Clarity is the alchemy that divides businesses which fail from those which enjoy longevity. When businesses lose direction, or have none to begin with, it’s a sharp and relatively quick downwards spiral towards closure or acquisition.
A lack of clarity is something that can plague the smallest to the largest organisation. We are operating in a volatile, uncertain, complex, ambiguous (VUCA) world, and in facing these conditions, and dealing with our own internal turmoil, we can find ourselves lost – or at a loss – at times.
1. What business are you in?
This may seem to be the most mundane question to begin with, but in contrast to its simplicity, it sets the strategic direction for organisations.
Consider McDonalds, for example. Asked what business McDonalds is in, we would probably answer fast food. Ask McDonalds that question and the answer you’ll get is property.
Knowing this fact helps us understand that McDonalds will only purchase prime property, in high-traffic areas. Unless this raison de etre changes, you will not find McDonalds locating in Petrol Stations.
Understanding the very core of the business you operate gives a massive injection to knowing the strategic direction of the organisation.
Related: Create Clarity for Your Team
2. Is the market there?
Whilst the answer to question 1 is an internal, strategic question, question 2 requires engagement with sources outside your organisation or circle of friends.
It is imperative that you quantify the size of the market that you are aiming for, and understand as much about the market dynamic as possible, prior to market entry.
You have to consider the size of the market, how competitive the space is, and whether power is held asymmetrically by any of the players. Think long and hard about how you are going to win your piece of the pie, particularly if you are low on resources versus your competitors.
3. What problem do you solve?
Answering this question helps you understand the need your business addresses. Position your answer in the context of solving a problem that a consumer or business has.
Doing so shifts your focus from features to benefits. For example, if you are a motor manufacturer, saying that you get people from A to B might be true. However, if the only thing your car does is get you from A to B, then your competitor will also be bicycles.
There is far more to this picture than what may be immediately obvious, so it’s important to invest time really thinking through your answer to this question.
4. Who do you serve?
This question is intertwined with 3 above, but moves the question to a different level. This focus requires gaining clarity about the consumer who will buy your product or service. Or, if you’re in the B2B sector, which is the organisation your business would love to serve?
It is important to define this to the point that you can describe your client in terms of an actual person, or specific organisation, and have identified the traits that make them your ideal client. This client–centric approach allows you to gear your business and your marketing around your client’s specific needs and expectations.
5. How do you make money?
- How does your business intend to create income?
- Are you producing a product with a certain margin on at the time of sale? Are you offering a service of some kind?
- What pricing strategy are you going to pursue?
- What is the pricing currently on offer by your competitors
- How does your pricing compare versus the value you are – or intend to be – offering?
Pricing your offering at the correct point is one of the most crucial decisions you’ll make as an entrepreneur. Price too low and you leave too much on the table. Price too high and your demand dives. Pricing in the middle secures you the highest possible demand at the best possible price.
6. How much money do you make?
If you consider the cost structure that your business has, versus the revenues that you imagine you will achieve:
- How much money is left on the table at the end of each month, each quarter and each year?
- Is the residual income sufficient to reward you for the risks you are undertaking and the effort you are investing into the business?
- Is there enough cash flow to sustain growth and to fend off competitor interest, should it arise?
- Are your earnings sufficient to meet your longer term expectations, and those of your shareholders or investors?
If you are not comfortable with cash flow analysis, get some help from someone who is. If your business isn’t generating cash the business model won’t sustain.
7. How are you different from your competitors?
What separates you from your competitors? Why would a customer buy from you versus another industry player? When there is parity in the market, the lever to shift is price. Those lofty revenue ambitions that you set drain away as you relentlessly discount to win business.
Your differential needs to be clearly definable and must be something meaningful to your customers. It is absolutely pointless to excel at something that is meaningless to your customer.
There are certain things that you must do to play in the market, and then there are things you can do to win in the market. How do you win over your competitors? Unless you have a distinct and definable differential, expect to compete on price.
8. How do you delight your customers?
There is a vast difference between locking your customers into a contract for 24 months – so that they cannot leave you even if that would be their choice – to designing your offering to be so attractive to your customer that they choose to remain with you, despite competitor approach.
If you don’t believe this is possible, consider the millions of Apple fans and how unlikely it is that they will defect to other providers. Delighting customers means really understanding what they want, what they need and when and how to give it to them.
Remember that in marketing, everything counts, so this question must be answered in the context of all the marketing P’s – product, price, place, promotion, people, process and physical environment. With the digital age upon us, these can be expanded to include participation, prediction and personalisation.
9. What happens if …
A large part of your strategic planning approach must be to scenario plan. We are in a VUCA world, and as a result, things happen that we did not anticipate.
Any business can overcome the smaller humps and bumps. However, what if a ‘black-swan’ event occurs; an event that is very rare, but highly significant, to the extent that it is game-changing. Think in the context of how AirBnB disrupted the hotel industry and how Uber has changed the taxi industry.
- What if an AirBnB or Uber arrives in your industry?
- What if they take your largest customer?
- What if they undercut your pricing by some margin?
- What if they offer more value than you can afford?
Negative events should not be the only thing you consider in scenario planning.
- What happens if one of your competitors goes up for sale?
- What happens if one of your competitor’s largest distributors approaches you for business?
- What happens if the opportunity of a lifetime presents itself on your doorstep?
- How ready will you be able to leverage the opportunity to your advantage quickly?
10. What next?
This is a question that every entrepreneur must hold in their mind, because it dictates how the business is managed and run.
- Is the business being built for sale in 5 years?
- Are you actively looking to franchise at a future point?
- Are your plans to expand into Africa or other continents in the near future?
- Is the business being run as a cash cow with the intention of an exit within the next few years?
Each of these strategies has a very different and distinct way that the business must be managed. You must know therefore, with clarity, what your intended future holds.
Once these 10 questions have been asked and answered to your satisfaction, they will need to be asked and answered again in a repeating cycle. The process of gaining and maintaining clarity around your business is never-ending. The business environment is always changing. Similarly, you as an entrepreneur are not static in your needs. Clarity is business alchemy. And knowing the answers to these ten questions at all times during your entrepreneurial journey enables you to transform your business into gold.
4 Tips To Become A Team Whisperer (And Improve Your Employee Engagement)
Engaged employees are motivated, innovative and willing to take on more responsibility.
Your team needs to be nurtured on an ongoing basis if you want to attract and retain the best employees. You can hire people, you can fire people, and you can tell them what to do. But you can’t make them like what they do. Some business leaders are content with having an unhappy team; as long as they do what they are paid to do then the state of their mental health is seen as superfluous.
This line of thinking is not only wrong, but it is entirely counterproductive to the continued survival of a business. Gallup has run some excellent pieces that demonstrate the difference between engaged and disengaged employees. In particular, they list several additional things that engaged employees bring to the table: Motivation, innovation, and a willingness to take on more responsibility within the company. So how can you keep your team engaged?
That level of motivation contrasts greatly with employees who don’t even want to be there. They do their jobs, but they never put in more than the bare minimum of effort. Don’t expect them to ever go beyond what their job description requires, and if there is a chance for them to duck out of work without getting fired, they’ll take it. Obviously, you don’t want to have a team that consists of these people. But without the right knowledge of how to motivate a team, you’ll find yourself unable to inspire your employees to go above and beyond what is required of them.
A great company cannot exist without great employees, and there are steps you can take to mould them into the people you want to have working for you. These tips are proven methods of getting your employees to be engaged in what they do, and anybody can learn to apply them.
1. Be a team, not a dictatorship
Every ship needs a strong captain, but that doesn’t mean that you have to spend every second reminding your employees who’s the boss. Your employees look to you for guidance, but they also want to feel as though you are in tune with everything that is going on. Some managers come off as though they are giving mandates from heaven, or worse, they rattle off long lists of orders because they don’t want to do the work themselves.
If you give the directive and then pitch in to reach the goal, you’ll show your employees that they are all part of a team, and they sink or swim together.
2. Give them a chance to shine
It’s true that some people are placidly content with being a cog in the wheel. I’m sure you know of at least one person who is sitting in a job they are relatively indifferent to just so they can collect a pension in twenty years. Those that fit that mould will gravitate towards jobs that give few chances to stand out and plenty of job security. For those who want to achieve more, they will never settle for a job pushing pencils all day.
These restless employees are always looking for a way to prove to you that they are capable of so much more than low-level work. Denying them this opportunity will either push them to greener pastures, or if they can’t/won’t quit, cause them to become disillusioned with what they do.
If you find somebody who wants to prove themselves, let them. An employee who shows the initiative and drive to better themselves is a person who will bring your business an incredible amount of value. Don’t waste this potential.
3. Don’t take them for granted — show your gratitude
This goes beyond a simple “thank you,” although those two words can have quite a bit of power in themselves. If your employees feel like their contributions are not recognised or rewarded, they will feel little incentive to go above and beyond in what they do. How you show this gratitude is as important as the action itself, because a perceived token gesture is even more insulting than a lack of a reward. Put another way, if somebody comes up with a million-dollar idea and you give them a monogrammed lanyard as a gift, don’t expect that person to stick around. Rewarding achievement is the flip side to punishing failure, and a balance between both is necessary to craft the ideal team.
As intuitive as these three traits seem, you probably know from personal experience that a lot of managers don’t quite know how to implement these strategies effectively.
4. Share the bigger picture with them
A really important element of keeping your team engaged is to share the bigger picture with them. This involves amongst others:
- Constantly communicate the Vision and Mission of your business to your team. If your team can buy into why the business was started, where it is headed and why you exist as a business, they will be able to be as passionate as you are.
- Provide a monthly update on how the business is tracking against its plan and this will empower them to focus on the areas that matter most to the business at that time. This includes sharing financials with the team — here one needs to take into account any legislation that might be applicable — but the more you share, the more you show your team that they are trusted with the information as well as being able to make better decisions that affect the business.
- Keeping your team engaged, excited and energised is a pre-requisite to developing a high performing team that is able to take the business to the next level. It takes a team of dedicated people to build a successful business. Without this team, your ability to expand at the rate you had planned to will be severely hampered.
IN YOUR TOOLKIT
Become a leader that inspires greatness
“Multipliers is profound. It’s been lifechanging for me and everyone that works with me. Leadership is not about having the best answers. You need to ask the best questions, and what happens is that you are turning people into productive engines. Micro-managing stops people from thinking for themselves as they wait for answers from you. The principle is that micro-management on that level means you are paying people 100% salary for 50% productivity. The multipliers effect allows you to pay 100% salary for 200% productivity.” — Robin Olivier, co-founder and MD of Digicape, a R240-million business based in Cape Town. Go to multipliersbooks.com for additional tips, tricks and surveys.
Radical Candor means challenging employees directly and showing you care personally at the same time. It will help you and your team do the best work of your lives.
Developed by Kim Scott — who led AdSense, YouTube, and Doubleclick Online Sales and Operations at Google and then joined Apple to develop and teach a leadership seminar — Radical Candor is all about becoming a leader who is both respected and followed, without being falsely ‘nice’.
There are two great YouTube videos that will give you her tips and lessons in under 20 minutes:
- Radical Candor — The Surprising Secret to Being a Good Boss | First Round Review
- INBOUND Bold Talks: Kim Scott “Radical Candor”
And if you’re interested in really unpacking the lessons behind radical candor, read the book: Radical Candor: Be a Kickass Boss Without Losing Your Humanity.
5 Signs A Business Is Being Poorly Managed
Are you considering investing in a new company? Evaluate its leadership with these five factors first.
Ideally, every business’s success would be so simple that anyone could run it – even an untalented person. Unfortunately, though, many businesses cannot withstand the leadership of an unqualified or untalented person, and, if a business is lucky enough to achieve longevity, odds are that someone unqualified or untalented will run it eventually.
But, how can you, as an investor, identify when a business is being run by one of those untalented people? More importantly, how can you spot when a business is being run by an untrustworthy person?
In this video, Entrepreneur Network partner Phil Town breaks down five signs of bad leadership you need to consider before investing in a new company.
Click play to learn more.
This article was originally posted here on Entrepreneur.com.
4 Essential Steps To Take To Successfully Sell Your Business
Here are 4 essential steps that will help you avoid potential setbacks and increase the chances of a fair and satisfying transaction while you are selling your business.
Many startup founders and small businesses dream of receiving an offer to becoming the next billion dollar business. Whether its because they are ready to move onto another project, or they are ready to expand and are looking to leverage the financial power of a bigger partner, selling a business is a big move for any business. For many business owners, getting an offer from a buyer is certainly exciting, but before you jump into anything, remember that are important steps to take before you sign the paperwork that will move a successful transaction forward.
From making sure you have a functioning and potentially lucrative business model, to working with an expert to establish goals and expectations on both ends to ensure everything goes smoothly.
Here are 4 essential steps that will help you avoid potential setbacks and increase the chances of a fair and satisfying transaction while you are selling your business.
1. Preparation is everything
Since you’re already a business owner, you most likely already know the importance of preparation. When it comes to selling your business it’s always wise to conjure up all that you have learned along the way and apply that to the process of making a sale.
Some of the key documents that buyers expect to see are:
- Corporate records
- Records of any important contracts
- Information concerning stocks and investments that would affect the relationship with the buyer.
Preparation also entails that you are forward about any setbacks or issues you had in the past that currently affect company operations. Being open about what failed in your business model will help buyers feel confident in their decision working with you, in addition to understanding what to potentially avoid in the future.
2. Setting up the right environment for buyers
Your business may have received endless praise from the press and has made the “most up and coming list” time and time again that doesn’t mean you are ready to sell. Good press will very likely attract buyers, but if you haven’t created the right environment to continue along with a merger and acquisition, those investors and businesses that were one so eager to scoop you up may not stick around that long. To ensure a productive environment for selling your business it pays to be open to new ideas, while also maintaining a professional setting from which trust can build.
3. Make sure your finances are in order
Financial records are vital when making a sale. Not only to they provide a clear outline of your businesses progress in numbers, they are also key to making sure you get what you want out of the final sale in the end; investments and any and all financial commitments. Ensuring that both parties are satisfied.
4. Hire a merger and acquisitions advisor
Even the most experienced business owners can benefit from the expertise of a mergers and acquisitions advisor. Trained specifically to help owners assess their the value of the business by reviewing it’s strengths and weaknesses on both a macro and micro economic level.
Some of the key ways that an M&A consultant can help you streamline the selling process are as follows:
- Professional who specialise in mergers and acquisitions are highly skilled at preparing for due diligence, helping you to navigate and organise the necessary documents and information that is needed by all prospective buyers
- If you are in the unique situation that you have more than one buyer interested in acquiring your business, an M&A consultant can help you assess which one will be the right relationship for you, especially if you will still be activity participating in daily business operations.
Again, experienced business owners may know everything there is to know about running a company, but that doesn’t mean they know how to appeal to buyers. Not only do you have to be in tune with your own company’s needs, but it’s essential that you understand what buyers and investors expect from a sale.
At the end of the day, even if you think you’ve found the perfect buyer, taking a few extra steps to ensure that a potential buyout will meet both parties needs and is overall good for the business can be done by being fully prepared and and working alongside an expert that will help to point you in the right direction. Successfully taking your business won’t happen overnight, in fact most transactions take about six to twelve months to complete, so it pays to be prepared every step of the way.
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