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Business Survival

Silent Killers of Great Businesses and How to Avoid Them

Are your profits falling, overheads increasing and turnover a fraction of what it used to be? You might have fallen prey to these four silent killers of entrepreneurs and their businesses.

Pavlo Phitidis



silent killers

What a dramatic heading. Silent killers! Yet, I see them at work every day with many of the entrepreneurs that I work with. These killers are seldom obvious and yet destroy the lives of solid entrepreneurs, eroding the value of some of the country’s best businesses and brands.

These killers are so insidious that they are most likely operating in you and me today. In fact, I know they are!

Recently I received a phone call from an entrepreneur that I’d done some really interesting work with a few years back. His business was mature when I met him.

It had been in operation for over 28 years and he had bought it from the original founder 17 years back. He got it for a song. It was a general wholesaler importing general hardware equipment and consumables as well as homeware.

When we met seven years back, George had done a lot to clean the business up. At the time of purchase, debtor’s days were averaging at 102, stock turn ratios were a mess and customer satisfaction was poor.

They bought from the business simply because of the ridiculously extended terms that were tolerated! We designed a turnaround plan and George immediately went to work. Stock that was older than six months was cleared for cash and that alone covered his purchase price plus some within the first year.

It took six months to get right but his debtors book came back to an acceptable 45 days and he shrunk his customer base to a healthier 1 200-odd from the 1 600-odd that had patronised the business before.

George had also refreshed his staff complement. The average age of staff was now 37 as he brought in fresh blood and reinvigorated the business’s energy. None of this happened without sleepless nights.

There were many moments when George believed that the present week of trading would be his last. The reason he got the business for a song was that he also took on the legacy bank debt that the founder had managed to accumulate to an impressive R3,8 million!

Related: Thriving in a Downturn

Build a competitive model

With the turnaround complete, we were now to take the business to its next level. As a general wholesaler, George was vulnerable.

The independent retailers organised buying groups, the chains organised procurement divisions and the Chinese direct trading capabilities with South Africa were making it easy for retailers to import direct.

What George wanted was the ability to build the business into an asset of value. This is a business that can be sold for a premium price or alternatively can relatively easily raise growth funding if required.

We needed to build a moat around George’s business. Something that would make it difficult for his customers and competitors to compete with him. His castle needed a defensive line around it that would safeguard its value.

After some consideration, the strategy of the business changed. George would migrate the business model from a general wholesaler to a branded distributor.

This was going to take some doing and the starting point was to work with what he had – good staff, good operating systems and reliable back office bookkeeping and accounting capability, extensive customers in the hardware and home-ware retail market.

The change in the business model took some time. Moving from a general wholesaler to a branded agent distributor creates a different emphasis on the business.

For example, it required a completely different marketing system to be built. Branded agent distributors have to influence the man on the street as well as their retail distribution channels. The man on the street needs to ask for the product and the channels need to promote the product.

Before, the man on the street was largely irrelevant to George since his retail chain took care of moving his no-name products off their shelves. The premium associated with branded products needed this new drive and marketing effort.

Within five years George had 11 big name brands that he represented. His marketing efforts were well organised and paying off. Business began to boom again. During this time, George negotiated exclusive supply into a retailer for a branded product that he represented in sub-Saharan Africa.

The retailer had 283 stores around South Africa. George’s business boomed. Cash was being generated in the business at a rate unseen before but getting the deal done, securing the supply from his principles abroad and bedding down the logistics and distribution to meet the service level agreements with this retailer had taken their toll on George.  Exhausted, George began for the first time to take the odd holiday.

Keep working on your business

In my recent meeting with George, I was saddened to see a dramatically different man. He looked faded and exhausted.

His former enthusiasm had been replaced by a cynicism and resentfulness towards arbitrary foes – the exchange rate, the schooling system, toll roads!  He was meeting with me in order to get some assistance to prepare the business for sale. It was clear that he was sick of it, sick of his customers, staff, suppliers and everything else.

We looked through his last three years of financial statements. The business had hit a turnover level of R79 million in its peak and today was trading at 24% below that high.

This is not necessarily a problem if the ratios remain the same since changes in turnover can be driven by many things. I looked on and saw that his gross profit had fallen by 6% and overheads increased by 16%. This was not good. What was especially disturbing was that George did not seem to care.

After an extensive consultation, it was clear to me that George had fallen prey to the four silent killers of entrepreneurs and the businesses that they build.



When securing a great long-term contract that spits cash into the business every month many entrepreneurs feel that they can take a breather. The everyday worrying slog of the business lifts.

The paranoia of remaining afloat fades. The tolerance for conflict and the fight to get the business to where you want it softens. It was exactly these conditions that led to the sellers offloading what was originally a good business to George for a song.

It was within a year of his big deal that George fell prey to the same condition.


We all suffer from entrepreneurial exhaustion. It’s vital that as an entrepreneur you find ways and means to constantly build your entrepreneurial psychic energy.

Often this is found through people, getting help from specific people who inspire you, thinking big and taking small steps to get to the big idea.

The cost of comfort is a fading interest that will result in you not dealing with the increasing number of little things that erode the businesses performance such as late payments, dragging compliance deadlines, late arrival from staff, softening pricing from suppliers and the like.


The exhaustion of entrepreneurship affects everyone. If you are introverted by nature, this killer will impact you even more.

By isolating yourself from your environment to find some reprieve from the hectic weeks that govern your business, life will only bite you in the back.

Related: Business Plans: A Remedy for Failure

If business is about people, you cannot afford to not be meeting people and activating a sensible networking calendar as a business development tool to prevent isolation from your industry, politics and the people influencing the direction of things to come that will impact you and your business.

Loneliness is bad enough without you having to amplify it!


There are many reasons for our inability to succeed in business. From uncertain government economic policy, red tape, compliancy pressures, weak staff capability and skills as a result of a shocking educational system, potholes and Nkandla amongst others.

There is a perverse satisfaction in being able to blame something else for our inability to move ahead and make it happen. The reality is that everyone is in the same boat. Languishing in blame only depletes the most precious commodity that we have.

Time. It can never be taken back. The remedy might well be to take a teaspoon of cement with honey and toughen up. A business is built through action, not ideas and building a business anywhere in the world is tough!

First warning

Silent killers are lurking in everyone’s business — which are yours?

Journey back to health

Small changes in strategy can result in massive improvements.

Pavlo Phitidis is the CEO of Aurik Business Incubator, an organisation that works with entrepreneurs to build their businesses into valuable assets. Pavlo is a regular commentator on entrepreneurship on 702 Talk Radio and 567 Cape Talk Radio. He can be contacted at

Business Survival

How To Have Your Store Run Smoothly Without You (So You Can Take A Well-deserved Break)

Below are some tips that can help ensure the smooth running of your store even when you’re not around, and let you take that break without the stress.

Higor Torchia




It can be hard for business owners to take time off from their retail stores – whether that’s because they’re too busy, need to be around to make decisions, or simply feel they can’t relax without knowing how the business is tracking. But taking a break can be incredibly important, if not sometimes necessary. And as we head into the busiest retail season of the year, taking a break now before the rush could be the best thing you do – for yourself and even for your business.

Below are some tips that can help ensure the smooth running of your store even when you’re not around, and let you take that break without the stress. 

1. Make the most of technology that lets you keep an eye on your store from anywhere

The beauty of living in this modern age is that there’s an abundance of tools that can help you run your store even when you’re away. To do this, cloud-based software is the way to go. Using a cloud-based solution to run your store means that you will no longer have everything housed on your computer server in one place. Instead, you can access files, sales and stock data, financials, business reports, customer and even employee data from anywhere, in real-time, and from any device provided you have an Internet connection.

The other beauty of cloud-technology is that it’s usually relatively inexpensive compared to more traditional systems. If you haven’t done so yet, look into some cloud-based software options, such as point-of-sale and inventory management, accounting and finance, customer management, and employee management and scheduling.

Related: 5 S-Words Make Your Store Site Pay For Itself

2. Develop a store manual

Create a manual that your staff can turn to when you’re not around. Document procedures, contact information, and anything else that will help your employees to know just what to do in your absence. Some of the sections you may want to include in the manual are: 

  • General store information – What do you stand for? Who are your target customers? Instil this information in your staff. The more they know (and love) your business, the easier it’ll be for them to make decisions in line with your company values. Include details on personnel conduct, pay and scheduling, store access, conditions of employment, store policies, etc.
  • Customer service – Have an entire section dedicated to taking care of customers. Include information on conduct, customer service standards, lost and found procedures, and dealing with difficult customers. Also, provide detailed instructions on how to handle theft and shoplifters.
  • Cashier procedures – Include information on the operation of your POS software, the types of payments you accept and how your loyalty program works.
  • Contact information – Take note of the tools you use in your store (computer, accounting software, analytics, cameras, etc.), and provide basic instructions on how to operate them. These tools likely come with their own manuals, so make sure that employees know where those documents are and how to contact the vendor if required. Include the contact details for the individuals or entities that your store deals with, including vendors, suppliers, business partners, contractors, etc. Also have a list of emergency contacts, such as the local police and fire department, as well as medical facilities in the area.

3. Appoint a second-in-command

Pick a second-in-command (or 2IC) to take charge of the store in your absence. This person should be someone you trust who knows the business.

It’s best to hire someone from the inside — ideally an individual who’s been in the business for a few years (this demonstrates loyalty) and has shown strong leadership skills or initiative.

Related: Why Launch A Member-Only E-commerce Store?

4. Empower your staff

Of course, the success of your store doesn’t depend on your 2IC alone, which is why it’s important to empower all your employees always do their best, even when you’re not around. This can be accomplished by giving them adequate training and by fostering an open environment that recognises the efforts of each team member. Encourage questions and be sure to give them specific as well as big picture answers so they know exactly how their actions affect the company.

It is important that you clearly define the roles of each staff member. Establish who’s in charge of what and require your employees to be accountable for their actions. Finally, believe in your employees and show them that you do. Trust you did your job right when you hired and trained them and that they’ll be fine even when you’re not there.

5. Do a test run

When should you start planning for your absence? That depends on the nature of your leave and how long you’ll be away. If you’re planning to be out of the office for a few days, then giving your staff a heads up a week or two before would be enough. But if you’re planning for maternity or paternity leave, then obviously your team needs to be notified months in advance.

Still worried? Implement a test run by consciously getting out of the staff’s way for a day or two. Work from home for a while or stay in your office instead of the sales floor and tell your 2IC to handle the store. Consider hiring secret shoppers who can put your staff’s skills to the test and have them report the findings, so you can figure out ways to improve. 

With Christmas and holiday season fast-approaching, now is a great time to start empowering your team so you can find the time for a well-deserved break.

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Business Survival

Stop Surviving And Start Thriving In Business

It will inform your operations, which will inform your human and asset capital and lastly, the financial investments you make.




To thrive – and not just survive – in business you need three basic building blocks: 1) attract more customers and clients; 2) who spend more; and 3) buy more often. But how do we make this happen in the tight, recessionary environment we find ourselves in South Africa?

Despite the tough economic conditions, businesses can still thrive. In fact, many small businesses have been found to thrive in difficult economic conditions and are known as counter-cyclical businesses.

So how do you turn the tide from surviving, to thriving? You need to start thinking creatively, making informed decisions and being agile in the business environment. Always start with your marketing strategy. It will inform your operations, which will inform your human and asset capital and lastly, the financial investments you make.

Related: Business Basics: The Four M’s Of A Successful Start-Up

Ansoff Growth Matrix

Business leaders continuously explore various growth strategies to retain and grow market share. One of most respected and often used is the Ansoff Growth Matrix. It was first published in the Harvard Business Review in 1957, written by strategist Igor Ansoff to help management focus on the options for business growth. Ansoff suggested that an effective strategy considers four growth areas, varying in risk. This strategic planning tool guides us to understand our current situation, contemplate strategic options and consider the associated risks.

  1. Market Penetration: Market penetration has the least risk of the four options. Here you are selling more of the same things to the same market. You know your product and market well. The question is, how can you defend your market share and sell more to your existing customer? You may consider special promotions or introduce a loyalty scheme.
  1. Product/ Service Development: Product and service development is slightly riskier as you introduce a new component into your existing market. The advantage is that you sell to a customer/ client that you know, and they trust you. Ask yourself how to grow your product and service portfolio? You may consider adding new services and products or modifying your existing offering.
  1. Market Development: With market development you target new customers and clients with your existing products and services. You sell more of the same things to a different market. You can consider new sales channels, online or direct sales. Do a proper market dissection to target different groups of people, considering different age groups, gender and demographics.
  1. Diversification: Diversification is very risky. Here you consider introducing a new, unproven product or service into an entirely new market that you may not fully understand. You may need new expertise, acquiring another business or venturing into another sector. The main benefit of diversification is that during difficult times only one component or element of the business may suffer.

Related: My Business Is Growing… What Now?

The fifth element: Passion 

In addition, I would add one more element critical to business growth: Passion. It is the single component most critical to business success and, combined with any one or combination of the four areas of the Ansoff Growth Matric, it can equip small business owners with all they need to thrive in their business environment. Passion determines your business success, so make sure you have it in heaps to reap the rewards of your hard work.

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Business Survival

6 Common Decision-Making Blunders That Could Kill Your Business

Among the logical errors nearly everybody makes is thinking only everybody else makes logical errors.

John Rampton




Humans are often very irrational. If you’ve ever explored behavioural economics or psychology, you may have found a host of examples demonstrating situations when we make objectively bad decisions.

Below are six of the largest decision-making blunders we all make. Avoiding them will dramatically improve your decision-making, your quality of life and success.

1. Sunk-cost fallacy

Of all the ones on this list, the sunk-cost fallacy is the most common. Many of the decisions we make are final or difficult to change. For example, let’s say you invest R1 000 in Facebook, and the price of the stock goes down to R600 the following day. The fact that you put in R1 000 initially is irrelevant to the situation at hand; you now have R600 worth of Facebook shares.

What this means is that once the decision is made and our cost is incurred, there’s no point thinking back. You already put in the time, money or other form of investment. Considering that in any future decision is illogical, despite how tempting it is. Instead, present yourself with the new options at hand — without considering the sunk cost.

Related: The 3 Dumbest Business Mistakes New Entrepreneurs Make Most Often

2. Narrow framing

Would you take this bet? You pay me R1 000 if a flipped coin lands on heads and I pay you R1 200 if it lands on tails. Most people would say no. We tend to be risk-averse, unwilling to risk something like R1 000, despite the reward being a bit greater.

Now, what if I offered you that bet, but I promised we would flip 100 coins? Each time, the loser pays up. Would you take it then?

Almost certainly, right? The chances that you lose money, overall, are extremely slim. This idea can be applied throughout life. When we’re in situations that will repeat themselves over time, we should take a step back and play a game of averages.

3. Confirmation bias

Another common one in the worlds of psychological and behavioural economy is confirmation bias. It hurts our ability to keep an open mind and shift our opinion. When we have a held belief, we typically look for information that confirms our opinion while ignoring data points that tell the opposite story.

For example, if I’m really excited about a new software product that I just integrated into my business, with ten of my employees as users, I might have made up my mind about the quality of the service before we put it to use. I would then be more likely to listen to the three employees who enjoy it, not the seven who don’t.

There’s almost always information that will validate our opinions, no matter how wrong they might be. That means we need to always look for conflicting evidence and, from there, make judgements based on more well-rounded information.

Related: 6 Rookie Investor Mistakes You Must Avoid For Profitable Investing

4. Emotionally driven decisions

When we’re angry or upset, we’re much worse decision-makers. When you have to make an important decision and happen to be in a bad mood, you should hold off. Instead, wait until you cool down and can think more clearly. It will remove the outside influences and let you think more rationally.

5. Ego depletion

This one makes intuitive sense, but it’s one of the most common ways to make bad decisions. The idea of ego depletion is that when we’re drained, physically or mentally, we’re less likely to think critically. Think about the times you’ve been exhausted after a long day of work. In those moments, you don’t want to have to think hard about anything. Instead, you want your brain to work automatically.

What that means is that when you’re tired and faced with challenging choices, you’ll rely more on your instinct or automatic processes as opposed to analysis and thought. That can be extremely problematic in situations that require effort.

6. Halo effect

The halo effect says that once we like somebody, we’re more likely to look for his or her positive characteristics and avoid the negative ones. This is similar to confirmation bias, but it’s oriented around people.

Related: 10 Stupid Mistakes Smart People Make

For example, let’s say I just hired someone named John, who was great during his interviews. Through his first few weeks, John does a few things well at work, but he also does many things poorly. The halo effect — brought on by his wonderful interview persona — could cause me to ignore his poor attributes and emphasise his good traits.

This can be detrimental to our ability to make judgements about others. We have to realise our biases toward certain people and eliminate them.

These are a handful of the many decision-making errors we’re all prone to. Although it’s challenging to scrutinise your preconceived notions, doing so is worthwhile. It gets easier over time and will, ultimately, make you a more effective decision-maker — personally and as a business owner.

This article was originally posted here on

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