This Week@Work Pavlo’s meetings with long-established business owners left him concerned about their runway to an exit. They have spent their careers focused on operational issues to generate income to sustain the business. Only now are they realising they should have been focused on growth and capital value to secure a profitable exit. What are you spending your time on?
I recently facilitated a business growth workshop for 89 established business CEOs, and the key question that arose was, “How do we get growth in a low-growth economy, riddled with power outages, held back by skills deficits, eroded by inflation, and impeded by gross negligence from the government?” Here are a few approaches to delivering growth across our client base today.
Growth begins with your mindset.
The foundation for growth in any business starts with your mindset. How you think affects how you engage and behave. There are two mindsets:
An operating mindset and a growth mindset. The operating mindset works hard to get growth but often hits a ceiling, building frustration that results in blame and cynicism. It does not yield growth!
A growth mindset works hard and smart. Acknowledging that most of your thinking and understanding is shadowed by not even knowing what you don’t know, or doubt, leads to a curious engagement with insights, perspectives, and new approaches. It helps create a restless and relentless intent to continuously improve, learn, and try new approaches. Across most of the developed world economies, a 64 year old business owner last experienced persistent inflation and interest rate increases at the age of 20. This invalidates much of what individuals experience in traversing the current inflationary and interest rate rises that govern these economies today. If the old dog won’t allow itself to be taught new tricks, it might well perish without a fresh perspective, new insights, and the courage to do things differently.
Growth needs a plan.
To achieve growth, you need a plan that is engineered through design and implementation. There are seven types of growth, each distinct from the other, whose timing and attention are vital. These include organic growth, financial growth, geographic growth, product/service line growth, customer segment growth, acquisition growth, and franchising growth.
Growth must be hunted.
Low growth means that you must grow by outplaying your competitors and eating their lunch. You must also grow by proactively responding to the changes in the status quo governing the problems you solve for your customers, how they behave and buy, seeking opportunities created by corporate outsourcing work to lighten their cost load and become more agile, and from accidental privatization resulting from government incompetence in service delivery.
Growth needs a number.
Tracking, measuring, and achieving growth requires a number to manage your path to success. A company valuation is not luck and prayer; it is primarily engineered, with luck playing a “timing role.” This number allows you to measure and manage your growth effectively.
Growth needs a team.
Your team is crucial to achieving growth, and it is important to ensure that everyone is aware of the growth plan. In over 10,000 surveyed businesses, 95% of employees were unaware of the growth plan, leaving the CEO to do all the heavy lifting. This can result in hitting a growth ceiling because you reach your capacity, and worse, you may fail the business because you burn out.
Growth is intentional and supported by a plan that is brought to life through your strategy, business design, team, and target. The economy’s condition is largely irrelevant when it comes to achieving growth. By adopting a growth mindset, creating a plan, hunting growth opportunities, measuring your progress, and building a strong team, you can unlock opportunities and overcome challenges to achieve sustainable growth in your business.
As an entrepreneur, it’s easy to get caught up in the day-to-day operations of your business. After all, there are endless tasks that need to be done, from managing employees to coordinating with vendors to ensuring that customer orders are fulfilled on time. However, if you want your business to truly thrive and grow, it’s important to shift your focus from working IN your business to working ON your business.
What does it mean to work ON your business? Essentially, it means focusing your time and attention on the strategic initiatives and developments that will drive growth and success in the long run. This includes things like identifying new market opportunities, developing new products and services, and creating scalable systems and processes that can support growth.
On the other hand, working IN your business involves focusing on the day-to-day operations and activities that keep things running smoothly. This might include managing employees, handling customer inquiries, and ensuring that products are delivered on time and on budget.
Of course, both types of work are essential for a successful business. However, if you’re spending too much time working IN your business, you may find that you’re not able to devote enough time and energy to working ON your business. This can ultimately limit your ability to grow and scale your business over time.
So how do you make the shift from working IN your business to working ON your business? One approach is to conduct an ON vs IN audit, which involves creating a spreadsheet to track your time and attention across different business functions and activities.
For example, you might create columns for input functions, activities you perform, minimum time required per activity, frequency per month, and time allocation per month. This can help you to identify areas where you’re spending too much time on day-to-day operations and not enough time on strategic initiatives and growth-oriented activities.
Ideally, you should aim to spend at least 70% of your time working ON your business and at most 30% of your time working IN your business. This balance can help ensure that you’re dedicating enough time and energy to growth-oriented activities, while still ensuring that your day-to-day operations are running smoothly.
To make the shift from working IN to working ON your business, you may also need to focus on simplifying, systematizing, and delegating your business operations. This might involve streamlining your processes, automating routine tasks, and delegating responsibilities to trusted team members.
Ultimately, the key to working ON your business is to build a scalable platform for growth, then focus on driving growth through strategic initiatives and developments. By taking the time to step back from day-to-day operations and focus on the big picture, you can position your business for long-term success and create a lasting legacy for yourself and your team.
Late payments are a menace to businesses, innovation, industries, the economy, and society as a whole.
Firstly, late payments have a significant impact on businesses, affecting their cash flow, which is akin to suffocating the business. It affects confidence both from your suppliers and your staff who will start looking around if you can’t pay them. This is compounded by increased costs of finance and expensive short-term loans, which can cause a ripple effect on the business and its stakeholders, even leading to bankruptcy in some cases.
Secondly, the economy as a whole is impacted by late payments. Unstable employment leads to mental health issues, businesses closing their doors has a huge ripple effect on their suppliers and the value chain they sat in. It can also affect trust and spoil relationships between businesses, leading to a bad culture of late payments.
Late payments can occur due to various reasons, such as cash flow management, complex payment processes, administrative errors, disputes over goods or services, intentional delay, lack of priority, inadequate payment systems, late payment culture, and anti-corruption legislation, and red tape.
There are many, many reasons so as business owners we need to look not at why these occur but what we can do to mitigate their impact on our businesses.
What can businesses do?
To avoid or manage late payments, businesses must know their industry and understand how value is created for their clients and customers so you know who they are, what can go worng and what their payment reputation is. Only offer services that you clearly understand and can deliver to prevent disputes on services redndered when it comes time to bill and be paid. Also, don’t be greedy – avoid deals that concentrate your risk.
Prevention is always better than cure but sometimes you might find yourself beholden to a delaying client and it’s important to build relationships across big corporations you are supplying to so that you are able to escalate when needed.
Be clear and concise with terms of service and administration and invoice accurately, per your clients requirements to get in front of the pyment queue. If payment is delayd, be practical and negotiate settlements, and with that lesson learnt, avoid repeating mistakes. If payment seems unlikly, be bold and fight for it if it is a big enough invoice. Nowadays, you can also remind customers of how late payments can affect their ESG rating.
What can government do?
The government also has a role to play in preventing late payments. There are various interventions globally, which fall into various categories, and which can be drawn on to build a framework to support SMEs
Pavlo discussed this in a recent Money Show podcast.
There is regulation but don’t rely on it. Do your homework, be savvy, don’t be greedy and always operate with enough self doubt to guard the downside when opening the upside of a big customer….
This Week@Work Pavlo shares his experience with a group of passionate business owners to illustrate the difference between purpose and intent.
The idealism of our purpose drives us to invest in our businesses day after day after day. The pragmatism of intent is important if we are to ultimately reward those years of investment, sacrifice and risk.
This Week@Work Pavlo met with a business owner whose growth is being hindered by his unconscious competence – he’s mastered what he does to the point where he gets things done without thinking. It may seem like an advantage, but it can also lead to complacency.
Watch as he discusses this ‘blind spot’ which affects many of us in our businesses.
This Week@Work Pavlo visit an old warship to bring to life an analogy that building a business is like sailing a ship.
Both a ship and a business need: A destination, a crew that operates clear systems, and a Captain, whose time is either spent in the engine room or up on the bridge.
Watch as he takes you on a quick tour
There are 2 elements that go into valuation: The first is the 5 technical levers of valuation which can be built into your business, the other 40% is all about how you strategically exit your business.
Click below to watch as I outline the 5. I have also created blogs based on The Money Show podcasts, which unpack each of these in more detail. Find those here.
As a business owner, there are 6 different jobs that you should do at different stages of your career, to maximise your business’s potential and monetise your years of hard work and sacrifice with a rewarding exit. The key? You have to do things differently at each stage
This is a cautionary tale about where to focus when times get tough. It’s a story of a business owner who had built a phenomenally successful business, and even had a £9.8M offer on the table 4 years ago! Now, this business has shrunk in clients, revenue, staff, and has virtually no value for a buyer today.