Tag: Strategy

People are business, and business is about people

People are at the heart of any business, from suppliers to customers and staff. Your ability to read and work with people – and to get what you need out of them to move the business forward is critical to your business growth.

In this Podcast of The Money Show Pavlo Phitidis outlines his approach to getting the most out of people to achieve your vision of the business.

There are three people or kinds of people you have to understand to harness their ability to build your business.

The starting point is understanding yourself

  • Self-awareness is an important part of career development, and even more so for your business to know where you are going, as a business forces you to look objectively and adjust. Examining strengths, weaknesses, accomplishments, and failures from the past can help you to move forward with re-energized objectives, which helps with vision alignment for your business, whether it is in the hiring process or having composed company goals with the people you share the vision with. There are always trials and tribulations, but when the whole business is aligned to the goal you have, it becomes easier to achieve beyond measure.

Next, understand your customer

  • In a world where everything in business is customer-centric, knowing your customer is critical, whether you work in a B2B or B2C organisation.

To get this right you have to listen to your customer – you cannot sell to them on the assumption or hope that they are interested in what you are telling them.
Understanding your customer will help you to be more clear and focused in what you do for them. It is always important to know precisely who you serve, what you serve them and how you serve them. You cannot be everything to everyone.

Then understand your employees

  • In hiring new people, you need to be at a point where you have understood your business and you have a good sense of what kind of personality fits within your business. Having a good sense of your own values and the values of the company you are building is important. You need to hire on the back of that discussion. And that is not an interview that needs to be a social engagement.

“When it comes to employing additional staff, you must have a strong understanding of your business and a real vision of what sort of personality suits it. It is critical to understand your own values as well as the values of the company you’re building. To the extent that you can get birds of a feather to flock together, you can coordinate, simplify, and scale”. 

profitable customers

SELECTING & SECURING PROFITABLE CUSTOMERS

Knowing how to focus your sales efforts on the most profitable customers can accelerate the growth of your business exponentially. It is a critical exercise because, with limited resources on hand, you need to focus your efforts, to maximise your impact and build your business’ momentum. On The Money Show with Bruce Whitfield, Pavlo Phitidis outlined a useful technique for positioning your business:

KNOW YOUR CUSTOMER

As the owner of a growing business, you may feel tempted to try and be everything to everyone. This impulse is rooted in wanting to generate an income as quickly as possible, but it’s never a good idea to try and solve every problem, for every potential customer that comes your way. Finding, and knowing, the customer that you are best suited to serve, and who would be most profitable for your business, is vital.

A TECHNIQUE FOR POSITIONING YOUR BUSINESS

We used this technique with a group of technology entrepreneurs and, through it, you’ll be well equipped to find the right kind of customer for your business, and solve their specific problems. This technique will help you to build your business to be customer-centric, rather than product-centric, by positioning your business correctly. To showcase this technique, we’ll focus on the product of a tin of baked beans.

1. UNDERSTAND THE ESSENCE OF YOUR PRODUCT OR SERVICE

Undertaking an in-depth analysis of your product will help you to better understand and define its capabilities and suitability for customer groups. Create a brief, feature-filled definition of your product, isolating what it can and cannot do, what it looks like and how it works. If we look at a tin of baked beans, we may ask the following questions: What does the tin look like? How many beans are in each tin? What do these baked beans taste like?

2. DEFINE THE GROUPS OF CUSTOMERS YOU COULD SERVE

Once you understand your product, look towards discovering the types of customers it can serve. Define who the people are that your product can serve, by detailing their demographics; lifestyle; likes; dislikes, and needs. We’ve outlined four definitive customer groups who may enjoy or eat our tin of baked beans:

  1. A mom with 6 kids
  2. A competitive athlete
  3. A busy business executive
  4. An artisan worker

3. UNDERSTAND THE PROBLEMS THAT THEY EXPERIENCE THAT YOU CAN SOLVE

Each of your defined customer groups will have unique problems they face, that your product could solve. These are some of the unique problems each of our chosen customer groups may face:

  1. Mom: needs our tin of baked beans to stretch as far as possible, and for it to be easy to use when her children are hungry.
  2. Athlete: needs a healthy, high-protein meal, that has muscle building capabilities.
  3. Business Executive: needs a convenient, on-the-go meal that’s nutritious and easy to make.
  4. Worker/Labourer: needs a filling, hearty, energy-boosting meal.

 4. PLOT YOUR CUSTOMER GROUPS ONTO A MATRIX

Plotting your customer groups onto a matrix may sound complex, but it’s really a simple, four-block graph, that helps you to define your most profitable customer group. You’ll assign your customer groups into each quadrant by showing which group:

Has high or low profitability: Which of these customer groups can I serve immediately, with the product I have right now? How useful is my product to them?

Has a few, or many, members: How many of these customers are out there?

Through this, you’ll discover your ideal customer: the most reachable and most immediately profitable customer will be in the top right quadrant. For our tin of baked beans, that turns out to be the Business Executive.

5. CRAFT YOUR MARKETING AND SALES MESSAGES TO FOCUS ON THE TOP RIGHT QUADRANT

You can now focus your marketing strategy and messaging on your most profitable customer group, and find ways to communicate with them, in line with your business positioning.

6. BE DISCIPLINED, FOCUS AND PERSIST

Focus most of your marketing effort and budget on your most profitable customer groups, and remember that persistence is the key to momentum. Wealth, and the development of a successful business, is a cumulative exercise and not an overnight task. Once you’ve established a solid marketing effort that focuses on your ideal customer, you can look at apportioning some marketing effort towards the other customer groups, and perhaps even think about new product developments that may serve them best.

Do you need help with figuring out your ideal customer is, or positioning your business correctly? Aurik can assist, as we work alongside you to build your business into an Asset of Value.

 

 

 

blind spot

Shining a light on the business blind spots

Smart and successful businessmen have faith in their vision for their companies, but they need to be aware of their limitations and see themselves and their situations in the proper light.

A failure to do this leads to the business blind spot, a place where we can’t see what is going on around us. It’s also a place where we see things not for what they are, but what we perceive them to be. It grows from a history of how things have always been done in the business and a narrow view of what the business needs going forward. On The Money Show with Bruce Whitfield this week, we discussed business blind spots, how they develop, what they cost your business and how to prevent them.

Recently, I met two business owners in their late 60s. Both started their businesses from the ground up, work hard and earn their success. But what perplexed me was that even with their wealth of experience, both were plagued by glaring blind spots preventing them from putting succession plans in place.

In fact, the global status of successful succession is bleak – 28% of businesses survive it and only 3.4% make it there.

Keeping it in the family

However, blind spots are extreme in the family context. Founders in their late 60s and early 70s don’t admit to their fallibility easily. They can’t tolerate change, but argue that they don’t want the next generation to change the way they’re running the family business because it’s too risky. The successors can’t see that the founders are fearful of risk simply because time is running out and change means risk. This cycle places both in a deep, dark circle of despair – and both generations know it, but feel helpless to change it.

We all suffer from them

Many successful businessmen overestimate their capabilities and have an infallible view of themselves. They surround themselves with a team that seldom disagrees and mostly offers opinions that support the boss’s views. They listen to reply, not to hear and they talk to an outcome but don’t back it up with a plan to act. They seem convinced that what and how they are doing things is the best course of action to grow their businesses even though the numbers don’t agree.

Luckily, there are some blind spot antidotes that we can embrace such as:

  • Have a big vision for the business and one you believe in. The vision then becomes more important than your ego, your being right rather than effective and it will require you to surround yourself with co-creators rather than subservient implementers. The different views on getting things done will shine lights on blind spots for the business.
  • Annually, do the turnaround steps to keep fresh, in the present and relevant.
  • Don’t surround yourself with yes-men. A few contrarian people whose views differ from yours is a good thing. Diversity in a team will bring on contrarian views for certain. Create a safe environment for people to intelligently contribute opinions. That means listen to hear when they are offered and be sure your team knows why the business exists and what its goals are.
  • Increase your self-awareness – understand that the way you project yourself might be viewed by your staff as bullying behaviour in your efforts to retain the status quo. A message will go out that even though you ask for an opinion, you never really engage with it.

As a business builds over time and as growth comes in, the complexity of the operation increases and your ability to change your way of working is crucial. Don’t allow your business to be sabotaged by blind spots. They can lead to a misplaced commitment to a selected course of action that can cloud your vision and stunt the growth of your business. If the destination is clear and there is a clear vision, you can get past the problem and deliver on the promise.

Aurik Business Accelerator will work with you to build, implement and manage a family business succession plan.

Gameplan

Hope is not a strategy

While hope is a central tenet of an entrepreneurial mindset, hope alone is a promise without guarantees. In this podcast from The Money Show on 702 & CapeTalk, Pavlo Phitidis puts forward his argument that you cannot rely on hope, you have to have a plan to get whatever it is you are hoping for.

You can’t become a business owner or a good entrepreneur unless you’re optimistic, and believe in your ability to deliver something better than it has been done before. It is baked into the psychology of business owners.

What Pavlo does find concerning, is the number of established, successful business owners, 20 to 30 years into their business, who are ‘hopeful’ that they will be able to sell their business in the near future. Yet statistically, 94.6% of businesses started, fail to sell. Hard work and hope alone, are not enough.

A good entrepreneur prepares for the worst and hopes for the best. And it is this preparation that makes the difference. Pavlo shared an example of a business that has gathered a highly qualified team of extremely specialised scientists. They are all mature, they all come with impressive value stacks – wisdom, connections, insights and foresights.

The have created a digestible piece of blockchain technology that stands to resolve many problems for many businesses. But they have pinned their hopes on one of the 4 giant multinational consulting clients to adopt their tech. They have been waiting 6 months for that multinational to make a decision on their business. In the meantime they have no revenue coming in and are running out of runway.

The problem is that they have pegged their hope on something outside of their control.

While we sometimes have to rely on others, and elements beyond our control, hope has to turn into a plan rather than just a wish. For example, they could have pitched their concept to 30 big multinationals but putting all of your hope in one external factor or entity is too risky.

You have to plan now, to sell your business when the time comes

Most business owners invest approximately 48 000 hours in building their business, and yet only 30 to 100 hours go into selling it. We hope there will be a buyer when we are ready to sell.

Often the business owners don’t even know what the business is objectively worth – they see the value in what it is worth to them, as they have lived through the business.

They need a plan that is actionable, measurable and achievable!

Asset of Value

Asset of Value strategy series

THE ASSET OF VALUE STRATEGY SERIES

Welcome to the Asset of Value Series.

As part of the Nedbank Business Accelerator Campaign with 702 , our CEO Pavlo Phitidis, produced a podcast series to help successful, established entrepreneurs get to the next level. At Aurik we do this by giving business owners like yourself the opportunity to share your stories and insights, and in turn, we work with you as the business owner to drive key changes necessary to accelerate your business. In the Asset of value series, we explore your journey to building your business into an Asset of Value.

Episode 1: Building your business into an Asset of Value

Every business owner invests time, money and effort into building their business. Whilst passion is important in achieving this, it’s not enough. The purpose behind this investment should be clearly stated and that is to build your business into an Asset of Value. What is an Asset of Value, why is this important, how do you do it and what will you gain from it!

Episode 2: Measuring your Asset of Value

When you build your business into an Asset of Value, understanding how to measure your progress towards this goal is important. To do this, you need to understand how your business would be valued by a buyer. This could be a private buyer or corporate buyer, an investor or, if passing it onto the next generation, family or staff through a management buy-out. Understanding how valuation works, gives you control over the future value of your business. There are three levers that you can “pull” to get your business valuation right. What are these levers, how to I build them into my business and what impact will they have on building my Asset of Value.

Episode 3: Creating a customer centric business

The first lever of valuation, how far into the future will my business generate revenues, is answered by defining who the customer you serve is! How do you find these customers and more importantly, once you find them, how do figure out how to get them to buy and stay with you?

Episode 4: Building a systems-driven business

Are you building a business asset or have you simply built your business into a job for yourself? It’s easy to test. If your business cannot function without you being there, that’s a job. If it can function without you for 3 or 4 weeks, it’s likely an asset. The difference between them are business systems. The activities that enable your business to generate customers’ enquiries, win over customers and serve them in a manner that they stay are examples of systems. This is called a System of Delivery and its impact on your business valuation is profound.

Episode 5: Developing a risk managed business

Putting all your eggs into one basket is not a wise business strategy. The environment of business today is so unpredictable, one stumble and you trip and fall – all your eggs are broken. A risk managed business is one that has multiple customers, that enjoy being served by your business and are found in different sectors. Should one sector struggle, the customers in the other sectors keep you going. It’s also business that has no customer responsible for more than 10% of your revenues. Should they stop using you for whatever reason, your business continues. Imagine if they were responsible for half your revenues? With a risk managed revenue profile in play in your business, it makes you a price maker, rather than a price taker in the event of a sale and has a huge impact on your business valuation.

Episode 6: Employing the right people in your business

Once you have a clear sense of who your customers are, how to service them and a System of Delivery in place, you are ready to employ responsibly and effectively. Think about it, we mostly employ people to do a job. What is that job, what are the activities that that job should perform, can they be measured, what’s a fair salary for that job? These questions are seldom asked and answered when we, under pressure with too many things to do, reach out for help and employ someone who we hope is right. And they are often wrong. How do you employ the right people to do the right thing at the right time and at the right price when you build your business into an Asset of Value?

Episode 7: Driving your business to the next level

We hear this expression “the next level” often. What does it mean and how do you get there is often left unanswered?

Episode 8: Succession planning in your business

Wealth is cumulative and time based for most of us. We often start our businesses with very little and it takes time to grow them into valuable assets. Often, to grow them into significant assets, it can take a second generation. This could be family or staff that we pass the baton onto to get the business to its next level. How do you do this and what approach can be adopted that makes the founder and successors ensure that the business gets the best from them both, that the founders wisdom is passed on successfully and that the successors ideas are adopted to keep the business relevant and contemporary with the inevitable\ changes in the business environment.

 

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