Tag: Business Growth

Aurik business growth and exit event 16 March 2022

Join us for 55 minutes on 3rd November to understand  how we would work with you and your team to achieve your business goals and ambitions. 

A Simple, Scalable, Smart Business Growth Plan

Business growth and exit event

16 March 2022 / Online / Free

Making the most out of your economic prime, needs focused attention and action.
In the years ahead, what is your ambition for your business?

  • Scale, grow and dominate your space
  • Grow revenue and profit to maximise a future exit
  • Set a growth path, transfer responsibility and exit profitably

As a business owner, releasing your time to drive your ambition needs a simple, scalable, smart business growth plan

Aurik has partnered with over 3 000 businesses across the globe to deliver average annual growth rates of 28.9% and average EBIDTA growth of 32.4%

Join us for 55 minutes on 16th March to understand how we have gotten this right, and how we would work with you and your team to achieve the same, or more.

Time: 
USA central: 7am 
UK: 11am 
Germany: 12pm 
South Africa: 1pm 
Singapore: 7pm 

Leave with insights and action on: 

  • How to set a simple, smart, scalable growth plan for your business and team
  • How to resolve the nine impediments to business growth and exit
  • How to build the 5 levers of valuation and exit
  • Secure organic growth through your team to allow you to focus on next-level growth
  • Develop an exit strategy in the 5-10-15 years ahead, today
  • How to build a motivated team you can successfully delegate to

Speaker

Pavlo Phitidis

As an entrepreneur and investor, Pavlo offers over 25 years of direct experience in conceptualising and building businesses across three continents. He has developed and brought to market business assets in excess of $400m through a combination of business start-ups, turnarounds, sales and acquisitions. Using his hands-on experience, business capabilities and relationship networks, he continues to support the growth of business owners through Aurik , a venture capital business growth service.

Pavlo is a regular media commentator, an international speaker on business growth and author of the best-selling, Sweat Scale $ell as well as his newest title: Reset Rebuild Reignite.

Register here



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funding for growth

Growth funding – debt, equity, or both?

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.  

get business to 100million

Growing your business revenues beyond 100m

Business growth is not a function of luck.

3 elements in play will generate growth despite your levels of luck, hope and prayer.

What are the 3 elements? Listen to this podcast where Pavlo Phitidis unpacks these on The Money Show:

 

  1. Mindset

It begins with you as the business owner. Success in a mindset has a few characteristics:

Passion – we believe in what we are doing, we see success, and this passion is fuel that keeps us going through disappointments and ups and downs. But it’s not enough.

You need purpose. And there’s only one purpose that any business owner should adopt: Building the business into an Asset. And an asset has 3 features:

1 – Generates income, and those incomes grow.

2 – Growing the capital value of your business. Some business owners work in their business for 10, 30 or 40 years and invest all of their time only to realise it doesn’t have capital value.

3 – It can operate without me, so that I can sell it when I need to exit.

 

  1. A growth system

Without a growth system to organise what we are doing, how do we know how to drive growth one day to the next? We get sucked into the operations of the business, and growth takes a back seat.

The reason is that we aren’t given a method or a system for growth. A system is a series of activities put into a sequence that is measurable. You should be able to use this system to guide your team to do what, when and how.

We have a system that has been proven to drive growth and it relies on:

1 – Positioning. What makes your business special? And product is not enough… it starts with what your customers want and need from you, what problem you solve for them.

2 – System of delivery. Get the systems right for marketing, sales, operations to deliver. As systems are repeatable. So when you’ve gotten that right, you don’t have to be involved in the repetition as your team can implement them.

 

  1. Four acts of leadership

One and two – mindset and the growth system, are the acts that get you to the point where your business is growing steadily without your direct involvement. Once you’ve gotten this right and are growing steadily, what next?

Dominate your market! And this takes you to the third stage of leadership, which deliberately focusses on ramping up that growth.

 

The final act of leadership goes back to purpose.

Every business in the world only has 2 final outcomes: Successful sale or closure. So the fourth act focusses on deepening profits, to increase your valuation, which allows you to exit successfully which secures family’s future and your legacy.

 

Efficient 25.11.2020

EVENT: Navigate your business through stormy economic waters

There is a way to build your business to withstand the wild waters that mark uncertain economies like the one we are in.

Join economist Dawie Roodt and business growth specialist, Pavlo Phitidis for insights into what the ocean ahead might look like, and how to build your business to thrive in any storm.

Date: Wednesday 25th November 2020

Time: 08h00 to 09h00

Venue: Online

Register HERE

positioning

POSITION YOUR BUSINESS FOR SUCCESS AND MAXIMUM IMPACT

Wing Chun Kung Fu, a style of martial arts, requires that you have a secure footing on the ground in all its defensive and offensive actions. This footing “anchors” you to the ground. It translates the force of your strike or block from your foot to your knees to your hips and torso to your strike or block. It lends integrity, strength and power to your action be it a kick or a punch.

Building and growing a business is no different. It all begins with positioning and leads all the effort and activity based on that positioning. Weak positioning or poorly articulated positioning will lead to misguided actions, investments, hires and decisions. It fragments and crumbles the businesses platform, leads to a life of chaos and frustrations as a #businessowner and will almost assure you a future where what you have built will never be saleable.

WHAT IS POSITIONING

This is all about what makes you special as a business. not in your view, but in the view of your customers. Not in what they say, as much as in what they do. that means, they say they like your service or product and they show it by returning again and again. They promote your business to friends and family. They turn their talk into walk.

WHY DOES IT MATTER

A well-built business that consistently gets to both the next level of growth and value is one that has been built of a clearly articulated, relevant positioning. It enjoys clarity and certainty in why it exists and how it will grow. Its “foot” is planted on the ground and points towards the direction that the strike or block needs to follow. The solid footing ensures that all the actions leading up to that strike are aligned, efficient and direct the maximum effort of the body’s movement into that strike.

These actions include marketing to generate leads, sales to convert those leads and operations to deliver the promise of the sales proposition. The team employed by the business understands how to work together, is well-coordinated and includes the right people doing the right thing at the right time.

A business that has no positioning or a poorly defined positioning can never direct and concentrate all its actions towards achieving its objectives. The actions would be fragmented and misaligned and the team would behave inconsistently and chaotically.

Poorly positioned business bleed effort, money and time since they are following an unstable footing.

WEAK POSITIONING STATEMENTS

When I ask most business owners what makes their business special, they say one of three things 99% of the time.

  1. Product – they argue the merits of their product in terms of its features and benefits. They might go so far as to say that their suppliers or manufacturing approach is unique and special. These aspects make their product superior. It’s the product that they have, hold and own or represent that makes them special.

The origins of this way of thinking date back to the mid-seventeen hundred when Ralph Waldo Emerson said, “build a better mousetrap and the world will beat a path to your door”. This is to say that a great product will always create a destination for customers to come to you. In the 18th century he was right. There were hardly any products around. Simply having one meant business!

  1. Service – many, in fact most, say it’s their service. that they offer personal service and will bend over backwards to accommodate and please their customers. Service wins the day and they offer that.
  2. Price – sometimes they argue price. Few argue that in fact because to attain price advantage over something in a competitive market is hard. If you are not in a competitive market, then price probably doesn’t matter in any event.

The fact is that seldom do any of these positions translate into a successful result.

Whilst each of these attributes may be true for a while, none remain true consistently. Money can build a better product, service is largely driven directly by the business owner (and that is not sustainable) and price advantage seldom lasts.

HOW DO YOU CREATE A WINNING POSITIONING?

Today, the world has become more fragmented and more individual than ever before in its trading history. IN 1922, Henry Ford produced the Model T Ford. He was quipped saying “you can have any model you want so long as it’s black”. Choices were limited then and more importantly, access to information and choice even more so. The trends today are focusing more on customised products and services than ever before and that is only going to increase.

In this world, spoilt for choice, customers want solutions to problems. These problems need to be lived, felt and experienced by the customers that a business serves. This means your positioning as a business needs to talk to the problems that you solve and who has them. If this is clear, then any marketing effort will contain messaging that resonates with the customers you want to reach. They will hear and identify with the problem that you claim to solve. Thereafter, any selling effort needs to demonstrate how your product or service will solve the problems you have articulated. Finally, the delivery of the product or service needs to create an experience that resonates with how customers, with the problems you have identified, want to be served.

It is the single most difficult thing to get right in a business. but when you do, all the actions that follow it will be aligned to generate momentum behind every investment and action you make in your business.

Working with Aurik, we revisit your positioning first. Once sure that it is relevant and clearly defined, we work with you to build all the actions your business needs to get to the next level of growth and value. Through this, we will ensure that you maximise your return on money, effort and time. Contact us today and let’s start the conversation.

resilience

BUILD RESILIENCE INTO YOUR BUSINESS TO TAKE CONTROL OF YOUR FUTURE

We often hear about being resilient to thrive and survive in business today. Why does this matter and what does it mean?

The pace of change driven by fragmenting political and economic ideologies, changing socio-political environments, accelerating access and advances in technology and increased competition is happening faster today than before. And this was before Covid dramatically shifted and accelerated change across the globe.

Staying relevant in this changing world is vital to ensure a future for your business. Think Kodak. One day they dominated, the next, gone. Think Nokia, BlackBerry, Sears, Studdafords, Commodore Comp and the list goes on! We know this, yet, every day I see established businesses facing similar fates.

On The Money Show with Bruce Whitfield, Pavlo Phitidis outlined how to build resilience into your business.

WHY DOES IT MATTER?

If you don’t get this right, your business will die. A business that is not growing is a business dying. Sure, one can blame a multitude of factors from the no-growth economy, aggressive anti-growth legislation and government policy, scarcity of funding and so on. Yet, in the exact same environment, businesses like yours are growing.

To not be relevant in the changing environment stalls growth and retards it generating a fateful future. Without growth you have a business that is hard to sell and further, you will not attract talent, new customers or funders compounding your no-growth scenario and blame.

Your years of sacrifice, investment and risk must turn into a successful exit and capital gain. That is your final reward and it is the pension that you need to care for your family and self.

BEING RESILIENT IS NOT ENOUGH

Most of the content on resilience focuses on human behaviour and psychological analysis of top-level sports people or rough and tough specialist soldiers. There is great value and inspiration in accessing this content. But reading it does not make it so. The human behaviour piece of resilience takes specific experiences, time and pain. Without it, you will suffer. But with it, you are only partly there. Resilience can be built, through design, into your business. When you tire from the ceaseless fight, when you fatigue from the constant assault on your business and future, you need your business to have resilience “baked-in” through its design and method of build.

BEING PROBLEM AND EXPERIENCE ORIENTED IS THE SEED TO RESILIENT DESIGN

Today, customers buy experiences that solve their problems. Being clear on who your customers are and what problems you solve for them is the single most important factor in designing a resilient business. Beware to let your product or service guide your business design and mindset. This means that your eye, ear and heart are all focused on the product and its features when in fact, the market is buying solutions to problems and experiences. Remaining “tuned in” to your customers and responding fast to their changing world builds a resilient business.

To get a clear message from the market, a resilient design is one in which the business does not try to offer everything to everyone. Resilient design means being super-focused, niched, a specialist in both the product or service you offer, as well as the customer groups you target and serve. It remains the single most challenging thing to get right.

INFORMED DESIGN LED BY YOUR CUSTOMERS

With clarity at hand, resilient design means that every activity in your business is developed to market, sell, deliver and enable response to that well-defined customer group. These systems need to orchestrate and act to create the right pitch and melody that your customer will hear and resonate with. Get the melody wrong, that customer switches channel or skips to the next tune on their radio. Get it right, and that customer will stick and stay. They will also lead the development of your business into the future. As their world changes, you will be able to understand what that means. That understanding leads to your actions leading to the investments and changes you make in your business to respond.

STRUCTURE DETERMINES BEHAVIOUR

Designed resilience means a team that is tuned into that customer and their changing world. In a service business making each and everyone’s bonus or incentive structure linked to customer experiences is a lot easier than in a product or manufacturing business. You may not like a member of your team but if your customers rate them well, they’re an asset and key tool to the resilience of your business. Remember, structure determines behaviour. Incentivise people against a structure that ensures resilience and responsiveness, and they will be true assets to the business.

RESILIENCE ATTRACTS GOOD COMPANY

It’s not simple to get right. It’s harder when you’re established. Without this design baked-into your business, it’s all up to you, 24/7. With this design in play, your efforts will act to deepen and ensure that the success you enjoy today, will be the success of tomorrow. Funders love it, buyers even more and your employees will thrive on it. Finally, your reward will be greater than you could ever dream of.

LET’S WORK TOGETHER

We work with established business to get to the next level of growth and value. That means resilience is baked-in, built-in and an absolute necessity in how we work with you. Get in touch and let’s ensure that your future remains brighter than your present day.

 

Wealth

Three activities to create wealth through private business ownership

Wealth is used to describe an abundance of a desirable thing. It could be friendship, love, money, access to a foodstuff and so on.

From the context of a #businessowner, what does wealth mean and how do you create it?

Before we begin, think about money as water

You are simply the custodian of it for a period. When you make it, you either store it or use it. Stored water eventually evaporates or stagnates. Used money is either wasted or generates more value for you.

In this context, a business should be built as a perennial spring. Well designed and built, it should produce water consistently. You use of that water should be well considered. Fertilise and feed productive lands that bear fruit. Bad investment decisions see the money made lost like watering barren soil with old seed. 

MAKE MONEY

Money in a business takes two forms:

Free Cash

Money in a business is used to sustain and grow a business. the money made needs to cover all your expenses. Thereafter, you pay yourself a salary to sustain yourself and your family. Any money left is profit and should come to you as dividends or be used to make investments in the business that will accelerate money making. This free cash can also be used to deepen the value of the business to generate future money. This happens by increasing the value of the business’s equity.

Equity or capital

Equity holds the promise of money. It resides in the value of the business should you decide to sell the business. Built right, a business can be sold and for a premium value to generate a capital gain. This will be the difference between the cost of your initial investment in establishing the business and the sales price achieved.

As a business owner, you can build a business to either make money or grow equity or both. To get this right, you need to build your business into an Asset of Value. This is a business that has the following criteria:

  1. It has a good strategy that sets it apart from competitors
  2. It generates steady, reliable sales
  3. It has a well organised delivery capability
  4. Its people are purposeful and motivated
  5. Banks and funders love it
  6. It’s saleable at a premium price on a clean transaction

Building your business into an Asset of Value will see revenue grow at a higher rate than your costs. This gap generates the free cash to make money in the business.

GROW YOUR MONEY

With money made, you need to now make it work for you by growing it.

You can grow it in your business. by making smart investment choices, you can amplify and accelerate the rate at which your business turns that money made into more money made. This might mean an investment into plant and equipment, people and software etc. Many business owners make their biggest mistakes here. Knowing how to invest in your own business is not as easy as it sounds. Alternatively, you can invest outside of your business into stocks, bonds, shares and other assets. In all cases, these investments must money for you either by generating more revenue in your business with little cost, dividends in shares that you have invested in and other capital appreciating assets.

PROTECT YOUR MONEY

Get smart with insurance and tax management. Insurance, as annoying as it can be, protects you from probable and improbable risks. There must be little worse that having, for example your fleet of trucks written off in a fire without insurance to fund the replacement fleet. It will set you back years if not permanently. Also, some investment products serve to protect money drains like tax. You can legally manage your tax rate down on a personal level by investing in retirement annuities for example.

Wealthy people did not get there in a single generation. Nor did they get there through one activity. Sure, we read about some business people who cracked it and got lucky in a single generation, but they are, by far, the exception. Strategy and habit are what builds wealth. Strategy means being clear on how to make, grow and protect your money. Habit is doing and behaving in this way over time.

Work with us to help get your business into a money making, growing asset. We call it an Asset of Value and we are expert at working with you to build your business into one!

Build together

Why SME growth is strategically important to the country – now more than ever

Through a number of webinars, meeting and other engagements, Pavlo spoke to roughly 5 000 business owners in a week, in South Africa, a few in the USA and a number in the UK. He also spoke to a number of corporates and through these discussions learnt why SMEs are so important – strategically and technically – to the economy.

He discussed why SME growth is not only possible but essential right now with Bruce Whitfield on The Money Show on 702 and CapeTalk. Listen to the podcast:

 

Why is SME growth so important right now, when survival seems more appropriate?

People don’t believe business can grow in an economy as depressed as ours. Pavlo agrees that big companies can’t as they require the whole economy to grow for them to grow.

But there are approximately 150 000 real businesses operating in the SME sector in South Africa, compared to between 1 500 – 2000 corporates.

It is clear where the tougher competition is – in the pool of 150 000. In the SME environment, you have to be one of those to get ahead, to get into a growth mindset, in order to take marketshare from their competitors who are sitting waiting. You have got no choice but to grow.

Your attitude: what you think, guides the way you act. And how you act builds up your lived environment. The mere fact that you have a growing mindset means that you’re looking out for ways to make things work, trying things that might work, and applying those that do.

It’s a great time to grow. We’re operating in an environment where everything you did to achieve success pre-Covid will have to be fundamentally different post-Covid.
For this reason if you can act very fast (and SMES are small enough to do this, while corporates are too big to respond this fast) and test and test and test to see what lands with your customers who are in a totally changed reality, you’re in a position to win.

How do you grow in the 5 stages of lockdown?

The 5 stages take us from hard lockdown to an open but fundamentally changed economy. The approaches in the different stages are very different.

In lockdown, growth might mean consolidation and shedding costs. It should mean engaging differently with customers, suppliers and staff to understand how client’s lives are changing and what problems they have, that your business can solve.

From there as it opens a bit, it becomes a great time to build. You can see what is working, and rebuild it to create scale – this basically means you can do more business without undermining your ability to deliver on your promise.

Then – if you’re growing towards the opening of the economy, you’ll be among the minority with any cash and you will be able to pick up stock and equipment at fractions of the cost, to source great talent who have been laid off elsewhere, and to pick up the customers from your struggling competitors.

The big opportunity is for corporates:

Other than getting their own business stabilised, a big company’s only chance for growth is to get their SME suppliers and SME customer businesses right. Each SME in the value chain is part of part of your network and everyone has to thrive to keep the ecosystem vibrant.

How does a country grow through it?

The biggest economies in the world have some sectors that are more competitive internally, others compete globally. If South Africa could pick 4 or 5 sectors in which we could compete globally and then invest resources on skilling up people, then creatinhg micro-enterprises, developing and supporting SMEs, and then businesses in these sectors, we will develop the capacity to become world-class players in these fields.

If you’re looking for your business’s growth plan through the Covid Economy, contact us. visit www.aurik.com/contact

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