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Seven Habits for Business Success

Want to take your business to the top? Develop these habits and enjoy a smooth journey.

Brian Tracy

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The absence of any one of these key habits can be costly, even fatal, to your company. When you become competent and capable in each of these areas, you will be able to accomplish extraordinary results far faster and far easier than
your competitors.

1. Plan thoroughly. The first requirement for business success is the habit of planning. The better and more detailed you plan your activities in advance, the faster and easier it will be for you to carry out your plans and get the results you desire once you start to work.

There is a “Six P” acronym that says, “proper prior planning prevents poor performance”. Very often, the first 20% of the time that you spend developing complete plans will save you 80% of the time later in achieving the business goals you have set.

You need to ask yourself very specific questions and be sure to have crystal-clear answers (see box, right). Once you have asked and answered these questions, the next stage of planning is to set specific targets for sales and profitability. You must determine the exact money, advertising, marketing, distribution, facilities, and administration and service people you will need in order to achieve your goals.

The more thoroughly you plan each stage of your business activities before you begin, the greater the probability that you will succeed when you commence operations.

2. Get organised before you get started. Once you have developed a complete plan for your business, you must then develop the habit of organising the people and resources you need before you begin. In organising, you bring together all the resources you have determined you’ll need in the planning process. In the military, there is a saying: “Amateurs talk strategy, but professionals talk logistics.”

It’s essential that you determine every ingredient you’ll need before you begin business operations and bring them together so they are ready to go when you open your doors or begin your project. The failure to provide even one important ingredient in advance can lead to the failure of the entire enterprise.

3. Find the right people. The third habit you must develop is the habit of hiring the right people to help you achieve your goals. Fully 95% of your success as an entrepreneur or executive will be determined by the quality of the people you recruit to work with you or to work on your team. The fact is, the best companies have the best people. The second-best companies have the second-best people. The third-best companies have the average or mediocre people, and they are on their way out of business.

4. Delegate wisely. The fourth habit you need to develop for business success is proper delegation. You must develop the ability to delegate the right task to the right person in the right way. The inability to delegate effectively can be the cause of failure or underperformance of the individual and can even bring about failure of the business.

When people start in business, they usually do everything themselves. As they grow and expand, the job becomes too large for one person, so they hire someone to do part of it. However, if they are not careful, they try to retain control of the task and never fully hand over authority and responsibility to the other person.

Whether you’re an executive or entrepreneur, you need to identify the two or three things that you do that contribute the most value to your company and then delegate the rest. Learn to think in terms of “getting things done through others” rather than trying to do them yourself. It’s the only way you can leverage and multiply your special skills and abilities.

5. Inspect what you expect. The fifth requirement for business success is for you to develop the habit of proper supervision. You must set up a system to monitor the task and make sure it’s being done as agreed upon. The rule is: inspect what you expect.

Once you have delegated a task to the right person in the right way, it’s essential that you monitor the performance of the task and make sure it’s done on schedule and to the required level of quality. Remember that delegation is not abdication. You are still responsible for the ultimate results of the delegated tasks. You must stay on top of it.

When you have delegated a task, set up a system of reporting so that you’re always informed about the status of the work. Be sure the other person knows what is to be done, and when, and to what standard.

Your job is then to make sure he or she has the time and resources necessary to get the job done satisfactorily. The more important the job, the more often you should check on the progress.

6. Measure what gets done. The sixth practice of successful entrepreneurs and executives is the habit of measuring performance. You must set specific, measurable standards and scorecards for the results you require. You have to set specific timelines and deadlines to make sure you “make your numbers” on schedule. Everyone who is expected to carry out a task must know with complete clarity the targets he or she is aiming at, how successful performance will be measured, and when the expected results are due. Don’t underestimate the importance of selecting and defining specific goals, measures and activities that are then used as benchmarks for performance. In his book From Good to Great, author Jim Collins refers to the importance of selecting the “economic denominator” for a company, and for individual goals and objectives within that company. Whichever number you choose, it must be clear to everyone, and it must be monitored continually to make sure everyone is on track.

7. Keep people informed. The seventh habit for businesspeople is the habit of reporting results regularly and accurately. People around you need to know what’s going on. Your bankers need to know your financial results. Your staff needs to know the status and the situation of your company. Your key people, at all levels, need to know what results are being achieved.

In a study on workplace motivation, several thousand employees said the most important factor leading to job satisfaction was “being in the know”. People in an organisation have a deep need to know and understand what is going on around them in relation to their work.

The more thoroughly and accurately you report to people the details and situation of your business, the happier they will be and the better results they will get.

To plan better, develop the habit of asking and answering the following questions:

  • What exactly is my product or service?
  • Who exactly is my customer?
  • Why does my customer buy?
  • What does my customer consider to be of value?
  • What is it that makes my product or service superior to that of my competitors?
  • Why is it that my prospective customer does not buy?
  • Why does my prospective customer buy from my competitor?
  • What value does he/she perceive in buying from my competitor?
  • How can I offset that perception and get my competitor’s customers to buy from me?
  • What one thing must my customer be convinced of to buy from me, rather than from someone else?

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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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

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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enemy

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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