Business Growth Archives

Elite Business: If your business is not growing, it’s dying!

Written by Lindokuhle Ntombela on May 26, 2023. Posted in Insights, Leadership, Operational systems, Positioning, Scale & Grow, Team.

In this article, first published in Elite Business, Pavlo Explores: Crafting a Strategic Growth Plan for Success in Today’s Economy.

Is your growth plan actually no plan at all? Or is it to sustain your value – neither is enough in this economy.

The Ukraine invasion, global supply chains, chip wars, trade ‘wars’, COVID hangovers, access to skills and grumpiness have heavily impacted our economy. Add inflation to a grumpy mood, and you, not the state of the economy, will kill your business if you allow it.

Let’s prevent that!

Plan to plan, but no plan yet.

If you are stuck here, you will develop an irreversible aversion to risk and a mindset that only sees risk and reasons not to act. A year back, I met the owner of a second-generation family business in the construction sector. He enjoyed a reliable £13m annual revenue, up and down a few percent for the decade preceding covid. Since then he has wanted to regain his revenues and dividend flows. Still, it remains talk, unable to commit to building a growth plan. Perhaps a decade of comfort atrophied the muscles needed to act amid his competitors enjoying record growth over the last 3 years.

Should this be you, sell your business before its value erodes further or act now. Here are two options.

Act to sustain your value.

In February, I met the owners of a once beautiful £21m revenue business. In response to the strain of their overheads bearing down on them, both partners dove back into operational sales. Spinning rolodexes, bouncing between their digital platforms, CRM and debtors book helped find, win and hold customers. It’s an exhausting and chaotic strategy, and they are reclaiming their £21m.

It’s not sustainable, and it’s not enough.

To maintain their 2019 value, they need growth to meet the corrosive elements of business value. They include:

Inflation – at 10,1% in March, robust inflation is likely to overstay its unwelcome visit. As business owners, we should look to open our upside and protect the downside so let’s expect the promised 2% target to arrive only three years from now.

Currency – our currency’s value is driven by relative inflation and belief. Technically, the gap between our inflation rate and that of our peers drives the relative depreciation of our currency. This gap runs around 4% at the moment. It is then either depreciated or compounded by the belief and trust in Britain’s ability to grow and attract investment.

Industry Growth Rate – Industry growth rates are, at best relative and as speculative as any revenue forecast a business owner presents to investors. Many factors weigh in on this number. For the benefit of a simple calculation, let’s assume that your industry is expected to grow at 2%.

Adding up the numbers, to maintain the value of their company, they need to grow their £21m by 16,1%.

After running these numbers, the mad flurry of activity undertaken by the founders paused. They boldly and purposefully replaced it with the following plan.

Plan to scale, grow and dominate segments in your industry

While 16.1% feels like a considerable number, scaling, growing, and dominating a few segments in your industry needs more. At least add another 3-5% to boldly set your year-on-year growth at a minimum of 20-23%.

A tough economy rewards companies that respond on the front foot ahead of the changed lived reality that their customers and clients face.

Start by revisiting which customer segments you wish to dominate and reset your product-market fit to meet the new experiences demanded by these customers. Next, articulate these experiences into your commercial activities, processes and systems. Done with your team, not alone, helps create accountability and enables effective delegation.

The result will be a simple, relevant, crisp strategy defined against a well-defined market segment. It will be a commercial system honed to service that market, empowered and led by a purposeful team. It will generate organic growth and resuscitate the value and dividend stream you once enjoyed. Valuably, it will release your time to lead the 20-30% that this economy offers.

Yup, I know, I said 20%. However, done this way, 30% year-on-year growth is likely, so why not!

This Week@Work: Build while you fly

Written by Lindokuhle Ntombela on May 25, 2023. Posted in Creating time, Mindset, Positioning, Scale & Grow, Week at Work.

This Week@Work Pavlo met with a business owner who is deeply frustrated because his business has outgrown the ‘chassis’ or business model that it was originally built on.

As our business’s grow, we’ll all face this, we can’t stop running the business to rebuild the chassis, we have to build while we fly.

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.

This Week@Work: Where to find growth in a low growth economy

Written by pippa@aurik.com on May 12, 2023. Posted in Leadership, Mindset, Scale & Grow, Week at Work.

This Week@Work at a large gathering of business owners the discussion centered on where to find growth in low or no-growth business environments.

Watch as Pavlo shares three points on what you need to do, and where you need to look to find the opportunities in such circumstances, to get ahead of your competition.

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!

This Week@Work: Overcome the 3 major impediments to business growth

Written by Lindokuhle Ntombela on May 4, 2023. Posted in Leadership, Scale & Grow, Week at Work.

This Week@Work, Pavlo facilitated a business battleplan with a room full of warriors, also known as business owners! The discussions about growth reiterated the same three big challenges to growth that he see’s over and over again, all over the world.

Understand them, and build a battleplan to overcome them.

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.

This Week@Work: Growth needs to be led, ideally by you.

Written by Lindokuhle Ntombela on April 13, 2023. Posted in Leadership, Scale & Grow, Week at Work.

This Week@Work, Pavlo presented a series of workshops with business owners looking for scale and growth, of course! One of the big discussion points was who should lead that growth. As the business owner you’re the biggest investor in your business and growth inherently carries risk.

You need to be the one driving growth as you have everything to lose or gain from 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.

at work : Don’t get stuck in No Man’s Land

This Week@Work: Don’t get stuck in No Man’s Land

Written by Lindokuhle Ntombela on March 28, 2023. Posted in Leadership, Mindset, Positioning, Scale & Grow, Team, Week at Work.

This week@work Pavlo met with a frustrated, established business owner who is looking to sell his business in the next 5 years. As part of his exit strategy he ramped up revenues to appeal to a buyer, but his success has put him squarely in ‘No Man’s Land’: Too big for private buyers to afford and too small for listed entities to be interested in.

It’s another warning to start with the end in mind so you can build your business for the right buyer.

Tag: Business Growth