inspiration of your team, amongst other things. In that case, you need to get some perspective. Fear of success is deeply unconscious, and it remains one of the greatest impediments to growth that I’ve come across.

How you delegate is equally essential. Most business owners delegate instructions, and this opens up misunderstandings that begin to break down trust and confidence. When someone doesn’t do what you told them to do, what attitude do you eventually hold toward them? The key to unlocking delegation is delegating a system of activities that can be measured and produce a definable outcome.

Mindset

Many challenges are being faced across all economies globally. Inflation, cost of capital, access to capital, talent, supply lines, energy concerns, war, currency fluctuations, and political mismanagement are some of the many issues experienced everywhere. So, it’s not personal. And that’s the most important thing to consider. It becomes personal if you allow it to wear you down. You end up wearing lenses that highlight everything wrong and wear yourself down further. And with that, everything wrong begins to dominate your day, seeding depression and anxiety. You can get trapped in that space. Ask yourself then, what does that achieve? An alternative is to create a different reality and to do so by creating a morning mantra – I’ll only focus on what it can control.

When you disconnect from the internet, the anxiety and stress caused by various realities disappears. Next, recognize that what’s wrong in your industry is wrong for all. It’s not personal. Your competitors are suffering from the same challenges. It makes for an equal playing field.

To get ahead, adopt a growth mindset that says we will grow despite everything that is wrong. That pair of lenses lets you see the challenges as an opportunity to get ahead of your competitors, which means growth. As an outcome, it breeds positivity and feeds inspiration. You are in control of it all. If you struggle to get to the other side of a negative mindset, get some help. An outside perspective is valuable and can prevent you from wasting months or years of your precious, valuable time, which you can never get back.

How to stand out in the noise and clutter

Written by Lindokuhle Ntombela on October 3, 2022. Posted in Asset of Value, Insights, Positioning, Scale & Grow.

An upset brand manager contacted the Money Show following an unflattering review of their ad campaign.

Pavlo joined the show to discuss the most fundamental part of any marketing activity – positioning. When the positioning of the brand is not determined from the get-go, then the brand is simply everything to everyone.

Listen to the discussion or read on for a few key takeouts:

Brand Positioning:

It all comes down to what makes your company unique. Not in your opinion, but rather in the opinion of your customers. Not so much in what they say as in what they actually do. In other words, they express their satisfaction with your service or

Why does brand positioning matter?

A well-built business that consistently gets to both the next level of growth and value is one that has been built on clearly articulated, relevant positioning. It enjoys clarity and certainty as to why it exists and how it will grow.

A brand is really a feeling that people who engage with that company have towards that company. And a brand is going to be created by two things.

Firstly, by the product that you offer.
The experience that they have interacting with your company.

Looking at a typical food chain store, there are three main components that are going to drive the brand: the consumers, the franchisees, and the employees in the company, and all of them together will form opinions through social media, through engagement with friends, family, and others around what their impressions and experiences are.

The product must solve a problem. That’s its job. But the thing that makes up a product is quite complex because it goes beyond the actual food, its preparation, and all the special ingredients.
A competing brand can replicate this at ease. What really distinguishes the brand is the experience you create for a customer group.

product by using it repeatedly. They tell their family and friends about your business.

Disruptive Brands:

Disruption and transformation without purpose are of no value to consumers. It’s clear that the definition of a “disruptor” – and its formula for success in a world of uncertainty, change, and transformation – isn’t black and white. So, what is the secret to success in this continuously changing world?

Flaws in positioning

Almost always, brand managers argue that they are positioning themselves through their product, service, and price.

Product: They argue the merits of their product in terms of its features and benefits. In the case of a food chain, the argument will be based on the taste and the special ingredients that are used for the food, and how their taste sets them apart from everyone else.

Service: many, in fact, most, say it’s their service. By keeping our ears to the ground and listening to our customers, we were able to offer a unique personalised service “bending over backwards to accommodate and please their customers”.

Price: The price debate. Arguing price in such a large market that has many competitors creeping out is baseless. If you are not in a competitive market, then price probably doesn’t matter in any event.

Building a 100m valuation company: Part 5 – Value

Written by Lindokuhle Ntombela on September 27, 2022. Posted in Asset of Value, Grow & Exit, Insights, Positioning, Scale & Grow, Succession.

If you reflect on what you have built so far. A simple business, focused on solving problems for a few well-defined customer segments and retaining them by creating a great experience delivered reliably and consistently. You have a few growth strategies maturing all the time, and they are all now led and run by your team. You have time on your hands. Apply it to focusing on deepening and locking in your value.

The starting point here is to understand the basic premise of value investing. If you are investing in a share on a stock exchange, you want three outcomes:

Income – your annual dividends.
Capital – you want the capital value of the share to grow over time so you can sell it for more than you bought it.
Tradability – you want to be able to sell and buy the share as you like

Value is all about behaving as a shareholder or investor in your own business. Looking at your business like you look at a share is how you lock the value into your business.

In this Podcast of the Money Show Pavlo Phitidis unpacks the final layer in building a 100million valuation company: [VALUE]

The fourth layer is all about growth.

With your time now split to only 30% on operational and management activities because of the first 3 layers, you have time to focus and lead growth. There are several different types of growth you must generate to both lift revenues and deepen profit, and one without the other is of little value.

Growing revenue is about increasing your company’s revenue, while growing profit is about increasing your company’s profitability as a percentage of your revenue. In effect, you want to increase the “gap” between your revenue and your costs to increase profitability while also increasing the quantum of revenue to increase profit.

The first three layers see you with a company that serves well-defined customer segments whose ideal customer experience you’ve determined in the Positioning layer, which is then built out in the System of Delivery layer and brought to life in the Purposeful People layer.

Locking in capital

Achieving this needs you to lock in the growth and future profits of your business. Depending on what business you are in, this can be achieved across multiple areas.

Brand – A brand is a feeling that your stakeholders have towards hearing your company name. What you do for who, how you do it and why you do it carry all the building blocks of a brand beyond pretty logos and business cards. It’s hard to get right and costly too if you cannot answer these questions with a vision for yourself and your business. A brand is lived before it is felt and it must transcend your business into the industry and sectors you work in.
Suppliers – any dependencies on suppliers must be locked in, contractually or otherwise. If you represent a brand in your territory, that contract must ensure longevity and cession. If you run a restaurant, you must have a long-term tenancy, etc.
Customers—to what degree can you provide a service (and every business is a service business) over the long term for your customers? If you can move towards providing a service over time as opposed to a single project, that secures long-term customers. There are many ways to get this right. Think of a motor plan as an example.
Team—how do you lock in your team as the drivers of your business.

Across all these areas, you need to ensure that you, your role, and your presence are minimised.

Ensuring tradability

Understanding the 5 levers of valuation and exit is key for any business owner. Not knowing them means you may well build a business that does well for you over 10–20–40 years but cannot be sold or transferred when you want to exit. You’ll have earned a good income, but the capital gain will be lost, robbing you of monetising the years of investment and risk it took to get here.

Let’s end off by behaving as the buyer of your business. The promise was to create a business worth 100 million.

20 years in, you should be owning a material portion of your market. This could be as much as 2-3% in the service industry. In manufacturing, this should be around 3-5%. It varies from industry to industry, but you need to have a view on it, and you need to be in a position where you are generating at least 10-12 million in profit. After 20 years, this should be possible… right?

Valuation works as a multiple of profit. In general, multiples start at around 2-3 and move up to 5-6.

So, let’s make a deal. The 5 levers are a set of questions that cover the following areas:

What distinguishes you in the eyes of your customers?
How is the business operated and run?
Who makes it all happen?
Is there future growth?
What happens without you there?

An Asset of Value™ is a business that answers them all. Each layer plays into the next as they couple together and demonstrate that each of these question sets can be addressed in a manner that earns an additional 5 multiples on the running industry multiple.

On a 10 million profit, a 5 multiple earns an additional 5 multiples to give you your 100 million asset.

Jack: An industrial baker whose revenues grew 10-fold working with Aurik

Written by Lindokuhle Ntombela on September 13, 2022. Posted in Asset of Value, Grow & Exit, Insights, Positioning, Scale & Grow.

Jack was 54 years old when he came to Aurik, he had 76 employees at the time and his revenue was $4,89 million per annum.

He was also exhausted.

Jack ran multiple, disconnected businesses. one supplied baked goods to hotel chains, another was a retail coffee shop, he also had a few bakeries which he ran, and he bulk broke flour to distribute to smaller bakers around him. The business was extremely chaotic, and Jack wanted to sell it, but who would buy his problems?

Working with Aurik, Jack identified 1 business and closed the rest, together we developed Systems of Delivery, empowered by a team, to dominate that chosen sector.

The System of delivery released his time to focus on new market segments and innovation to enable next-level growth.

Jack’s annual revenues increased 10-fold and his business was valued at $77,2 million after working with Aurik.

In addition, Jack no longer wanted to sell as he business was fun and exciting again –

Watch this video summary of Jack’s story