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Makings of an Effective Leader

Leaders are made, not born. Brian Tracy reveals how to lead your employees effectively.

Brian Tracy

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MakingsEffectiveLeader

Your ability to negotiate, communicate, influence and persuade others to do things is indispensable to everything you accomplish in life. The most effective men and women are those who can competently organise the cooperation and assistance of other people to accomplish goals and objectives.

Of course, everyone you meet has different values, opinions, attitudes, beliefs, cultural values, work habits, goals, ambitions and dreams. Because of this incredible diversity of human resources, it has never been more difficult and yet more necessary for diplomatic leaders to emerge and form these people into high-performing teams.

Fortunately, leaders are made, not born. You learn to become a leader by doing what other excellent leaders have done before you. You become proficient in your job or skill, and then you become proficient at understanding the motivations and behaviours of other people. As a leader, you combine your personal competencies with the competencies of others into a smoothly functioning team that can outplay and outperform all its competitors.

When you become a team leader, even if your team only consists of one other person, you must immediately develop a whole new set of leadership skills. To determine what these skills are, you need to consider the genesis of high-performing teams.

Teams generally go through four phases as they evolve toward high performance: forming, storming, norming and performing.

Forming

The forming stage is very important, perhaps even critical, to the success of the team. Your ability to select the proper team members to accomplish a particular task – personal or business – is the mark of the superior leader. If you select the wrong people in the first place, it becomes almost impossible afterward to build a winning team, just as it would be impossible to win athletic championships with unskilled or ill-suited players.

In the forming stage, the team members come together and begin to get a feeling for each other. There will be a good deal of discussion, argument, disagreement, personal expression of likes and dislikes, and the forming of friendly alliances between team members.

This stage, especially the discussions and conversations that take place, may seem time consuming, but it’s indispensable to developing a unified group of people that you can lead. One of the most important qualities of a leader is patience. And patience is never more necessary than when you’re going through the early stages of assembling your team.

Storming

The second stage of team development is storming – a shortened form of “brainstorming.” During this stage, the group, whose members are now comfortable with each other, begins the hard work of setting goals and deadlines, dividing up the tasks and getting on with the job. During the storming phase, people learn about the contributions each member can make to achieve the team’s objectives.

Norming

The third stage of team development is norming. This is when norms and standards are established among the team members so that everyone feels secure and confident in his or her place. All members know what’s expected and how their performance will be measured. They also are aware of the responsibilities and obligations that they have, not only to the job, but to each other. Your ability as a leader to promote the norming process is critical to the team’s success.

Performing

The fourth stage of team development is performing. In the final analysis, your ability to get results is all that really matters. Your lifestyle, your rate of promotion and level of rewards, and your respect and esteem among your co-workers and bosses will all be determined by your ability to perform and to get others to perform.

There are basically five qualities you need to foster throughout the stages of team development. The degree to which you accomplish this before you start working will determine your success as a team leader and the success of the team.
1. Shared values.

You can foster this quality by asking the question, “What are our values?” or “What do we stand for?” People will contribute the values they consider the most important. As they do, you or someone else can write them on a flipchart. The values will usually be something like: integrity, excellence, quality, caring about people, profitability and harmony.

2. Shared objectives.

Everyone must take the time to discuss the actual reason for forming the team and the chief results that are expected.

Leaders can see the big picture. They’re absolutely clear about what they want to accomplish and what it will look like. They have the ability to articulate this vision in the minds and hearts of others and to get everyone, no matter what their background or personality, working together in harmony toward the realisation of that vision.

People can’t hit a target they can’t see. Again, even though it may appear time consuming, everyone needs to have ample opportunity to discuss and agree on the ultimate goals desired before work begins. The more thorough the discussion of goals and objectives, the more effective the team will be when it begins working.

3. Shared activities.

Everyone knows what they’re supposed to contribute to achieving the team’s goals and objectives. They also know what each of the other members is expected to do. All the work is clearly divided up among the team members, and everyone knows their role in the process.

4. A team head who leads the action.

You become the role model for all of the others. You go out in front. You continually look for ways to make it easier for your team members to do their jobs. You accept complete responsibility for achieving the overall goal. You start a little earlier, you work a little harder, and you stay a little later. You set careful priorities on your time, and you always work on your highest value tasks. You never ask anyone to do something that you wouldn’t do yourself. You always put yourself out in front and go to bat for your people in every circumstance. You are a leader because you continually lead.

5. Team members who continually evaluate their progress.

They’re always asking themselves, “How are we doing, and how can we do better?” When they manufacture or sell products in the marketplace, they ask their customers for ongoing feedback and evaluation. They set incredible standards of excellence and are constantly striving to be better.

Whenever they have problems, misunderstandings or difficulties within the team, they reexamine their values, their goals, their activities, their assignments and their responsibilities. They’re more concerned with what’s right than with who’s right. They’re more concerned with winning than with not losing. High-performing teams run by excellent leaders are determined to perform in an excellent fashion. All members know that their ability to work together in harmony and cooperation is the key to all of
their success.

The wonderful thing about becoming a leader in your work and personal life is that you can practice the skills of influencing and persuading others toward a common objective.  You can promote the principles of excellent teamwork by establishing your values and goals, determining your activities and then leading the action. And you can improve yourself by continually evaluating your performance against your standards.

One of the marks of excellent people is that they never compare themselves with others. They only compare themselves with themselves and with their past accomplishments and future potential. You can become an even more excellent person by constantly setting higher and higher standards for yourself and then by doing everything possible to live up to those standards. The more proficient you become at getting the results for which you were hired, the more opportunities you will have to get results through others. And your ability to put together a team and then to lead that team to high performance will enable you to accelerate your business and fulfill your goals faster than ever before.

Brian Tracy is the most-listened-to audio author on personal and business success in the world. His talks and seminars on leadership, sales, managerial effectiveness and business strategy provide people with proven ideas and strategies that they can implement immediately for improved results.

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Leading

What’s Your Number? How To Unpack Company Valuations

Business is booming. Investors want in. But how do you put a price on the value of the company you have built with your own hands?

Louw Barnardt

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Company valuations is such a hazy part of the scale-up journey of a private company. Putting a price tag on a business is both art and science. At the end of the day, the number that makes the headlines (if ever disclosed) will be where willing buyer and willing seller meet.

But how do you , as business owner,  go about setting your asking price? Before approaching investors, it’s a good exercise to determine your own valuation range for the business. Choosing the right valuation method is the first big question. The answer has many parts to it, but the most important driver is the stage of the business.

Let’s look at some of the most commonly accepted valuation methods in our market:

Earnings Multiple

Applicable stage: Established, profitable companies

Listed companies, institutional players and private equity investors normally invest in a company for its cash flow profit that can contribute to their portfolio income. More often than not, companies will be valued based on their current earnings (bottom line profit after tax).

This method can only be used for companies that consistently make a profit. A multiplier will be chosen based on the company’s perceived risk. Younger, more risky businesses will likely have lower multipliers (as low as 3 and 4) and high growth, well established, lower risk companies will get higher multipliers (8-15).

Sometimes small adjustments are made to current year earnings (like non-standard, non-repeating income statement items) after which the valuation is set at Earnings times multiplier equals company valuation.

Related: 7 Factors That Influence Start-up Valuations

Discounted Cash Flow (DCF)

Applicable stage: Post-revenue start-ups, growth companies and established businesses

The most commonly used method in practice, the DCF method argues that a company’s value is determined by the future cash flows that it will yield to investors.

The starting point is creating a five to ten year cash flow forecast for the business. This is no small feat. In order to create a full financial model – income statement, balance sheet and cash flow statement – for the next decade requires a lot of work, both from a strategic and technical perspective.

Investors love this model because if forces the owners to put a clear strategy and expansion plan for their business into numbers. It will include dozens if not hundreds of assumptions – all of which can be scrutinised for reasonability. The result of financial model will be five to ten years’ worth of projected cash flows. These amounts are then discounted to present value at a discount rate that reflects the company’s risk and expected cost of capital.

The sum of the discounted future cash flows plus a terminal value (that represents the value after the five or ten year period of the model) then represents the valuation of the company after some final small adjustments for things like existing debt in the business.

Revenue Multiples

A revenue multiple valuation approach is focused on the market for similar businesses and is underpinned by your company’s current turnover. It seeks out the sales price of other similar companies in the country or worldwide, adjusted for size, stage and market differences.

A company that sold for R100 million at a turnover of R50 million would have a two times revenue multiple (valuation/revenue). If the average revenue multiple for similar companies is in a certain range, this multiple is then slightly adjusted and applied to your business.

If the average sale in your industry has been two times revenue but you are growing much faster than the average with a better competitive advantage, you can argue that two and a half times revenue is a more applicable number for your business. Revenue multiples are often used as a reasonability check in the market for the current asking price.

Related: Why Start-ups Like Uber Stumble When They Scale

Other methods

Most established companies are valued using one or a combination of more than one of the above three methods. At start-up stage, there are a number of other methods like Cost to Replicate or the Scorecard Method that early stage investors look to. When a company is simply in too early stage to practically value it, seed stage investors would also consider SAFE Agreements (Simple Agreement for Future Equity) – an instrument that determines that the percentage of the company the investors are buying with their investment. This is only determined when the Series A round is raised at a future date and under certain conditions, generally at a discount to the price the series A investors are paying.

Company valuations are complex. Many of the above technical factors play a role. A lot of it also comes down to the salesmanship of the owners and the negotiating capabilities of the parties. In ‘How Yoco Successfully Secured Capital And The Importance Of A Pitch’, the Yoco team speak about the importance of the right approach in their recent R248 million fundraising

Don’t go into this process without seeking some kind of expert advice. The price of the wrong valuation is simply too high. Make your numbers and your arguments bulletproof and you will be on your way to defending a strong and exciting valuation for your next raise!

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3 Keys To A Vision Others Can Own

Trying to get others to buy into a vision that is all about you getting more money is not going to excite people.

Zech Newman

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I get really excited about my dreams. Over the years, as I have led my team, I have realised that they aren’t as excited about my dreams as I am. I own two restaurants and employ minimum wage employees. In the early years of owning my restaurants, turnover killed me. I used to fight for them to have the same passion for my goals and dreams as I had and as a result I had extremely high turnover. Confused and frustrated, I knew I needed to change the way I was leading a team.

A few little changes have created a committed team and extremely low turnover. If you don’t have a passionate, committed long-term team, check these simple vision casting strategies.

Deeper Vision

Often our vision that we cast is shallow and self-serving. A vision that is all about you getting more money is not going to excite people. Take some time to uncover what you are trying to accomplish. When you can cast a vision beyond your selfish desires, others can sink their teeth into the vision. For my company, I wanted to raise up leaders to change the community.

My focus changed to my crew and they could feel the shift in perspective, which also helped me to earn a bi-product of more money, my original desire.

Related: 30 Top Influential SA Business Leaders

Their Vision

Our deeper vision helps us keep and build a team, but it’s still our vision. We need to really understand the goals and dreams of our team to find untapped potential and loyalty. No one will ever care as much about our vision as us because it’s ours. The more focused you get about helping your team and their wants and desires, the more they will care about yours. In my restaurant I had a young lady who wanted to be a teacher. I thought about what it takes to be a great teacher and how I could help her toward that. Find out what they care about and dig deeper to see what is behind that desire.

Marry the Two

If you have a team running around caring only about their vision they may be loyal and passionate, however, they will not be united in one direction. Magic happens when we combine our vision and their vision. At the points of intersection, our interests and theirs are united to accomplish more. I want to encourage leaders who can change the community.

Related: Business Leadership – Learn How To Embrace Change

As for the employee I mentioned above who desired to be a teacher, I trained her toward being a better teacher so that she could raise up young leaders to change the community. Now she is one of my top supervisors and teaches many other crew members. She will be an awesome teacher someday, but in the meantime, she is a valuable team member.

Caring for a team and helping them see how your vision and their vision can help each other will change everything. Growing people is the business no matter what business we are in. Care for others and they will care for you. Care only for your own wants and you will never get the most out of your team. Find a deeper vision, figure out your teams’ vision, and combine the two and your business will transform.

This article was originally posted here on Entrepreneur.com.

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3 Signs You Are Your Own Worst Business Enemy

It’s hard to be objective about ourselves but if we really pay attention our colleagues will reflect how we are perceived and what it means for the business.

John Boitnott

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Sometimes, it’s hard to get out of your own way.

Entrepreneurs and business owners have to keep all the trains running on time, as well as figure out the next place they’d like those trains to go, metaphorically speaking. It’s a huge, complex job. So it shouldn’t be a surprise to realise that in many cases, the problem behind an underperforming company is the boss.

How do you know when it really is “just you,” though? We human beings have a notoriously difficult time being objective about our own behaviour and choices.

So, try looking for the following signs in the people and circumstances around you.

1. Your employees seem unusually tense or flat lately

Has the camaraderie vanished? Is the workplace one big collection of really bad moods, most of the time?

Of course, the boss’s mood can infect the entire office. As the leader of your team, you set the example and the atmosphere, and your employees follow your lead.

Getting along with others, both inside and outside your company, is imperative for success. If your employees and customers sense a negative change, then it’s worth examining your behaviour. These signs could be symptoms that you’re becoming a toxic boss.

To address this, first make sure you’re acting with integrity and in accordance with your personal values. Next, make an effort to demonstrate empathy with your employees. You don’t have to agree with every single point they make to do this. Respect their boundaries and try to see the issue from their perspective.

Finally, make sure you listen deeply. Employers who simply command and demand compliance find themselves stuck with the “toxic” label all too quickly. Instead, be curious about your employees’ perspectives and problems. Ask open-ended questions to get them to tell you more, and listen to what they say.

2. You feel deeply frustrated with your employees

employee

Are you feeling unusually impatient around new workers? Do you find yourself snapping at experienced workers over small annoyances or accidents?

If so, there could be some deeper issues at play.

Insisting on perfection, or even just on competence in an unreasonable amount of time can eventually sour your entire workforce and drive away valuable employees. You’ll have a hard time attracting and retaining talent if you create an awkward, uncomfortable or outright hostile environment.

Instead, try practicing a “talk-down” method on yourself. When you feel your impatience or annoyance growing, mentally talk yourself down from these emotions to a state of greater calm. Here are some questions to ask yourself:

  • On a scale of one to 100, how bad is this, really?
  • What’s the worst that can happen here, realistically speaking?
  • If that happened, how would we respond?
  • Is this more important than my relationship with my employees? Or my reputation?

In most cases, reflecting on these questions helps you keep small issues in check. You’ll also want to give some thought, however, to whether there’s a bigger issue just beneath the surface. Using smaller problems as a diversion from the bigger ones provides an effective distraction from tackling life’s larger challenges, but doesn’t do much to help us solve underlying issues.

3. Minor projects are infinitely refined and “perfected” but your company hasn’t come up with a strong new idea in ages

One of the most common ways entrepreneurs become their own worst enemies is by focusing too heavily on things that don’t deserve so much attention. For whatever reason – be it fear of failure, fear of success, or something else altogether – people fall into the habit of spending too much time perfecting existing projects when they should be thinking about what’s next.

Not giving yourself enough time to create and innovate is one of the biggest ways to become your own worst business enemy. Your primary job as the business owner is to create that overarching vision for your company, and then work with your team to figure out how to achieve that vision. If you’re not even allowing yourself the time to do so, you’re fighting an uphill battle without reinforcements. After all, no one else can really do this kind of work for you.

To combat this tendency, try keeping a log of your time for two weeks. Track your time in fifteen minute increments to help figure out where you’re spending the majority of your attention and energy. Then carve out uninterrupted “CEO time,” and schedule it as if it’s a firm appointment you cannot reschedule or miss. Give yourself at least three hours a week to work on new ideas for your company.

Takeaways

It’s hard to be objective about our own behaviour and surroundings. Instead, use your colleagues, employees, and environment as a mirror to reflect back to you the reality of how you are perceived and the ways that perception is impacting your business. Then take the appropriate action to mitigate those challenges.

This article was originally posted here on Entrepreneur.com.

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