Tag: Winning mindset

Why are mid-size business owners committed to build, grow and dominate in such a bleak economy?

Pavlo Phitidis drew inspiration from an event he had spoken at earlier in the week, with 119 established private businesses turning over between R15million and R200million annually, probably of an average age early- to mid-50s. The businesses crossed all sectors and were from all over the country.

Pavlo was preceded by a highly regarded economist who shared a brutally tough economic forecast. He spoke about a lack of economic recovery strategy post-Covid; to the 4 caps to economic strategy development; to the political issues marring our ability to develop our growth strategy; the kleptocracy, ongoing corruption and its impact; the rating agencies who downgraded SA, the unemployment rates – it was a devastating picture and the audience were all felt shattered by the end of it!

Pavlo’s role was to try to share insights on how to build a busines in this environment! Not an easy task.

So he started with a poll. Which asked these business owners: in the next 36 to 60 months, which of these do you want:

  1. Build grow and dominate in your sector
  2. Build, grow and emigrate
  3. Build, grow and exit for a comfortable retirement at the coast or in the bush
  4. Exit your business to get a steady, predictable paycheck

What would you anticipate the results would be?

Listen to the podcast of The Money Show on 702 or CapeTalk here to gain his insights into what the business owners’ responses say about this segment of the economy.


Pavlo ran the same poll on social media and the results indicated that 83% of the people on social media thought that business owners would be looking to build & grow to emigrate.

But in reality, 87% of the business owners polled voted to build, grow and dominate their sector. Despite having just been reminded of the appalling operating environment we are dealing with.

WHY?

  1. Mindset:

These business owners had signed up to attend an event that promised a business growth discussion. They were open to learning about opportunities.

  1. Age:

These business owners were wanting to find a different way to build, grow and scale a business – they had probably tried to do it themselves and realised what they could, and could not achieve alone. The runway is far shorter than for a 30-year-old.

  1. Necessity:

Established mid-tier businesses have too much to lose. The business owners have all their wealth tied up in their business. To realise that, they need to grow, in order to exit.

  1. Reality:

Corporates that tend to dominate a sector or industry, are too big to grow in low-and no-growth economies, but mid-size businesses are nimble enough to make the changes needed to get ahead of their competitors.

When you’ve been in a business for 20 or 30 years your value stack is deep. You have the relationships and know where the problems and opportunities lie. Furthermore they have been through a cycle, probably including the recession of 2008, and many other crises since and they know how to direct the business into the opportunity that emerges from the crisis.

Engineering and creative mindsets that build and break businesses

Building a business without either the ability to fix something or create something (preferably both) is truly hard.

An engineering ability, using math’s and science to solve problems and/or a creativity ability, the tendency to generate, possibilities and alternatives to solve problems are key talents that enable a business to attain validity. Afterall, a business exists and sustains by solving problems for customers!

Without these skills, its hard to make a business happen. However, if these skills are not contained and directed as a business grows, the business will simply become a job for its creators and never build into an asset.

Listen to the podcast of Pavlo Phitidis’ discussion about these business mindsets, from The Money Show on 702 & CapeTalk:


What is the difference?

A job is something that operates only with you at its center and meets only 1 of the three criteria of an asset.

An asset has three criteria. Capital/equity value that can grow, income value that can grow and tradability to allow its sale so that the capital value can be realized.

How do these talents/skills need to be directed over time

All businesses go through a development cycle. Usually, this is determined by time. You start, build, grow, accelerate, reach prime, mature and decline. For the average business, in fact for the majority of businesses, they start, build, grow and then move into a repeating cycle of build-grow into perpetuity before they close.

Often, the guilty party enabling this is the exact talent that enabled the startup – the engineer/creative.

Why does this happen?

Psychologically, this talent finds meaning in solving or ideating solutions to problems. There is a thrill and ego bump every time it happens. It can be and often becomes addictive to the point where many business owners are not even aware that this is operating.

Talent in engineering/creative abilities create unlimited timelines. Because you can fix things and do so repeatedly, you can always start again, do it again, recover again after the last effort. This puts you in a position where you can earn income repeatedly because of your talent so you simply just continue.

The talent does not get redirected and channelled differently. In as much as it takes an engineering/creative talent to solve a problem, the exact same talent is required to build a business. Think about what a business is – it is a legal person, that contains systems and operators that serve customers by solving problems for value through a commodity or service. To start you need to have a commodity to trade – a product/service. To grow, you need to wrap it into a business.

From a Job to an Asset

The redirection of these talents needs to come at a point where you can delegate responsibilities to your employees. To get this right, you need a simpler business, that can be driven by systems and enabled by people. Delegation is impossible without a system and a system cannot be built reliably if the business is trying to be all things to all people.

The building industry is a great example as is the advertising industry.

Less is more and simplification is key. Understanding this lets an engineer or a creative redirect their talents away from product or service solutioning to building the commercial wrap to take the product or service to market without them.

This business is no longer a job and now is an asset. A buyer looks and will find capital, income growth and to make it all tradable, independence of you!

KVD: A FISHERMAN’S TALE

American Kevin VanDam is one of the top-ranking bass fishermen in the world with two Major League Fishing Cups, four Bassmaster Classic titles, seven Toyota Tundra Angler of the Year titles and eight Angler of the Year titles under his belt. His winnings amount to millions of dollars and he is the beneficiary of major sponsorship deals. In this blog, we take a look at the secret of his success.

WHAT SETS THE TOP INDIVIDUALS APART?

Being at the top is a numbers game and bass fishing is no different to any other industry. All top sportspeople require talent, motivation, dedication and tenacity, but just like every other highly competitive sport, what separates the top players is a matter of percentages. Just as at the top level of professional sports every individual fulfils the minimum requirements of skill and practice, to rise to the top in any industry you need to gain the advantage where you can.

A NUMBERS GAME

“If you want to be the best, you have to do things that other people aren’t willing to do.” – successful Olympic swimmer Michael Phelps

There is little that separates the top players, so gaining the advantage is a matter of maximising what might seem to be minor elements. There are many variables with bass fishing including currents, wind, sunshine and landscape. Kevin VanDam ensures that he always has the advantage. He makes sure that he gets the best locations by visiting them ahead of time and assessing the terrain. He ensures he will be the first to claim the prime spot because he has the fastest engine in his boat. And he is better equipped than the competition because he has more rod racks and a wider range of lures.

Kevin VanDam also does something else that few others do: He invests in a coach. His coach provides alternative perspectives – from assessing the terrain of a lake where the season’s competitions will be held to consultations on lure choice and the rod actions that he practises. VanDam uses his coach to build trust in his approach, process and attitude and prevents himself slipping into doubt or a deep blue funk. In fishing, as in building a business, a few consecutive small failures have a tendency to do that.

“Becoming the best and staying the best means you need someone to talk to who understands your challenges and the pressure of competition. They help maintain perspective and prevent me slipping into habits or behaviours that prevent winning.” – Kevin VanDam

Success in sports and in every industry and business depends on many factors including having the right attitude, passion and motivation. But these things alone are not enough in a highly competitive environment. Insight is required to work the percentages and gain the advantage. If you’re not sure how to start, then get the right support. Aurik could just be the specialist that your business needs.

Pivot: what does it mean and how to do it

It has become one of the worst pieces of jargon through the Covid-19 pandemic and lockdown, and one that Pavlo has steered clear of. But at its simplest, the word pivot means you need to find revenue from a different place and space.

The word was popularised 15 years ago on the West Coast of the USA where the startup industry was booming. Investors into that market were engaging in what is called portfolio investing, but which Pavlo calls ‘roulette investing’ – throwing money at a host of business plans and ideas. When these failed, the investor would ask: ‘What Now?’ and the startup would say: “We have to pivot”. And this is possible in the startup environment because they have nothing to lose as they haven’t built up a legacy business.

It is very different when you have an established business with the baggage of your business, in these instances, you need to pivot very differently.

Listen to Pavlo discuss how establish businesses did, and should pivot on The Money Show on 702 & CapeTalk:


To make his point about how different businesses pivoted, Pavlo reminded us of a massive phenomenon at the very beginning of lockdown: everyone was stockpiling toilet paper. Why? His view is that in a crisis, the fist thing we do is to ACT to avert the crisis, we do something, even if it is misguided to make us feel as if we have some form of control over the crisis.

Pavlo witnessed similar behavior among business owners. He saw established businesses making pivots based on their own biases. Their history and legacy were affecting their decisions and actions as they tried to find ways to bring in revenues.

The first grouping were those businesses that had invested plant and equipment that the business owned. Consider a fleet of trucks, or workshops or fridges. The tendency was to look at the equipment lying idle, and figure out what they could use that for to make something new or store something different.

Very often those types of businesses are run by people with an engineering background, and these are people who are good at working with their hands… making something or doing something. So making or doing something new was their place of safety – their toilet paper stockpile.

The 2nd pivot grouping was with those who had created their own product or service. Whether it was baked goods or a scientific invention, or a service innovation. These business owners went back to their product or service and figured out how to make the product or service better. Whatever their strength was, they focused their energy there, that was their safe space.

Finally there were pivots where business owners moved towards their customers and suppliers. They sought to understand what those suppliers were doing differently, and how they needed to pivot to be relevant to them.

Pavlo believes that going to your customers is always a good idea as that is where the revenue is going to come from first. And he shares a technique you can apply to get it right.

The Onion Peeler:

Pavlo has developed an incredibly simple but effective technique called The Onion Peeler to understand where your strengths lie in your business.

Every business has a core and strategic competence. It might be in your services, skills, or with your customers. Without it you don’t exist at all as a business.

The middle layer is not core but absolutely strategic. For example – technology, accounting, inventory management or whatever it is that enables your business but is not what your business does.

The outer layer is what you can shed, it is not core nor strategic. You can buy it as and when you need it.

If you apply this to your approach to pivoting – take what is essential to your business and take that to your customers and ask them what has changed about their needs that mean they no longer need your core offering, in the same way.

The customer that guides your pivot will be the first one to pay for the pivoted offering.

 

5 post-Covid business syndromes that could hurt your business

Through thousands of discussions with business owners, Pavlo has identified certain patterns among different kinds of business owners. Most are severely on the back foot.

His concern is that if you have a prolonged view on the current environment, the psychology you hold today can change your attitude and patterns of behavior, which affect the habits you make in the next 18 months or so, which could mean in the next 18 months to 2 years you could end up being a significantly different person to who you are today.

Listen to the podcast of Pavlo’s discussion about the 5 syndromes affecting business owners, from The Money Show on 702 & CapeTalk:

It’s important to understand that psychology, and work through it or work with it, to get through the next 2 years.

The 5 mindsets that he is seeing over and over again are:

Loss aversion

This is a view that assumes that losses loom larger than gains. You see losses running out of the business, but you simply cannot see the gain that will outweigh the losses you are experiencing now. The problem here is that you have to change to remain relevant, post-Covid. The extent to which you test and invest in new technology, for new engagements with clients and suppliers, scares a lot of businesses that are experiencing this. They can’t face the enormity of the task and freeze, unable to act. Sadly, your competitors are, and when you emerge from your frozen state, your customers, clients and suppliers will all have changed and you will be left behind.

Panic

When you panic you move into a Freeze, Flight or Fight response – this switches on an automatic response which narrows your perspectives and point of view. It is an impulsive state. An example is a business owner who decides that Covid is here to stay, and so the business needs to cut costs to staunch the bleed of money. Where do they cut? Sales and marketing, which stops the flow of leads into the business, which cuts revenue, and exacerbates their panic because now they actually are losing money.

Imposter syndrome

This is the voice inside your head that makes you feel like a fraud, who will be found out soon enough. Pavlo’s rule of thumb to identify the frauds is to look at what they say vs what they do. Pavlo suggests persisting with a question to get a deeper and deeper view – if someone brushes you off… they may be an imposter.
But right now, not a single one of us knows the answers! Simply saying”;I don’t know, what do you think” helps us move past that place where we feel we need to know all the answers all the time, because people see right through it when we pretend we do.

Denial

This is often expressed as a dependency on one area where you feel strong and capable and you won’t move from it. You obsess about that. But doing the same thing again and again and expecting a different result was Einstein’s definition of insanity. Technical experts are doing this a lot. Brilliant scientists and engineers and specialists will act where they can physically do something – they dabble and fiddle with the product or the service, without engaging the market to see what is actually needed. Making a product ‘better’ without knowing what your customers’ needs are is insane.

Exhaustion

Private business owners work 35% more hours in a week than employees, so already they were tired. But Covid has forced them to learn, adapt, cut, find new revenue streams which has compounded that.

Burnout in yourself or your business can be devastating so if you are truly exhausted or find yourself manic, which often leads to burnout, Pavlo’s advice is to go for a run, or a ride, or a stroll with the dogs. Take a break to manage yourself, before you get back into it.

 

If your business is suffering due to these psychologies, contact us for a fresh perspective and a trusted partner to reignite your business.

Build your Corona Business Battle Plan

After years of economic mismanagement, corruption, unstable power supply and business-unfriendly legislation, SMEs and private businesses have very few reserves to draw on.

Many of these businesses are struggling to figure out whether they can afford to sit out the Coronavirus lockdown and how they can survive in a new, post-lockdown world.

Aurik has put together a series of practical, action oriented webinars to help business owners to create their Corona Business Battle Plan.

Topics covered include:

  • Designing your battle plan
  • Negotiating with your landlord
  • Negotiating with SARS
  • How to deal with your people – on both a human and a practical level
  • Digitising your business, which has become essential in a world of physical distancing

Find all of these webinars and other free resources at www.aurik.com/corona

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