As a business advisor I am contacted daily by business owners that want me to assist them in taking their business to that fabled ‘next level’. I always start off with a very simple question: “What is your next level?”
90% of the time the penny drops, as the answer is always the same. Not a clue! We all want to grow, improve, become more profitable but that is as generic as ‘I want to be more strategic!’
If you don’t know where your business is either going, or needs to go, or how you’re going to get there, you need to define the path that lies ahead very clearly and apply creativity, practicality and relevance.
Where do you start? Well you need a plan.
Crafting a strategy for a smaller business
The strategy journey for any business is mission critical for success, especially an SME. We often fall into the trap of thinking that we need a 40 page strategy document using various models and frameworks to come up with something that pretty much mirrors what it is that we knew we needed to do in the first place!
I personally favour the ‘one-page strategy’. Don’t take this too literally. Keep it short, focused and relevant.
Remember that the strategy itself is not as important as the effective implementation of the required actions to achieve it. What are the steps to craft a powerful strategy for your business?
Define what your goal or ‘next level’ is
Where do you want to take your business? Do you want to grow your number of customers, your revenues, profits, products or markets? The list goes on and on. You need to map this out. Understand what it means to your business.
Do you have the resources and the time? What are your challenges? Is your ‘next level’ achievable and sustainable? This phase of your process should be filled with hundreds of questions. When you can start answering all of the questions you will start realising that you are on track to define what the ‘next level’ is for your business.
Start with the foundation that you have built
Always attempt to leverage the momentum that you have already built. There will be times when you need to make a radical shift in another direction. Perhaps if you sell analogue fax machines in Silicon Cape it may be time to look at a new direction.
However, in this example your momentum is your ability to sell. Leverage that in your new direction. You truly need to understand your business in order to move it forward effectively. We will pick this up in a subsequent article.
Don’t plan too far in advance
The days of planning a three to five-year strategy are gone. If anyone can predict what lies ahead in excess of 18 months you have some very real talents. It’s important to not live with a short term focus and have a longer term ‘direction’, but focus on delivering on the first 12 months without fail.
There will be more than enough variables for you to have to deal with without you worrying about some potential issue in 48 months-time! I am yet to come across a strategy that remained intact, irrespective of the period.
Determine what you need to get there
Do you have the resources, time and skills in your business to get to where you need to go? Understand what is required in order to achieve your ‘next level’. If you are planning on moving into a new market do you need to recruit someone that understands the technical side of that market? Do you need to raise additional funding?
Map out your ‘Path to Success’
This is the most important step. Translating your strategy or plan into tangible actions is what will ensure that effective execution takes place. Map your action in detail.
If you can translate a 12 month strategy into weekly actions you will ensure momentum is maintained, you will measure whether your plan is relevant and can re-assess and make small changes along the way (if required). You will be working with reality as defined by the market.
Working through the actions and executing them effectively will result in a discipline that will entrench the strategy into your business.
What’s The Worst That Can Happen With A Disgruntled Silent Shareholder?
Whether a shareholder brings capital to the business, experience or connections, you need to ensure everyone has the same vision and values.
While we often hear that it can be bad to have a silent shareholder that does not want to play ball, it is not often that we make enquiries about how the governance of a company can be hindered by a disgruntled shareholder.
Most of us assume that as long as they own more than 50% of their own company, they are entirely in control of all aspects of the company and how it is governed. This is not true: Even if you are a majority shareholder, holding less than 75% of all the shares in your company can still result in headaches if a minority shareholder, holding at least 25% of the company, becomes disgruntled and neither participates in the decisions of the company, nor consents to the decisions being made.
What is set out below highlights, among others, why it is so important to give shares in a company to prospective shareholders over a period of time, rather than from the outset. This allows for shareholders to prove their worth without you potentially placing your company in a position where it could be held at ransom for many years.
The illusion of holding more than 50% of the shareholding in a company
- Many people assume that by holding more than 50% of the shares in a company they are free to do with the business as they please. This generally only holds true for basic decisions of the shareholders, such as the removal and appointment of directors. The most important decisions of a company are based on special resolutions. A special resolution requires that shareholders, either individually or collectively, holding at least 75% of all the shares in a company, vote in favour of a specific decision.
- Examples of decisions that require a special resolution include:
- Amending a company’s Memorandum of Incorporation
- Approving the issuing of shares or granting of other similar rights
- Authorising the basis for determining directors’ salaries
- Disposing of company assets
- Mergers and acquisitions.
So, what does this mean for you and your company?
- If you are a start-up looking to raise funds, apart from some exceptions, you will not be able to issue further shares to new shareholders or anyone other than existing shareholders if there is a shareholder that is effectively dead weight.
- Should you manage to vote a new director to the board, you will not be able to determine the basis on which they are compensated (their salary) without a special resolution.
- If you intend to merge with another company, you will not be able to pursue this without a special resolution.
- If you plan to raise money by disposing of or selling most of the assets of your company you will, once again, be prevented from doing so.
Accordingly, it is always best when starting a venture to vest your shares over a period of time. This means that, for example, shareholders are only entitled to have their shares allocated to them after a certain period of time to avoid a situation where you have a dead-weight equity shareholder hindering the governing of your company, and requiring possible litigation to remove them.
There’s More To Team Management Than Leadership
When you’re running a business you need to ensure that your employees are on your side, helping you to make profits. Giving them job security, taking them seriously and treating them with respect, will go a long way in enhancing loyalty and productivity.
The staff that work for you determine:
- How happy your customers are with your business
- The quality of the things that you sell
- The costs that you incur to sell your products and services
- Your risks – the things that can go wrong and how much it costs you
All of these things determine your profitability and how competitive your business becomes. How do you ensure that everyone is on the same side and helping you to make profits?
At work everyone believes that they are getting something (such as money) and are giving something in return (such as time and effort). They are weighing up in their mind “how much am I giving, how much am I getting in return and is this fair?” If they believe that they are:
- Giving too much or
- Getting too little
- Then this is unfair, and they won’t work well (poor productivity – how much they produce).
The manager needs to:
- Know what people are thinking about what they are giving and getting and
- Manage the giving or getting side
- So that people become more productive
In a smaller business you sometimes cannot afford to pay more or provide the sort of benefits (pensions, medical aid, bursaries etc.) that larger firms can and so the staff may be unhappy, not be productive and be on the look-out for something better.
How do you increase happiness without money?
- Job security – knowing that you will still have a job next year – and that you will get paid on time.
- Contributing to the success of the business. If you train staff to have the knowledge and skills to do a better job and you then encourage and support them to do this then they are happier, and you increase profits. If you then share some of these profits with the staff that helped you to make them then everyone wins!
- To be taken seriously and treated with respect. If you do this then staff are happier, and they will also treat your customers with respect.
- To be part of the team. You can often do this by having a regular briefing on what your plans are and discussing ideas. Because staff are doing the actual work they will often have good ideas and then will be motivated to implement them – it was their idea after all!
Staff leaving you all the time is a can destroy significant value. If you implement the strategy above, you will have happier staff that are more productive and a more profitable business.
Jeff Bezos Reveals 3 Strategies for Amazon’s Success
One of the richest men in the world shared his leadership tips for running a company.
“It remains Day 1.” That’s how Jeff Bezos, founder and CEO of Amazon, signed off in his 2018 letter to shareholders. He’s been propagating the “day 1” mantra for decades, and it’s meant as a reminder that Amazon should never stop acting like a start-up – even though the company now boasts more than 560,000 employees and more than 100 million members of Amazon Prime, the company’s paid service for free shipping on select items.
Here are some of the most useful nuggets of wisdom Bezos shared in his letter and during a recent onstage interview:
1. Standards are contagious
Bezos says he believes high standards are teachable rather than intrinsic. “Bring a new person onto a high standards team, and they’ll quickly adapt,” he writes. “The opposite is also true.”
If a company or team operates with low standards, a new employee will often – perhaps even unwittingly – adjust their work ethic accordingly.
He also says that high standards in one area don’t automatically translate to high standards in another – it’s important for people to discover their “blind spots.”
Try making a list of your duties, then ask trusted colleagues to tell you which responsibilities are your greatest strengths. If certain things from the list don’t come up during the conversation, it might be useful to think about how you can up your personal standards in those areas.
2. Set clear, realistic expectations
If you’re looking to raise your standards in a particular area, the first course of action is to outline what quality looks like in that area. The second is to set realistic expectations for yourself – or for your team – regarding how much work it will take to achieve that level of quality.
Exhibit A: You won’t find a single PowerPoint presentation at an Amazon company meeting. Instead, teams write six-page narrative memos to prepare everyone else for the meeting.
Bezos says the quality of the memos vary greatly because writers don’t always recognise the scope of the work required to reach high standards.
“They mistakenly believe a high-standards, six-page memo can be written in one or two days or even a few hours, when really it might take a week or more!” Bezos writes.
3. Stay involved with the people you’re serving
Whether you’re selling a product or service, it’s a good idea to make sure you never lose touch when it comes to the people you’re serving – no matter how high up the ladder you climb.
Bezos says he still reads emails from his public inbox (email@example.com) as a way to keep his finger on the pulse of what’s happening with Amazon customers.
He says he believes focusing on what customers are saying is much more important for success than focusing on what competitors are doing, and he often compares customer feedback to company data to see where they misalign.
“When the anecdotes and the data disagree,” Bezos said at a recent leadership forum at the George W. Bush Presidential Center, “the anecdotes are usually right.”
This article was originally posted here on Entrepreneur.com.
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