94,6% of businesses started do not get sold! Our purpose as entrepreneurs should be to build our business into an asset of value, which is a business that one day could be successfully sold and fetch a premium price. It’s also a business that can successfully raise growth funding.
We should be building assets of value because our businesses are our pensions and there is nothing elegant about retiring into poverty after ten, 15, or 20 years of building an unsaleable business.
Brian is one of the most charming and affable people I have met. When he walked into my office five years ago I warmed to him within minutes. He had a firm handshake and his wide smile clearly said, “I’m so pleased to meet you and thank you for your time.” This was his way with everyone he met. We sat at the table and he began speaking.
His contagious enthusiasm about his business, his excitement about the trends that were reforming the telecommunications sector in which he traded and the open ended possibilities that this change brought into his businesses got me equally excited. His insights were delivered with a wit and intelligence and I could see that Brian took his business very seriously, but not himself. This was part of his charm and I listened intently since I knew that this would also be his shadow.
He had worked in one of the big cellular networks for a number of years before he began his business. He left a nine year corporate career to start his business and four years down the line saw his business fast approaching annual revenues of R23 million.
The idea for his business emerged from his time in the cellular networks where he had been employed in business-to-business data sales. His job was that of pre-technical sales. He met clients, interpreted their data needs and translated them back into products that his company offered.
This placed Brian at the coal-face of a dynamic market where client needs either lagged or raced ahead of what the network provider could offer. The industry was undergoing stupendous growth.
Where great ideas fail
Brian was sales. Everything about him spoke it and resulted in it. I could sense his frustration and more specifically, his exhaustion. He had taken no more than 17 days of leave in the last four years, including public holidays. This was simply unsustainable.
At the same time he had spent in excess of R300 000 in search and placement fees with three of South Africa’s best known sales-specialist recruitment agencies. They had actively head-hunted some of the best sales professionals in the sector.
All had resigned within three to six months of starting at Brian’s company and were working elsewhere.
Five sales professionals in four years and none were on the ground. I looked at their CVs. They were pros. Each one had performed in their previous employ and three made big sacrifices to leave good jobs and join Brian. So why did they leave him?
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The business systems diagnostic
As impressive as Brian’s revenues and forecasts were, the valuation I did on his business horrified him. His business model was super smart. It offered a volume based, variable pricing model for clients, cold water for new competitors and an inbuilt innovation cycle that would never allow his techies to rest; a key feature of a tech company needing excellent technical skills to innovate the market.
On top of this all, once integrated into his clients’ systems, automated billing administration worked smoothly, the reporting built trust and deepened his credibility with his clients. His self-provisioning set-up allowed clients to customise many elements of their service from Brian making switching costs very high.
With all this and racing revenues, his business spluttered a valuation between R2,8 million to R3,2 million. Brian was dismayed.
Many aspects contribute to a business valuation. A dominant feature in Brian’s and any other business is the people system. Brian’s had none. The evidence was palpable.
The source of the valuation pain came from the discount rate, one of the three elements that make up a valuation calculation. His forecasts were fantastic, the business scaled and the investment needed to sustain a robust aggregation platform was accounted for. Cash flows into the future were contracted and the envy of many entrepreneurs. We ran the business systems diagnostic.
The results came onto my desk whilst I was on the phone with one of the sales professionals who had worked for Brian. His marketing systems were okay, operations rocked, money management was tight. But his sales systems were barely existent and his people systems were all over the place.
I spoke with the other sales professionals and they echoed the same story. Brian was a fantastic guy, driven, passionate, can-do. It was very exciting to work with him at first. But then you could do nothing right.He interfered in the sales processes and got angry when certain things were not done his way. The problem was, none of them knew what his way was. If they did, they would have done it.
The high discount rate was there to counter the single biggest risk in the business, Brian himself. His shadow loomed larger than ever. Brian was the business.
Without him, there were no more sales and there were no more relationships. His single biggest strength turned into the business’s single biggest weakness. I valued the business as a buyer would and no Brian equalled no sustainable business.
We had to fix this and fast. Brian needed to raise growth funding for his Africa strategy and, in typical style, had already secured the contracts into Tanzania and Kenya.
Building business systems
Brian’s problem is not unusual. When we grow we need help and we offer jobs. We look for help so that we can focus on the many other things that a growing business demands. The successful candidate comes into the business and we start to realise that this person can’t do what we thought they could do. Do we continue to invest in them and hope that it comes right or do we move them out and start again?
The investment of our time as business owners in sourcing, selecting and then engaging new staff is enormous. The risks that we open up in our business every time we do this are enormous. The hope we place on this person within our emotional framework is enormous. And then to top it all, we pay them before we pay ourselves.
The answer lies in not offering a job to perform a business function such as sales or marketing or buying. Rather, we should be offering jobs to run business systems that we have built.
Good systems include six elements: The activities and actions that need to be taken to make something happen, organised into a sequence to deliver a measurable result within a period of time. This is then specified in a job description and supported with training materials on the activities with a carrot and stick written in a contract of employment.
These are systems we build as business owners. We test them, refine them and, only then do we employ people to run them. This way, we increase our chance of getting the right person to do the ‘job’. We can measure their performance fast, reward them effectively to keep them, remove them efficiently if they can’t get it right.
In this way we get back the precious commodity of time. Time to focus on growing our businesses to the next level since if we don’t, no one else will.
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A growing business
Within six months, Brian had a sales system in place employing three sales people. The systems achieved the sales and the people ran the systems. We had in effect systematised Brian. We redid the valuation that year. A different number emerged. Brian was no longer the business and he beamed with pride at its R8,9 million valuation.
A World Of Opportunity Awaits With Peli Peli
Business ownership has always been the entrepreneur’s way of shaping their future. If you’ve always wanted to experience life in the US, this is your chance.
Global media has been reporting that the chances of non-American citizens being granted access to move to the US are getting slimmer with the new administration. However, there is still one channel of access that allows people the opportunity to relocate that hasn’t been amended by the presidency.
The EB-5 Visa programme was created by Congress in 1990 to stimulate the US economy through job creation and capital investment by foreign investors. Under a programme initially enacted as a pilot in 1992, and regularly re-authorised since then, investors may also qualify for EB-5 classification by investing through regional centres designated by USCIS based on proposals for promoting economic growth.
The question most commonly asked by foreign investors is where to start selecting a relatively low-risk company to invest their money into. One such entity that has been granted designation under the EB-5 programme is the restaurant group Peli Peli.
Peli Peli is a South African cuisine restaurant that has gained incredible traction in the competitive American restaurant industry. They currently have six successful branches opened in the Texas area. Peli Peli Vintage park, which opened in 2009, generated revenue of $5,3 million in 2016.
Peli Peli Galleria opened in 2015, and had $5,2 million revenue in 2016. Peli Peli Kitchen, their first fast casual concept, opened in October 2016 and reported revenue of $2 million in 2017. Peli Deli, a downtown fast food casual lunch concept and Peli Peli Cinco Ranch, which opened in February and July 2017, respectively, are both showing incredible growth to match their predecessors.
At least two more locations will be opening in 2018, and as all new Peli Peli locations have historically generated positive cash flow within the first year, the company expects to increase its revenue exponentially.
The power team behind the brand
The restaurant chain has garnered popularity, and won a multitude of awards, including Best Service & Best Atmosphere — Readers’ Choice Award (Houston Press) and 2013 Diners’ Choice Award winner for the Top 100 American Fare Restaurants in the United States (OpenTable). Peli Peli is also rated in the top ten in Houston, Texas (which boasts over 12 000 restaurants) on both Tripadvisor and Yelp.
The Peli Peli trio who own the business are Chef Paul Friedman, Thomas Nguyen and Aiki Tran. These three dynamic businessmen have their own share of accolades to speak of. Chef Paul, who is a born and bred Joburger, has been a contestant on Cutthroat Kitchen for multiple episodes on the Food Network. He won the People’s Choice Award and was placed third as a judge in the Gumbo Smackdown 2014. He received the 2013 Chef of Chef Awards in the 9th Annual Houston Wine and Food week, as well as being the 2013 Cadillac Culinary Master. He was also one of 60 Houston Chefs to be listed in the book Best Chefs America.
Thomas Nguyen, who is Chief of Marketing for Peli Peli, graduated from the University of Texas School of Law and was a former litigation attorney. He was the Houston Business Journal’s 40 under 40 award recipient in 2015 and an EY Entrepreneur of the Year Gulf Coast finalist in 2016 and 2017. He was Entrepreneur of the Year — Houston Asian Chamber of Commerce and is also a freelance writer for the Houston Press.
Peli Peli’s CEO, Aiki Tran, has over 12 years of experience in restaurant technology and won the 2007 Entrepreneur of the Year award — Houston Asian Chamber of Commerce. He was responsible for streamlining the technology infrastructure for franchises such as Popeyes and Wings, Pizza N Things. He also became the number one reseller of Aldelo and Dineware POS systems in Texas, with installations in over 200 restaurants.
Joining their ranks is South African Ryan Stewart. Having owned 16 restaurants throughout the country, he is also the CEO and co-founder of the Mozambik restaurant chain. Ryan has 17 years’ experience in the industry and is being brought on board by Peli Peli to assist in their revenue and store location growth.
Your path to the US
With the combined talent, brainpower and experience of these four businessmen, it’s no wonder Peli Peli is achieving success. The investment required to qualify for an EB-5 Visa through Peli Peli is an amount of $500 000 and is structured as an equity investment at risk. It entitles the foreign investor to permanent residency, and within two years of living in the United States, a green card for the investor and his/her dependents.
For more information on how
You can be a part of the EB-5 Visa programme through Peli Peli.
4 Ways To Find Your Own Business Style
The only way to develop a business style is step-by-step over time.
Finding a style in finance will define how you react to changes and how you approach new situations. It’s as important in business as it is in stock trading. Developing a business style and developing a stock trading system are extremely similar pursuits.
But I’m not going to pretend that it’s easy to do. It will take time and you do have to be willing to work at it.
Here are my four ways of finding your own business style.
1. Get rid of your expectations
You can’t force anything to work. It’s necessary for you to be flexible when it comes to finding a business style. Begin by letting go of any expectations you have before trying a new style.
Prior to attempting a new style, you have to be willing to go into it with no expectations. You never know what you’re going to find.
2. Track your movements
Some things are going to work and some things aren’t going to work. I always tell my students in the Tim Sykes Millionaire Challenge that they should keep records of the things they’re doing. Keep these records as detailed as possible because attempting trial and error can quickly lead you in circles.
Don’t fall into the trap (as I did in the beginning) of trying the same thing multiple times because you never tracked the results.
I keep large spreadsheets with notes of the various styles and systems I’ve tried in business. Business mistakes can be costly, so you need to do everything you can to avoid making them.
3. Look at what others are doing
I refuse to believe that someone is doing something truly unique. The moment someone makes a breakthrough in business there are a hundred people replicating the same things. And that can be a powerful tool. Consider what others are doing and see whether you can learn something.
It’s why I also advocate finding a mentor to help you out. They’ll be able to help you out and you’ll benefit from their enhanced experiences in business.
Again, track what you’re taking from other people so you know whether something is working.
4. Refine what you do
Rarely will anything in business work the first time. However, your first attempts will give you a good benchmark as to what you need to do next.
You should never be satisfied with what you have, even if it’s working. Always work on improving your business style. I believe this is the most important thing because it also teaches you how to adapt to changing conditions over time.
Last Word – Constantly Growing
There’s no step-by-step guide for how to develop a business style. The only way to do it is to obey the fundamentals and then develop everything over time.
Even though the process is long, you’re guaranteed to learn a lot of lessons and gain from a huge number of experiences over time.
This article was originally posted here on Entrepreneur.com.
6 Questions You Should Be Asking When Coaching
Top athletes have coaches because they’re winners. Business leaders should be the same.
Whether you’re a CEO looking for a mentor, coaching your management team, or structuring a coaching programme for your managers to implement, there are six questions that can help anyone get better at anything.
Dr Marshall Goldsmith is a best-selling author and world-renowned business educator and coach. He has coached top CEOs, including Alan Mulally, former President and CEO of Ford Motor Company.
The key to a successful coaching programme is simple dialogue and establishing responsibility. The person being coached must understand and agree that success lies in their hands. They must take responsibility for their actions.
Once every few months, have a direct coaching session. Ask (or answer for yourself) these six questions:
- Where are we going?
- Where are you going?
- What are you doing well?
- Do you have suggestions for my improvement?
- How can I help you?
- So you have suggestions for me?
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