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Growing Your Business In Uncertain Times

In turbulent times, you can either become fearful, or focus on building a sustainable business anyway. Some of the most robust businesses were launched during recessions and in times of uncertainty. True entrepreneurs know that there’s no time like the present, and that for every challenge there is a solution.

Pieter Scholtz

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At one of my recent presentations I was asked, “What do you think will happen to the economy in South Africa in 2017, and how will that affect our SME market?”

I have heard similar questions relating to the recent BREXIT vote and they’ve intensified since the rand was downgraded to ‘junk’ status. In an attempt to address this growing concern, I have outlined what I believe to be core considerations for growing your business in uncertain times.

1. Controllable versus uncontrollable factors

Business owners tend to worry about what happens in parliament, or the political system, or similar platforms, often forgetting those factors within their business that they can change. These include:

  • Customers’ perceptions of brands and products
  • Products, and adding value
  • Marketing strategies
  • Pricing strategies
  • Cost structure
  • Growth in markets that are untapped or that provide greater ‘certainty’
  • Internal and external stakeholders.

If you want to grow your business, focus on these factors; they are all critical elements to business success.

Related: Expanding At The Speed Of Stress

2. Communicate, communicate, communicate

One of a business owner’s major responsibilities is to ensure that proper communication takes place internally (to staff) and externally (to customers and suppliers).

Internally, ensure that your team buys into and believes in the business plan for the next quarter, and at best, the next year or two. Always ensure that every member of your team has the ability to act as a sales person for the business.

Externally, ensure that your suppliers understand where you plan to take the business, in order to align their business with your goals. Make sure that you increase your communication to your customers so that they know your brand, product USP, or promise. Never let your competitors get an opportunity to own your hard-won rapport with your customers.

3. Review cost structures

Check whether your cost structure is flexible enough to handle any swings in the economy. Identify unnecessary costs in your business, while making sufficient provision for marketing costs.

4. Value added products

Now is a good time to review opportunities to add further value to your product. Consider seasonal promotions, such as bundled products, to increase average transaction size.

5. Know your numbers

During uncertain times it becomes more important than ever to know your key financial numbers and other KPIs, in order to make changes quickly. Here are some of the numbers to be considered:

Related: 3 Signs Your Business Is Ready To Expand Internationally

Know your ‘5 Ways Numbers’:

  • Number of leads
  • Conversion rates (= number of customers)
  • Average transaction size
  • Number of transactions over a given period (= revenue)
  • Margins (= profit)

Sales Team KPIs: Sales team performance should be measured daily to ensure a correct balance between ‘lead’ and ‘lag’ indicators in the sales process. This also helps to timeously address underperformance.

Fixed Costs: Keep a firm grip on fixed costs to avoid nasty surprises.

6. Processes and systems

Check that your internal systems are reviewed and regularly updated to ensure that you are able to master the core activities of your business. It is important to ensure that your product quality and quality control processes are up to standard.

Ensure that your CRM system is up to date and that you are maximising your opportunities to nurture relationships with your key customers.

7. Focus on key financials

Review your debtors’ book weekly and take the necessary action against late payers or non-payers. Categorise your customers into ‘ABCD’ categories and remove the ‘D’ (Dead) customers. Renegotiate your creditors’ terms where possible, and ensure that you have a quality financial accounting software system that provides you with up-to-date figures.

8. Manage your time

It’s critical to evaluate what you (and your team) are spending your time on to ensure that everyone is focused on delivering growth and a superior customer experience.

Therefore, always be aware of your business and your roles and responsibilities, and address them timeously. Keeping in mind the points discussed above, I believe it is possible to grow your business in times of uncertainty, regardless of the form uncertainty may take.

Pieter Scholtz is the Master Licensee for ActionCOACH South Africa. ActionCOACH is the world’s largest executive and business coaching company with operations in 41 countries. It is also on the list of the top 100 franchises globally. As a highly successful Business and Executive coach, Pieter is a master of teaching business owners how to turn their businesses around and accelerate their growth. Email him at pieterscholtz@actioncoach.com or phone 082 8813729.

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Performance & Growth

Why You Should Do Things That Won’t Scale In Your Early Start-Up Days

Unless you want to be a small-business owner with a lifestyle business, you’re probably looking for an idea that scales – something that allows you to 10x your customers and profits in record time – but how do you accomplish this? Here’s some counterintuitive advice.

GG van Rooyen

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In the early days of Airbnb, when the site had just a handful of hosts in its website, the founders of the company did something surprising: They offered to have the accommodation hosts were offering professionally photographed for free. As they didn’t have the money to actually pay professional photographers, they did this themselves. They showed up, introduced themselves and took some pictures.

In the world of Silicon Valley, this seemed absurd. Silicon Valley is all about scaling. You want an idea that’s easy to expand exponentially. For instance, the marginal cost of adding a single user to Facebook or Dropbox is small, which makes these companies extremely scalable.

Service businesses, meanwhile, are typically not very scalable, since they are limited by the time and energy you can physically put in. Every new client brings more complexity and demands more time and resources.

Related: Has Your Business Stopped Growing? Here’s How To Turn Things Around

With their free photography, the Airbnb founders had turned an Internet start-up into a service business. There was no way you could scale this kind of behaviour, so, according to the dominant Silicon Valley philosophy, this was not worth doing. If this was what was required to sign up people on Airbnb, it could never be a success.

The manual approach

So, why did the founders do it? Because Paul Graham at the famous Silicon Valley incubator Y Combinator suggested that they do it.

Y Combinator has funded many, many successful start-ups (including Airbnb and Dropbox), and one of its most common pieces of advice to new start-ups is to do things that don’t scale. Recruiting users manually is not a failure or proof that your concept won’t scale. Most of the time, it’s simply a necessity.

“The most common unscalable thing founders have to do at the start is to recruit users manually. Nearly all start-ups have to. You can’t wait for users to come to you. You have to go out and get them,” says Graham.

“This can’t be how the big, famous start-ups got started, they think. The mistake they make is to underestimate the power of compound growth. We encourage every start-up to measure their progress by a weekly growth rate. If you have 100 users, you need to get ten more next week to grow 10% a week. And while 110 may not seem much better than 100, if you keep growing at 10% a week you’ll be surprised how big the numbers get. After a year, you’ll have 14 000 users, and after two years you’ll have two million.”

Surprise and delight

Another reason, according to Graham, why the manual approach is important, is because it allows you to really know and understand your customers. By visiting all those Airbnb hosts, the founders quickly learnt what they loved and hated about the service.

Related: SME Leaders: How You Can Manage Growth

By doing things that don’t scale, you get a much greater understanding of your customer, which comes in handy once you’re ready to flip the switch and grow quickly.

“You should take extraordinary measures not just to acquire users, but also to make them happy. Your first users should feel that signing up with you was one of the best choices they ever made. And you in turn should be racking your brains to think of new ways to delight them,” says Graham.

Lighting the fire

The only opportunity you’ll ever have to thoroughly engage with all your customers on a personal level is when your business is still small. That’s why it’s important to do things that don’t scale early on. It creates the foundation for successful scaling.

“Sometimes the right unscalable trick is to focus on a deliberately narrow market. It’s like keeping a fire contained at first to get it really hot before adding more logs. It’s always worth asking if there’s a subset of the market in which you can get a critical mass of users quickly,” says Graham.

“Most start-ups that use the contained fire strategy do it unconsciously. They build something for themselves and their friends, who happen to be the early adopters, and only realise later that they could offer it to a broader market.”

You can read Graham’s entire blog post, Do Things That Don’t Scale, on his blog www.paulgraham.com.

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Performance & Growth

3 Ways To Promote Business Growth In A Troubled Economy

If you’re running a small business, here are three things you can do to survive and thrive in this tough economic climate.

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It’s a complicated time for South African business owners. According to Xero’s State of SA Small Business 2017 report, 62% have seen a reduction in consumer demand over the past year, and 68% describe economic instability as their most significant challenge. Of course, these problems that entrepreneurs face are not of their making, but they must face them nonetheless.

There is a degree of optimism amongst entrepreneurs which is encouraging: 45% anticipate that business will stay the same over the next year, and 40% expect growth. While this positivity is a good thing, it must be tempered with pragmatism and proactivity.

Related: 3 Strategies To Implement A Culture Of Innovation In Your Business (Without Blowing Billions)

If you’re running a small business, here are three things you can do to survive and thrive in this tough economic climate. 

1Look for cost savings

This is very obvious, but it’s worth repeating. When your business is contending with an ailing economy, it will be forced to make certain choices. Those choices can become more or less difficult depending on how you manage your incomings and outgoings.

Developing the firmest possible handle on your finances is the best defence against external turmoil.

Look for cost savings wherever you might find them. What subscriptions are you still paying for that you no longer need? Which supplier relationships need to be terminated? Are you spending too much on stationery? Aim to eliminate all unnecessary costs: Even if they’re small, they’ll often add up to a larger cumulative saving.

Technology can often help with this process. For instance, cloud accounting software like Xero can take care of financial administration and cash flow related tasks – identifying any areas of discrepancy or waste and ensuring that your resources are being used efficiently. Taking advantage of it is likely prudent. 

2Automate everything

automation

And we mean everything.

Businesses that waste time, waste money. The more energy expended on manual processes and tasks, the less time you have available for vital business or operationally critical processes and tasks. It’s very hard to grow if you’re spending inordinate amounts of your day on repetitive, time-consuming work.

Related: How You Can Profit From Constrained Consumption

When it comes to things like report preparation, data entry, and accounts payable and receivable, it’s worth investigating your automation options. Things like pursuing invoices can now be done with a click of a button and a few strokes of the keyboard. What’s more, they can be handled safely, legally, and efficiently.

Don’t stop there. See what other tasks can also be automated. When you have more time, you have more headspace for the things that really matter to you and your company. 

3Spend wisely

Although it shouldn’t be a rule during trying economic times, it becomes substantially more important during times of unrest. It’s easy to spend money on hires and gadgets in a blind panic, but it’s also dangerous – and can deepen any financial troubles you may have.

Any investment you have, no matter how trivial, should be thoroughly audited for potential profitability. If it won’t help you make money or become more efficient, it shouldn’t be pursued. If there’s a greater than acceptable chance of making losses, save the risk for a time when your business is more profitable.

Related: Has Your Business Stopped Growing? Here’s How To Turn Things Around

Knowing what is and isn’t a sensible investment isn’t always easy. Cloud technology can again be of use here. if you’re considering investing in service desk software, it can generally let you know if the number of resolved queries will result in meaningful cost savings. If you invest in a marketing automation tool, it will let you know if your campaign ROI is likely to exceed the expense.

Navigating the choppy waters of the modern South African economy won’t be easy, but by implementing the above, it will be more than manageable. With financial prudence, process automation, and strategic investment, you can come out the other side even stronger than before.

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Performance & Growth

How You Can Profit From Constrained Consumption

There’s an art to giving new markets access to products that were previously unavailable to them – and growing your business as a result.

Matt Brown

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The ambition to disrupt markets with new innovative products and services is on the rise. This is especially prevalent in Silicon Valley, where entrepreneurs love to talk about disruption  —  though few understand the term.

There is an important distinction between efficient, sustainable and disruptive innovations  —  namely that instead of making products better or more affordable, disruptive innovations give a market access to a product that was previously unavailable to them. Enter constrained consumption.

Constrained Consumption

African consumers are aspirational by nature. The challenge, however, is that the man in the street has to overcome barriers and constraints to achieve their aspirations. If these constraints can be accurately identified by entrepreneurs and brands, they have a huge opportunity to capitalise on them.

Related: Common Mistakes SMEs Make When Looking At Growth Opportunities

The Disruptive Opportunity

When it comes to making a true dent in the world ,  perhaps the biggest opportunity for disruptive innovations lies in emerging markets, where examples of constrained consumption can be found everywhere you look . This represents fertile ground for entrepreneurs and brands to disrupt markets and create monopolies around new innovative products and services.

This opportunity is compounded by the impact of ‘the rising billion’; the estimated three to five billion people who will connect to the Internet for the first time by 2020.

7 Consumer constraints that require innovative solutions that will allow you to access new markets, carve a niche for yourself and grow your business.

Unpacking Constrained Consumption

business-constraints

Below are just a few examples of constrained consumption, and how entrepreneurs and brands can take advantage of them.

1Wealth Constraints

Arguably one of the most common addressable constraints in emerging markets is the wealth constraint. Smartphone adoption in emerging markets is largely constrained by the affordability of smartphone devices. The world’s cheapest Android smartphone (the Freedom 251) by Indian company, Ringing Bells, is a disruptive product that removes this constraint even in remote areas where some consumers earn below $10 a month.

2Access Constraints

There are more people in Africa with access to mobile phones than clean drinking water. The same can be said when it comes to electricity access. In many instances, the ability to charge a mobile phone is restricted, and sometimes non-existent.

The $5 wind-powered phone charger for bicycles, developed by a sixteen year old Danish student, is a disruptive innovation that addresses the access constraint in a simple and DIY fashion.

3Complexity Constraints

If a technology product is complex by nature the technology adoption curve by users is often extended. There are some who argue that the launch of the smartphone has extended the technology adoption curve,  not shortened it.

The reality is that if a complex feature of a smartphone can be transformed into something simpler, and then provided to the constrained users, the technology adoption curve can be shortened or removed. MTN has done this by enabling feature phone users in Africa to access tweets from Twitter via SMS.

4Educational Constraints

South Africa’s population is currently around 55 million people, but, according to 2015 statistics, only 550 127 full-time learners took the National Senior Certificate (NSC). What if this status quo could be disrupted through peer-to-peer video streaming technology, such as Meerkat/Periscope?

By enabling lessons to be streamed to a broader set of remote students, educational barriers could be substantially removed. It could also disrupt the underlying business model, with educational institutions creating an additional revenue stream by charging 25% of the normal tuitional fees to remote students (subscribers).

Related: [PODCAST] Brent Tollman – How To Sell More Using Story Telling And Video

5Health Constraints

The simple act of getting to a medical healthcare professional or doctor is often out of reach for many Africans. The connection of doctors to patients in a remote and digital context can remove this barrier. While the commercial model won’t work in Africa, given its price points, iCouch.me is a Web app that pairs users with healthcare professionals who typically charge between $65 and $90 for 50 minutes of video chat time.

A solution like this would disrupt the entire value chain through partnerships with companies, hospitals, and insurance companies.

6Banking Constraints

The lack of banking infrastructure has seen disruptive mobile banking solutions launch across Africa. Most notable is mPesa in Kenya and EVP Plus in Somalia, but more start-ups are entering financial services with disruptive innovations. Why does this matter?

Access to affordable financial services is linked to increasing economic growth, reducing income disparities, and alleviating poverty. But in most emerging markets, access is limited by high fees, product constraints, and lack of trust. The Barclays Accelerator start-up, GetWala, is on a mission to bring digital banking solutions to emerging markets.

7Funding Constraints

For many start-ups and small businesses in emerging markets, the lack of funding is often a primary barrier to growth. The rise of crowdfunding and social funding has solved the funding dilemma of many start-ups. But the emerging opportunity lies with the traditional institutions and today’s modern disruptive companies. Barclay’s Africa has recently launched its own accelerator and is in the process of opening up its business model to disruptive innovators. Even WeChat Africa has announced its own seed fund for promising mobile start-ups.

Future-proof your business

Disruptive companies that put innovation at the heart of their culture are future-proofing their businesses, and the importance of culture generally increases in proportion to the competition in the market.

Success and profit are largely dependent on the right culture mix. Spotting constrained consumption is just the first step towards realising a disruptive ambition and a pre-cursor to creating a dent in the world as we know it.

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