Tag: business strategy

three strategies

3 Winning Strategies for 2021: an uncertain year ahead

This is part three of Pavlo Phitidis thee-part discussion of how to set your business strategy to cope with whatever it is that 2021 is going to hold for us. Taking into account that it looks like 2021 is going to be another tough year.

In part one, Pavlo identified the five biggest issues threatening the survival and growth of established business owners.

In part two he discussed six reasons why you must “be in action” in an uncertain environment.

And in this instalment, he talks about 3 strategies or action plans to get you and your business onto a positive trajectory for growth in a stagnant, uncertain economy. Listen to the discussion from The Money Show here:

He started by stressing the importance of taking a view. Identify a plan of action, and put your head down and focus on it. He sees three strategies that should be considered, and one of these will apply to most businesses.

  1. Reset your business to be resilient because the road ahead is going to be bumpy.

Whenever we talk about resilience, we talk about mindset, which is important – it’s 50% of the solution. But we also need to be designed to be resilient – to be able to cope with a lot of uncertainty. In this environment that includes the tough decisions on cutting costs, simplify your business, don’t try to be everything to everyone but specialise in understanding who you serve so that you can be in control and guide your team to only focus on things that deliver results.

  1. Reignite your business by ramping up growth and making up lost 2020 revenues.

Once you’ve designed your business to be simpler and more specialised in serving your key customers, this places you at the edge of change of your market. This happens because the changes in your clients and customers come from them – you need to be close to them! He referred to a website he had stumbled across that said “we are chef-led innovators”. To Pavlo this reminded him of what we all tend to do. When we are under pressure, we revert to our comfort zone, in this case, a former chef, doing what he THOUGHT his customers wanted instead of listening to what they really want and need.

How to do this? It could be as simple as setting aside 2 hours a week to have a zoom coffee with 2 customers, to find out where they are at, and what they need. It is not overly complicated. Just keep asking WHY? Why won’t it work? why do you want it? Why is it too expensive? What aren’t you seeing in the value?

  1. Reset your business for an exit given what lies ahead.

There is going to be a lot of M&A activity ahead, as big corporates hunt for new revenue streams. Your business needs to be built in such a way that the value is clear, and that it runs well, independent of you.

 

 

turn talk into walk

TURNING THE TALK OF YOUR BUSINESS STRATEGY INTO THE WALK OF EXECUTION AND RESULTS

While the big ideas and the talk of business strategy seems easier to do, the walk of action and executing on those ideas is a struggle. On The Money Show with Bruce Whitfield, Pavlo outlines the obstacles that could be holding you back as a business owner, and how to overcome them:

PROCRASTINATION

You may have the big business strategy, the great idea, the gigantic goals, and the inspiration to attain them, but procrastination holds you back. Set too big a goal, and you may be overwhelmed by them, effectively preventing yourself from achieving any! Instead, break your big goals and idea into many small steps and then begin climbing that ladder – one step at a time. This will enable you to build momentum.

Don’t let your obsession with perfection hold you back from attaining your objectives – start with smaller goals and work your way through them, to achieve a sense of progress. With just 3 economic months left before the end of the year, you need to act and the best way to do it is to begin.

Also, holding back on action because you are waiting for a big project to land, environmental circumstances to change, or you’re concerned you will fail, won’t get you anywhere. Truth is found in action, so start acting, now.

IF YOU WANT SOMETHING DONE PROPERLY, DO IT YOURSELF

Letting go of control over the small tasks that make your business work, is imperative when you’re working on executing your business strategy. Building your business through effective delegation is important for growth, and where that has failed, look more towards hiring people as operators, and not just to fill a job vacancy. Moreover, if staff performance seems to be dwindling, look at your performance measurement systems, and re-assess how well they are working.

SILVER BULLETS

There are no silver bullets in business. Yes, you could hire new people, acquire new premises, find a new funder, or buy new equipment, but those aren’t going to generate action all on their own. Put aside the idea of a silver bullet saving your business, and set your mind towards action, rather than looking for a silver bullet.

EGO AND PRIDE

If you’re frustrated by a lack of progress in your business, and battling to implement your business strategy, it’s time to put your pride in your pocket and pack your ego away. Asking for support, help, or guidance, is not a sign of weakness; it’s a sign of strength and willingness to move beyond your current circumstances. More and more big businesses across the globe are re-assessing their business strategy and moving towards focusing on their core objectives – you should too. Outsource things that aren’t your primary business objective or area of specialization and look long and hard at the goals you want to achieve.

TIMING

The phrase “it’s not the right time” is an all-too-common excuse for delaying your execution of business strategy. Just get started! Of course, it can be difficult to measure and assess your leadership and direction in your business, especially at first, but remain cognizant of your business journey. Look for and find your business’ pattern of growth, while you focus on the objectives for that phase of your business journey.

At start-up stage, you should be focused on learning and understanding what business you’re in, defined only by the problems your business intends to solve for its customers. Moving on from that, building the business beyond yourself means you’ll need to change your leadership strategy, and lean more on implementing systems that will support your business strategy, while hiring the right people to work with those systems.

EXHAUSTION

We live and work in unsettled times, beleaguered by uncertain economic circumstances and a seemingly overwhelming barrage of bad news. This level of uncertainty is the new normal. Rather than allowing yourself to become despondent because of it, focus only on the things you can act on, control, and make happen. Focusing your energy on what is useful to you will help you to find the energy to keep moving, stay on track, and build your business. Developing a fitness for this new normal of uncertainty will mean you’ll be able to build your business, no matter what the external circumstances look like.

project revenues

ESCAPING THE PROJECT REVENUE TRAP

It’s an issue that faces any project or event-based business – they tend to generate bumpy revenues, which affects their ability to build momentum and secure growth funding. Listen to the podcast from The Money Show with Bruce Whitfield, as Pavlo Phitidis sets down a plan for business owners to escape the project-revenue trap!

WHAT IS A PROJECT DRIVEN REVENUE MODEL?

Any business that sells bespoke or customised work has a project-based revenue model. Examples include event management services to the supply of industrial plant and equipment. Securing deals like this are very appealing. They have lots of adrenalin and anticipation. It takes a real skill to win such deals because the value of these big deals is material. They can have some big numbers to them.

HOW DO THEY AFFECT THE TYPE OF BUSINESS YOU BUILD?

Depending on the type of product or service you sell, these deals require specialised skills. Typically, selling and securing a project, for example to build a piece of software to solve a problem or a massive mixing plant in an industrial bakery needs specialist skills. Specialist skills are by nature expensive. Often, the person with the skills is you, the business owner. You started the business because you had the skills to deliver this kind of product or service.

WHAT CHALLENGES DOES THIS KIND OF BUSINESS FACE?

There are numerous challenges including:

  1. Skills – access to specialist skills to ensure that you can sell, secure and deliver the project
  2. Bumpy revenue – its hard to secure reliable, predictable revenue. This makes building the business in an organised manner very hard. We refer to it as sine-wave-revenue. You spend your time chasing the deals because it requires your skill to secure them. Then, if you win them, you spend your time installing, delivering the product or service. in the meanwhile, there is no selling taking place unless you have a base of skills on board.
  3. Funding – its hard to secure funding n these types of businesses. Funders want and need reliable predictable revenue to service debt payments.
  4. Valuation – its hard to get a reliable valuation on these businesses. Valuation relies on free cashflow being generated over time. unpredictable revenues caused by the project nature of your revenue makes it hard to forecast a reliable estimate of the free cashflow.
  5. Sale – it’s a tough business to sell. A buyer would need to have your skills to see themselves buying and running the business.

ESCAPING THE PROJECT REVENUE TRAP

To move into a different revenue model, one that offers more certainty and predictability is a good idea. Such businesses build momentum, enable planning and growth in an organised way and over time yield very attractive valuations. They make for very attractive investments – hence the term Asset of Value.

Here are a few of the many strategies that you can deploy to make this shift in revenue model. However, beware, it’s a painful process and it take time. be sure you want to move there too because there will be some tough choices to make.

  1. Build products

Take a good look at all your projects. Identify the typical, most requested project. For example, if you are software developer, what is the most common problem that you find yourself building for clients. Correlate the projects against sector and industry. An important element of a product business is to have clear customer segment that you service and very well articulate problems that you solve. Create a workplan to begin building out the products. Try do this with a few of your client’s on-board right from the get-go. Allocate resources to this and deepen them over time. you will need a balance sheet to support this process. Those resources that serviced the project revenues are now going to service product revenues. These product revenues take time to build. Over time, as you deepen your product revenues, slowly switch the selling effort from project clients to product clients.

  1. Augment your projects

This is a far easy route to take. Think about the automotive industry. They started by selling cars. Once bought, that was it. today, they have added a suite of additional services. From motor-plans to driving experiences to trade-in deals, they have turned a once-off event into, in some cases, a revenue stream that lives as long as you might.

A client who supplied pumps as and when to mining customers took advantage of the recession and collapse in the mining industry to turn water elimination into a service. using technology and I.O.T he no longer sells pumps used to eliminate water form the shaft, but rather, sells a service that sees him being paid per hectolitre of water pumped.

  1. Deal make your volume

Because clients only buy as and when, look to deals that secure the as” right now and the “when” in the future. Its about selling to a client once and securing their further needs on other projects. For example, an eventing business could make a deal that offers a rebate on the future events if a client commits to 5 events in a year. do 10 such deals and you turn 10 projects with 10 clients into 50 projects in the year. the consistency of project acts to smooth your revenues.

These are some of the strategies we have developed for clients wanting to make the shift from project revenue to regular consistent revenues. Contact us and we’ll be sure to help you step beyond the project revenue trap.

 

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