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Clem Sunter’s Take on the Entrepreneurial Economy

Lessons from the mind of a fox on staying competitive, looking to the future and putting your business’s best foot forward.

Nadine Todd

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Ask Clem Sunter about what business should be doing to stay relevant and competitive, and he has a wealth of experiences to draw from, from his days as an executive of Anglo American Chairman’s Fund, to his current roles as entrepreneur and scenario planner.

Related: Adapt or Die: 3 Business Strategies for Thriving in a Recession

Here are his three top tips for staying ahead of the game (and the competition).

1. Use small business to grow your big business

When Anglo American launched Zimele in the 1990s, it was originally a CSI project. Today, it’s a strategic component of the group’s business model. Why? Because by setting up a venture capital arm that aimed to promote small business and do its bit for the economy, Anglo learnt two very important lessons: One, don’t do what’s not your core.

There will be a supplier who does it better than you, at a lower cost. And two, SMEs are flexible in a way that big business is not – and there are ways to use this to your advantage, even if you yourself have lost that small business agility you once had.

“We designed Zimele to assist SMEs in gearing up for our contracts,” Sunter explains.

“We invested money into these businesses, simplified our tendering procedures, gave them mentors and installed Anglo managers on their boards. The project has grown to such a degree that today there are 1 200 businesses employing 25 000 who operate under the Zimele banner.”

Despite the fact that this started out as a CSI initiative, Anglo soon learnt some interesting things.

“In many cases, these SMEs now supply the food at the mines we operate. We are not in the catering business, and so these small, agile, expert businesses do a better job, at a lower cost. It made us realise that in order to remain competitive in today’s market, you should focus on your core – what it is you actually do – and outsource the rest to experts in that category.

“It also means you can lower your labour force. It’s commercially sensible, and even though it’s still classified CSI, the reality is that it’s an important part of Anglo’s strategy.”

2. Cultivate the mind of a fox

Getting-foxy-with-Clem-Sunter

In 1982 Anglo created a scenario planning division headed up by Sunter. The idea was to create and evaluate the various scenarios the future of South Africa might hold, and adjust Anglo’s business plan accordingly. At the time, there was a high road, and a low road.

The low road did not include a democratic government in South Africa, and ultimately led to high levels of unrest and a failing economy in which Anglo realised it would no longer be able to operate.

The high road led to an inclusive, democratic government which the company knew was essential to future growth and sustainability.

While most businesses cannot impact the political environment, scenario planning remains an essential factor in real business growth.

“You need to become what we call a foxy leader,” affirms Sunter. “Foxes are always paying attention to their surroundings, they’re looking ahead, but also at what’s taking place around them. While it’s impossible to forecast exactly what the future holds, by paying attention to what’s happening outside of your business, you can determine a few likely scenarios, and begin preparing accordingly – and then have the speed and agility to react to what you see.”

For example, Sunter currently has two scenarios. One predicts that the global economy will remain flat. Two of the largest economic blocs (Japan and the EU) have ageing populations, and this does not correspond well with high economic growth. In this scenario, business owners need to evaluate what they can do to grow their businesses in a flat world.

“The emphasis must be on innovation and new products to create new markets. You need to live your brand in such a way that differentiates you from the crowd, because the economy isn’t growing, which means you need a larger slice of what’s already available.”

The second scenario is coined the ultra violet scenario. In this scenario, while the economies with ageing demographics go through the long U, younger, more vibrant economies are chasing the short V – they’ve hit the bottom and are aggressively pursuing economic growth.

Related: Connect With Your Customers Outside of Social Media

“This will take place in the emerging economies: India, Africa and South America,” says Sunter.“In this scenario, businesses must target these economies: Create products that work for them, create strategic alliances with businesses on the ground to grow your brand. Find ways to tap into these growing markets.”

Sunter offers flags to help business owners determine which scenario is more likely to develop. “One of these is China. If China experiences 8% to 10% growth, this will galvanise growth in the emerging economies, and we’ll be in the second scenario. But if China’s growth falls to 5% or less, then we’re in the flat economy scenario and it’s hard times for everyone.”

The takeaway lesson? Your business does not operate in a bubble – pay attention to what’s happening around you, on both a micro and macro scale.

3. Encourage an entrepreneurial economy

As your business grows bigger and more corporate, don’t forget about the value of smaller businesses to the economy.

The most vibrant economies enjoying the highest percentage of growth in Africa have strong entrepreneurial spirits. South Africa, while Africa’s largest economy, is by no stretch its most vivacious.

“I work with an entrepreneur who travels extensively. He quips that in other countries they roll out the red carpet, and in South Africa, they roll out the red tape.”

While he’s a firm proponent that government’s mantra shouldn’t be five million jobs by 2020, but one million businesses (and the rest will take care of itself), Sunter believes that much can be done if the corporate and big business mindset changes.

“A vibrant economy is good for everyone. If you want your business to grow, no matter its current size, you need to support small business. The economics of this work, we’ve already proven that, but it also starts with a mindset. Start with the question: How can I involve smaller businesses in what I do? And take it from there.”

Nadine Todd is the Managing Editor of Entrepreneur Magazine, the How-To guide for growing businesses. Find her on Google+.

Business Landscape

How Schindlers Attorneys Became Involved In The Landmark Cannabis Case

Everything you accomplish accumulates and eventually comes back to assist you further along in your career. This is how a final year LLB assignment became the basis for a Constitutional Court case.

Nicole Crampton

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Schindlers Attorneys are the law firm that were involved in the landmark Constitutional Court judgement on cannabis use within a private space. Paul-Michael Keichel, Partner at Schindlers Attorneys shares how they came to be the foremost legal experts on cannabis and how they became involved in the Constitutional Court case:

How the journey began

“In 2005, my first year at Rhodes University, whilst studying for Intro to Law, it occurred to me that there were strong constitutional points that could be raised to objectively justify the decriminalisation of cannabis in South Africa,” explains Paul-Michael Keichel.

“In my final year LLB, 2009, I took Constitutional Litigation as an elective (largely motivated by the creation of a timetable clash, which meant that I’d not have to sit another semester of lectures for a module that I had failed the previous year). This provided me with the opportunity to write an assignment titled “A Critical Analysis of Prince and an Objective Justification for the Decriminalisation of Marijuana in South Africa”, in which I composed my argument (based on the right to equality in our Constitution).”

Related: 7 Top Lessons You Can Learn From The US Cannabis Market

The start of the partnership

“Fast forward to 2013 and the Dagga Couple find themselves at Schindlers (where I am a first-year associate) to register their NPC, “Fields of Green for All”. The attorney handling the registration (who I’d also bored with my argument) suggests to the Dagga Couple that they speak to me. It turns out that they already knew of me, because my assignment had (unbeknownst to me) done the rounds on the underground cannabis networks. We get chatting and I rope-in my brother, Maurice Crespi, the managing partner of Schindlers,” explains Keichel.

“We are the only firm out of many approached by the Couple who are willing to take on their trial action against 7 state departments and Doctors for Life to push for a declaration of constitutional invalidity of the laws prohibiting cannabis use/possession/dealing in South Africa. We decide to run the challenge for them pro bono.”

The Cape ruling that started it all

“Prince and Acton et al have their matter heard in the Cape, which resulted in the 2017 Judgment. We run a portion of our trial (including expert evidence from international scientists and doctors – the best in field), but it is rendered part-heard. We then heard that Prince and Acton et al’s matter will be heard by the Constitutional Court in November 2017 and we decide, with the Dagga Couple, to intervene in that matter, upon which it is confirmed that my 2009 assignment forms the on-record basis of a major chunk of Prince and Acton et al’s arguments in support of legalisation.”

“Our involvement in the Constitutional Court was such that we provided clear legal argument and authority to support and expand upon what Prince and Acton et al were trying to say to the Court. Ultimately, much of what we submitted has found its way into the judgment of the Constitutional Court.”

Related: 10 Cannabis Business Opportunities You Can Start From Home

How a final assignment became the foundation for a Constitutional Court case

“So, an idea (bolstered by wanting to create a timetable clash) resulted in an assignment, which provided certain credibility and impetus to cannabis activists. Two of these activists ended up being our clients, which, despite being handled pro bono, has brought Schindlers immeasurable positive publicity, and which, ultimately, contributed to the decriminalisation (and potential future legalisation and commercialisation) of cannabis in our country.”

“Schindlers now has a dedicated “Medicinal and Recreational Cannabis Law” department, through which we will continue to make submissions to parliament, apply for licenses on behalf of our clients, support those who have been arrested and charged.”

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Business Landscape

6 Ways To Win A Better Deal

Be proactive not reactive by working through these six critical elements of your strategy.

Andrew Bahlmann

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By far, the majority of our clients start the journey of selling their business by working on a very reactive basis. Most business owners going to market say they just want to ‘see what happens’.  But this means you are starting the process on the back foot.

This approach automatically takes the control of the business sale out of your hands and puts it into the hands of the market. Keeping control is a critical element in selling your business for maximum value.

Letting the market tell you what they think about your business and what they want from you means that straight away the acquirers set the hoops that you need to jump through.

They tell you what they want. Any engagement is on their terms.

You have not defined terms or standards to use as a yardstick for what the market is saying. So you are much more likely to find yourself boxed into a corner, forced into the role of price taker rather than price maker.

Taking the time to define your ‘go to market’ strategy is a critical factor in achieving success for yourself, what you want for your business and how the market aligns to this.

Be proactive not reactive by working through these six critical elements of your strategy:

1. Define your non-negotiables

We all have certain non-negotiables in our lives and you must think through those that you want to apply to the sale of your business.

Spend quality time working out what your personal and business non-negotiables are. Then make sure that they feature prominently in your deal strategy. Examples could be:

  • I am prepared to stay on for only 18 months after the sale conclusion.
  • My staff need to be looked after as they have been with me for 20 years and are like family.
  • I want to sell 100% of my shareholding on Day 1.
  • I am not prepared to warrant future profits.

When you start out on the selling journey, this list will probably be a lot longer. Usually, it will reduce as you travel further and further down this road but you may even add new non-negotiables once you climb into the trenches and take control of the process.

Don’t be shy about presenting your list of non-negotiables to prospective buyers. They will certainly be putting forward their own list as well.

Related: Savvy Business Sale Spells New Life

2. How ready and committed are you to sell your business?

Selling your business is one of the biggest decisions that you will take in your life. It is an emotional rollercoaster. You will face more questions than answers as you progress down this road. Nobody can ever be 100% ready but you can help yourself prepare as much as possible by asking yourself the following questions:

  • Do I know what my business is worth?
  • Is my business ready for acquirers to see?
  • Am I ready to let go of my business?
  • Can my business run without me?
  • What makes my business attractive and enticing to an acquirer?
  • Do I have the time and skills to embark on selling my business myself?

As you work through these questions, a whole host of other questions will probably occur to you. Be decisive, objective and critical in asking and answering all these questions.

3. Put a plan together

Like any other business or strategy implementation, selling your business is a project. All projects need a plan of the objectives, timing, resources and risks required to succeed.

Selling your business is by far one of the most important projects that you will ever drive and also one with the least room for error. Your planning cannot control the biggest variable of all – how the market will react to your business. But being as well prepared as possible will help you cope with this.

4.  The market wants a serious seller

The way that your business and personal brands show up in the exit process is critical. Buying or selling a business is a very time-consuming process, with both seller and acquirer committing quantities of effort, energy and resources.

The market therefore wants to deal with a committed and serious seller. Any business owner just dipping his/her toe into the water to see what happens will frustrate them and potentially damage future transactions if that toe is removed from that water.

Related: When Is The Right Time To Sell Your Business?

5. Be ready for the experts

You are brilliant at running your own business, which is why you are considering selling it for maximum value. The acquirers on the other side of the table are, of course, also experts at what they do and how they do it.

Expect them to speak a different corporate language, exude negotiation and transaction skills and have mastered the ability to control the transaction. If you do not have a strategy or blueprint to default to when the heat gets too high, you will lose your way and could be blindsided into the wrong transaction.

6. Bring it all together

Work through the various steps identified above and craft your deal strategy. Let this framework be your compass during the transaction.

Always lean on it when there are too many variables being thrown at you. Having your strategy is the first step. Sticking to it will be your biggest test when the pressure is on.

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Business Landscape

Hooked On Ethics

The business that puts ethics at the forefront of its culture is the one that will shine in a landscape littered with dishonest behaviour.

Howard Feldman

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There is significant research into how the work environment influences ethical behaviour. Study after study has shown how the ethical values upheld by management filter down to all employees, affecting behaviour and business practice. The biggest influence on a person’s ethics is their environment. In South Africa, the after effects of the recent political regime continue to shake both country and citizen. Corruption has seeped into almost every part of the government and in some of the country’s most prominent private organisations.

The old saying that the ‘fish rots from the head’ has never been truer, nor more obvious.

The ethical dilemma

The reality is that the government’s flagrant disregard for ethics saw corruption become a part of everyday life. This makes almost everyone ask themselves questions like – why should I pay X utility bill? Why should I pay my TV license? The money is being clearly used fraudulently. Sure, it is the law, but leadership has proven that ethical behaviour isn’t rewarded or recognised.

But it is. The value of building an ethical business and upholding a culture that promotes honesty and integrity cannot be understated.

Related: Developing Your Business’s Ethics Policy

Here are five reasons why…

  1. Those who skirt the edges of ethics almost always get caught.  There has been a steady shift in the country’s moral compass as leadership has taken a far stronger stance on rooting out corruption and already some of the country’s biggest names have been found guilty. KPMG, McKinsey, Bell Pottinger and SAP have all had their names tarnished by the scandals that have rocked the country.
  2. Employees are more engaged and better behaved. A weak ethical culture filters down from the top, influencing behaviour and attitudes. If employees feel that they can get away with bad behaviour that benefits them, or if they feel that their environment encourages this, then they will.
  3. A strong ethical influence will dictate how employees treat customers and one another. If your company enforces and rewards honesty and integrity, then these will be the qualities that clients will perceive. Their lack may also see you lose market share and your reputation.
  4. Like attracts like. If you create a culture that rewards employees that work all hours, deliver the goods and commit themselves then you will attract more people with these qualities. The same applies in reverse – reward bad behaviour and the results will rapidly speak for themselves.
  5. Your business reputation. Trust can’t be bought. It is hard won and easily lost. If you lose your reputation then it is very unlikely you will win it back and it will follow you for the rest of your life. The same applies to your staff. If their behaviour is questionable it could damage your company. Make sure you set the rules of what is or is not tolerated by your company culture and consider investing into ethics courses that allow your teams to stay ahead of the curve.

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