Tag: business growth system

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

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

Don’t “Keep Calm and Carry On”​ ​Eat lunch instead!

During WWII, the British government used a series of slogans to manage the public mindset, the most enduring of which is “Keep Calm and Carry On.” It lives on in memes, coasters, fridge magnets, t-shirts, bumper stickers, and mugs. It was a slogan used to manage fear and an attempt to maintain a mindset of EGBOK (everything will be okay) amid deep uncertainty.

Uncertainty is back, and the world of NICE (no inflation, constant expansion) enjoyed over the last decade in many economies has ended.

Rising inflation and interest rates; an unstable currency; the seemingly unstoppable march of energy costs; and the almost certain probability that the unemployment rate will begin to rise all contribute to an alarming increase in the cost of living. Exacerbating and feeding more uncertainty are the impacts being felt by climate change, global conflict, and trade barriers while still trying to recover from the COVID supply chain disruptions, the isolation of remote work, online fatigue, and eyewatering levels of national debt. These and a litany of other local and regional grumblings can collectively disassemble any sane, rational person.

Exasperated, we turn to our politicians and leaders, demanding that they “fix” everything. They did promise a better life for everyone! Well, we all know how that has worked out. When there are no cogent answers to complicated problems, slogans become the mantra governing life for many again. Keep Calm and Carry On, put one foot in front of the other, keep your head down and quietly hope and pray that EGBOK. Embrace a life of austerity nostalgia—that is what it asks you!

It all stinks of resignation. It breeds apathy. It stunts growth. It makes you poorer. It erodes your independence and confidence. It seeds negativity, discontent, and blame. It begs you to be content with weekend muddles in the woods with your trusty labradoodle, Rusty! It works for the government that holds no practical answers to private business owners’ economy. It also works for your competitors, so long as they don’t get duped into embracing it.

The antidote is to live and lead with a growth mindset.

A growth mindset embraces the environment for what it is but directs energy and effort only to what you have control over. It allows your actions to be led by your vision for your company and yourself as a business leader. It wears a lens of opportunity, recognising that uncertainty changes the status quo and cracks open new opportunities. It acts, despite uncertainty, and embraces failure as a teacher, not a measure of who you are. In times like these, competitors will hesitate to invest in the changes needed to adjust to the changing circumstances of their customers until certainty begins to calm the stormy seas of the economy.

And whilst they do as they are told and “Keep Calm and Carry On”, you will be eating their lunch!

Written Pavlo Phitidis, Aurik Co Founder & CEO.

Building a R100m valuation company: Part 4 – Growth

To recap, for the last few weeks, we’ve been talking about how to build a $100 million company.

There are five layers that a business owner needs to build to ensure that you can support your company valuation. How you act and direct your team across each layer changes over four stages of growth, from start-up to scale-up, ramp-up, and value-up.

The first layer is about positioning—it answers the question “what makes your business special in your customers’ experience”.

The second layer is the delivery system, which is all about designing processes, activities, and systems based on the experiences your customers want.

The third layer is about getting the right people to do the right thing at the right time and at the right price.

In this podcast of the Money Show, Pavlo Phitidis unpacks the fourth layer in “Building a R100m valuation company” [GROWTH]

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.

Accelerated Growth

Your job now is to accelerate your growth with your current services and offerings by leveraging these 3 layers to dominate in your segments. Doing so increases your market share in each of the segments you have chosen to dominate and increases your ease of finding, winning, and holding clients through referrals or word-of-mouth and brand familiarity. If you maintain your first 3 layers and don’t veer from the simplicity of the business model they offer, increased revenues will be serviced by an experienced and well-capacitated System of Delivery and team. Put differently, the same cost base of your business will generate increased revenues, widening the gap that drives your profitability. It will also mean that your team can drive this growth, releasing your time to focus on next-level growth.

Next Level Growth

This is growth that generates a significant impact on your profitability with little impact on your service or delivery costs. It’s also vital to diversify your company’s risk to create sustainability and increase your valuation multiples. Getting this right must again be done without disrupting your first 3 layers too much. Too much disruption or completely disassembling those layers will pull you directly back into your company’s engine room and the daily, weekly, or monthly grind of operational and administrative activities.

To get it right, use the time you have released to find new customers in different industries or sectors. By this, I mean customers who have the same problems that need solving and that your products and services can solve much like they do for your current customer segments. Then evaluate the similarity of the experiences that those customers want in order to support you. Their ideal experience must be as close as possible to the current experience you generate for your current customer segments. Again, this means that there is as little disruption to your first three layers as possible.

The result will be an entirely new seam and stream of revenue from the new customer segment in the new industry, served off the back of an experienced, capable, and moderately increased cost base. A significant jump in revenue, with much of it flowing down to your EBITDA or post-tax profits. Achieving this with little disruption to your first three layers means that your team can lead it and, again, release your time to focus on capital growth.

Capital Growth

This is about locking in your future revenues and further deepening your profits. It is essential if you wish to secure a clean future exit at a premium valuation. Your focus here is on productivity, efficiency, and technology. Productivity is typically calculated as revenue per employee. Efficiency is calculated as time/activity, and technology is measured by automation—in your business or in your client’s business, which you have put in place.

Productivity gains are gotten through working with your team. Identifying process-driven activities and the ‘gaps’ between your business systems that compromise coordination (For example, lead generation not handing over effectively to lead conversion) is the low hanging fruit. Business systems need constant attention and development!

Efficiency comes into play when you identify with your team how you can enjoy more value for the same cost of an activity or engagement, or alternatively, the same value for a lower cost. Often, gains are found in your business systems that can be optimised and integrated more effectively.

Technology gains can see many productivity and efficiency gains automated inside your business. Outside your business, you see technology innovate and advance the capability of your service or product. For example, I.O.T, A.I., ML, additive printing, and many more technologies available invite significant gains in value to your customers and clients. Instead of running an in-person sales team, create a virtual showroom and offer sales calls digitally, weekly rather than six times a week in person.

Leading this aspect of your business evolves over time.

Starting up—growth is focused on transaction volume and velocity of clients until you identify how to position your company 

Scaling up – growth must be generated organically as a result of this stage, freeing up your time to focus on the next stage.

Ramping up—accelerated growth is the order of the day.

Value optimization –  next-level and capital growth should take up 70% of your time during this phase.

Getting growth right needs the first three layers in place. After that, it needs a vision, targets, and discipline – don’t get distracted!

Building a R100m valuation company: Part 3 – Securing a purposeful team

To recap, over the next few weeks, we are talking about how to build a 100m company.

There are five layers that a business owner needs to build to ensure that you can support your company valuation. How you act and direct your team across each layer changes over four stages of growth, from start-up to scale-up, ramp-up, and value-up.

The first layer is about positioning—it answers the question “what makes your business special in your customers’ experience”.

The second layer is the delivery system, which is all about designing processes, activities, and systems based on the experiences your customers want.

The third layer is about getting the right people to do the right thing at the right time every time and at the right price.

Building and growing a business towards a 100 million valuation 20 years down the road is simply impossible without a high-performance team.  It’s simple logic. Without a capable team, it’s just you doing everything and holding everything together. This makes your business a job and, at best, you might attract a small buyer for a small price who wants that life.

In this podcast of the Money Show, Pavlo Phitidis unpacks the third layer in “Building a R100m valuation company” [Securing a purposeful team]

Getting the right people

Recruiting the right people is the first challenge. You need to know what talent you want, why you want it, and where to find it. Broad job descriptions based on functional roles doesn’t work, you need to think about hiring in terms of performance. If you are looking for a salesperson, how do you specify the talent and skill sets you need? Good salespeople have similar attributes, skills, and experience. Yet, of the many you’ve hired, most have probably not stuck around, leaving at great cost to your business. Rather, recruit against a system that you want that person to operate, innovate, and manage. It’s far easier to recruit against a set of activities than a set of CV of bullet-pointed attributes.

Doing the right thing

Once on board, getting that person to be able and capable fast is the next challenge. How do you train and then performance manage that person if the job description is shaped as a broad function, like sales? Simply performance managing against targets that a salesperson must deliver, for example, 5 new customers a month, is sure to fail. A sales system includes valuable content and activities to enable a salesperson’s success. For example, who are your customers? How do they buy your products/services? What are their key motivators and concerns? How do you resolve objections? Organizing activities that generate a measured outcome into a sequence allows you to measure performance more closely and usefully.

Arguably, one of the biggest challenges in a business is deciding how to delegate effectively. Delegating responsibilities to a team member only to have to do it, check it, confirm it and so on defeats the purpose. Delegate a system, not instructions. This is the key to unlocking delegation success and performance.

At the right price.

Despite the fact that education, skills, and knowledge are widely available, finding the right talent as you grow and are under pressure might make you think that big, hefty degrees and a weekend course at Harvard require you to pay big salaries. As private businesses, we cannot compete with corporates on salary and must build our businesses more smartly as a result. The key here is the system you employ to perform that function. Again, if it’s built to the specifications of your customer experience, you can afford to get a person with less experience and no Harvard degree to run it and grow from there.

Leading this element of your business changes over time too.

Starting up—get a team on board that is inspired by your vision and wants to be part of the future. The more cross-sectional their appetite to learn, do and help, the better, since in the beginning, you need a jack of all trades.

Scaling up: Specialize your team into functional areas of marketing, sales, operations, and so on. Working with them, build the business systems in a manner that has them co-creating the systems with you. It makes people feel valued, accountable and it automatically sets the standard and bar as to how they need to perform.

Ramping up – get your team to build capacity within each of their functional areas. As leaders, they need to be more strategic and have their underlying team do, so that they can lead the constant improvement of each functional system and coordinate between them.

Value up – lock your key team into the future of the business. Any buyer who is paying a premium price for your business will want to know who is going to deliver the growth and performance in the future that you’ve enjoyed in the past when you leave. A committed, high-performing team adds a full multiple onto your valuation, adding a significant uplift on your market valuation.

Building a R100m valuation company: Part 2 – Building a System of Delivery

The second step in building a 100 million valuation company over 20 years is ensuring that the company is built with a system of delivery.

Over the next 20 years, the company will go through 4 phases that work into each of the 5 years: Start up, Scale up, Ramp up, and Value up.

What we said is that a business that will be able to achieve this has five layers, built in sequence, one on top of the next. The first layer is positioning, and that asks: Why do you exist? What makes your business special in the eyes and experience of your customers?

Positioning is about saying, “let me not be greedy”, let me understand what industry I’m playing in. Let me look at the universe of all clients and customers that make up the industry and then let me find three or four slivers of clients who have the same problem, emerging in the same way, that my product can solve.

Instead of saying I define my business by the features of my product. Let me rather say I define my business by those three or four niche little slices of customers who are similar in their behaviour around how my product can solve their problem;  how they wish to learn about me; how they wish to be engaged with me, and when they do become customers, how they wish to be serviced by me. That is layer one – positioning .

In this podcast of the Money Show, Pavlo Phitidis unpacks the second layer of valuation in building a 100million business over 20 years;

The second layer of valuation, is about building systems, which is a process you must begin almost immediately. To give an example, Pavlo met with a business owner whose 40-year-old business  specialises in brick laying. So how does this work? The business owner organises groups of people, often referred to as gangs. These are made up of three people; two bricklayers and one individual who does all the mixing of the cement. Depending on the building site that he enters onto, he will organise a gang or three gangs or seven gangs to get the job done on time. What was so interesting about this individual?

The fascinating thing about this business is that laying a brick is not just simply laying a brick, because there are various forms of bricks and the ability to lay these bricks in a fashion that works with the architect’s vision of what the home or the building looks like is vital.

Another interesting thing is that it’s a  family business and  the father has now bought his daughter and son into the business with a view for them to take over from him. T daughter has a quantity surveying qualification and the son is learning directly from the father about the business operations. However, for the succession of this business, there need to be systems in place and the business needs to be built on a system of delivery, which is essential for the success of the business.

Like the brick layer, building a system of delivery is essential for building your business. Start by listing all the activities you perform and note them down. In the first five years of the business you’ll be working on getting those lists right. Start with  how you market your business to your customers, how, when they engage with you, you take them through a process of building their confidence that you can deliver the work. That’s what selling is. And when they eventually come on board, what is that process? What are the activities? What are the checklists that you need to build to make sure that you deliver the service as you promised? It takes five years to get those checklists right. And that is the first five years of the start-up period in building your system of delivery.

Once you have got those lists in play, you are a quarter of the way there. At that point in time, you’re now getting money in consistently because you’ve positioned your business smartly and successfully. You are now finding yourself working 15 hours a day because it’s you who is managing all the activities in the business.

And from there, you move to the next phase, which is where you scale up. Scaling up is where you  identify those individuals in your team who’ve got potential and you give them those checklists showing how they must go about marketing the business, how they must go about signing and securing clients, and how they must go about delivering the service to those clients.

The checklists help to gain measured outcomes and are very useful in the early stages of effective delegation. To get that right takes time, because most of us in business think that we are delegating by issuing instructions to our team to get the job done. Effective delegation needs to be how you get the job done rather than just get the job done. And how you get the job done is going to be specified in those activities that make up the Systems. When you get to a point where you’re really gunning it in the market and getting a great response, those good customer experiences that you want to consistently deliver are supported by systems that your team runs and operates. Whether it’s one, two, three, five, fifteen, twenty or more Without those systems to deliver, bad customer experiences quickly erode the five, ten, fifteen, and twenty years of  effort, risk, and love that you’ve put into your business

© 2003-2021 Aurik
Aurik and Asset of Value are trademarks of Aurik