Connect with us

Performance & Growth

How Andrew Cook Took His Business To R8 Million And Beyond

Want to take your business to R2 million? Andrew Cook believes he has the answers with his company Smoke Customer Care Solutions as proof.

Nadine Todd

Published

on

Andrew-Cook

Vital stats

  • Company: Smoke Customer Care Solutions
  • Player: Andrew Cook
  • Est: 2007
  • Contact:  +27 (0)11 462 9881
  • Visit: www.smokeccs.com

What would it take to double your turnover? The answer to that question depends on where your business is in its growth cycle, and how focused you are on growth.

Smoke Customer Care Solutions doubled its turnover in 2012, and again in 2013. It’s still growing by at least 12% per month. But as founder Andrew Cook will tell you, it’s easy growing from R2 million to R4 million, and even from R4 million to R8 million. Where it gets trickier is taking a business from R8 million to R20 million and beyond.

Related: 9 Things Rich People Do Differently Every Day

So what’s his secret to success? A laser focus on growth, which follows a plan that was meticulously designed from launch.

1. Design a solution that customers want (and need)

Andrew Cook left a successful career at KPMG because he believed that South African companies either didn’t take customer service seriously, or they didn’t know what their customers thought of them.

He assembled a small team of developers who were able to put his vision into practice through simple-to-use electronic surveys that highlighted key performance indicators that businesses could act on.

“We created a customer platform that any company could use. It needed to be cost effective for the customer because our ultimate goal is to make the world more customer-centric – if a product is too expensive, it becomes a ‘nice to have’. We wanted to create a ‘must have’. Once it’s running, it proves itself.”

2. Spend on early development

Even though the business was bootstrapped, all revenue was poured back into development for the first two years. It meant the business didn’t show a profit, but it also meant that the product was getting better and better with each iteration, based on client feedback.

Today feedback can be given through 11 different channels, from SMS to email and phone surveys. The question Smoke’s engineers consistently ask themselves is: Is this the quickest, simplest way for customers to give our clients their feedback?

3. Give your market what it wants

Smoke-CCS

“When we created the business model, it was focused on creating a user-friendly product (called Eyerys) that customers could literally plug and play. We wanted to sell licences, not man-hours, which meant we didn’t want to be consultants. A consulting model is extremely difficult to scale, and it’s much more expensive for clients.

“Eyerys collects an enormous amount of data and distils it into simple dashboards, reports and spreadsheets that our clients can then use to improve their customer service models. The problem is that many of them weren’t using the data.”

It was a key insight that Cook could have ignored. Instead he chose to pivot the business. “We had worked on the assumption that to save costs our clients would want to analyse the data themselves. When we actually evaluated this assumption, we realised that 60% didn’t want to do it – they wanted us to do it.

“The result was that either they weren’t using Eyerys to its full potential, or, in the case of many key clients, the account was costing us money. At the beginning, helping big clients analyse their data was a value add until they were able to do it themselves. We didn’t charge for the service, which meant we didn’t immediately realise how much time our brains were spending on ‘non-core’ work.”

Many businesses don’t track the time their employees spend on accounts, and the result is that key clients actually become a revenue drain rather than a revenue booster, with no one understanding why profits aren’t higher when business is so good.

“Because we track everything, we were able to show our clients that our consultants were spending up to 50 hours over six months working on their data, and that we could no longer shoulder that cost. Our clients were very happy to pay for the service – as long as they continued to get it.”

This meant a new decision for Cook, because it was taking the business towards a consulting model, which was not where he wanted to be. Until he evaluated all angles of the business model shift.

“In situations like these, three things can happen: The business owner can refuse to do something that’s not in the business model; he can take on anything that brings in revenue and lose focus; or he can carefully determine how many resources to give the new division, and find a way to make it work for the original business model.”

This is what Cook chose to do. “This will never be a big revenue generator for us, but we realised that it could be used as a pull factor for clients who want the product, but also want the analytical support to use the product effectively. Don’t ignore what your market wants, or you’ll lose business – but charge accordingly. At the end of the day, keep clients happy in a way that works for both of you.

Related: What the Power of 10% Rule Can Do For Your Profits

4. Focus on sales

Eyerys has been recognised as a leading ‘Voice of the Customer’ solution. Years of pumping money into development has paid off, and while Cook will never cut down on development costs, even great products don’t sell themselves, which is why focus needs to be shifted to sales.

In addition, because the product’s development costs have already been paid for, the business’s margins grow exponentially as sales grow.

“We have a very specific sales model, which is to focus on channel partners rather than direct sales,” says Cook.

“Infrastructure companies speak to customer service reps and decision-makers, so it makes sense for them to recommend us when they’re fitting or maintaining enterprise infrastructure systems

“We could be seeing all the same companies and trying to close deals, but working through channel partners means we’re approaching clients through trusted service providers. It cuts out cold calling, and promotes good relationships.”

For partnerships like this to work though, three key elements need to be in place. Cook and his team only approach telecoms companies with good reputations that they know and trust – adding your product to a business that isn’t delivering good customer service itself will hurt the brand; they understand that they need to always deliver great service so that their partners can trust them – after all, it’s their recommendation that’s making the sale; and a revenue share is crucial to make the partnership worthwhile.

“It means our margins are smaller on each sale, but the volumes are much higher.”

5. Hedge your bets

While business in South Africa is doing well and the brand is steadily gaining recognition, Cook’s main focus for growth is the international market.

Related: Healthy Cash Flow. Great, Now What Should You Do With It?

“I spend a lot of time travelling overseas, visiting trade shows and conferences, and making connections with channel partners in the US and the UK. Because we’re a rand-based business, we’re extremely competitive, and this side of the business is growing daily.

“It’s a licence agreement deal, with no consulting work, so when the rand does well our local business strengthens, but when the rand is weak our international business does well. After all, growth is the name of the game.”

Nadine Todd is the Managing Editor of Entrepreneur Magazine, the How-To guide for growing businesses. Find her on Google+.

Advertisement
Comments

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

Published

on

scaling

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.

Continue Reading

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.

Published

on

business-growth-advice

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.

Continue Reading

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

Published

on

business-growth-in-new-markets

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.

Continue Reading
Advertisement

SPOTLIGHT

Advertisement

Follow Us

Advertisement

Trending

FREE E-BOOK: How to Build an Entrepreneurial Mindset

Sign up now for Entrepreneur's Daily Newsletters to Download​​