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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 Embrace An Exponential Mindset For Your Business

In the age of exponential technologies, it’s a risk not to take a risk.

Mic Mann




Think global and exponential

If you’re an entrepreneur trying to establish a successful business, it’ll be dead before it even takes off, if you don’t build it for the future. You have to think three to five years ahead, so when it launches, it’s still relevant.

Think like former Canadian pro ice hockey player Wayne Gretzky, who said: “I skate to where the puck is going to be, not where it has been.” And these days it’s easier for entrepreneurs to predict the future thanks to technology and data insights.

Consider what Singularity University co-founder Ray Kurzweil calls The Law of Accelerating Returns. He says the only thing that’s constant is change and that change itself is accelerating exponentially. As per Moore’s Law, information-enabled industries are doubling their performance and halving their price every 18 months, according to the price-performance ratio. The field of biotechnology has managed to surpass that.

Related: 5 Mindset Changes You Must Make When Going From Employee To Entrepreneur

There’s no time to slow down, your business has to constantly evolve, and you have to keep asking “what’s next”. Encourage experimentation and innovation in your company. Innovation focuses on incrementally improving your already existing products and services, while experimentation allows for fresh outlooks and breakthrough strategies that leapfrog old ways.

We should reprogramme our linear mindset into an exponential one. Don’t aim to grow your business by 10 per cent year-on-year, but rather 10 times. The first thing I learned at Singularity University is the potential of exponential growth. If you take 30 linear steps, you only move 30 places, but if you move 30 exponential steps your place doubles with each step and by the 30th step, you’ve moved over a billion places.

We’ve seen this happen with unicorns – not the magical creatures, but start-up companies that are valued at over $1 billion within their first year – like Slack (cloud-based team collaboration tools and services) and Square Inc. (a mobile payment company). It once took around 20 years for American companies to reach the billion-dollar valuation mark, now it may take less than a year.

In the early stages – until your third step – your progress may seem linear. Many exponentially-geared companies give up at this point – just as their growth rate is about to explode. Persevere!

A few decades ago it was unthinkable for an individual or start-up to disrupt entire industries. Start thinking globally, not locally. Use staff-on-demand and crowd souring to propel your business ahead of the competition. It’s unlikely that you have the world’s smartest minds working for you, however with the power of the crowd, you just might.

If you’re struggling to find a solution, turn the challenge into a game and offer prize money. You’ll have thousands of people attempting to solve your problem, but will only pay for the best solution. Kaggle is a platform for predictive modelling and analytics competitions. It lets statisticians and data miners compete to produce the best models for predicting and describing data. Mining company Gold Corp placed its geological data online and offered money to anyone who could locate gold at their Canadian mine. Four of the five winning entries struck gold. And in 2011 it took a team of gamers 10 days to solve an enzyme riddle that could hold the key to curing AIDS.

The six Ds of tech

As companies become information-enabled they should internalise what Singularity University co-founder Peter Diamandis calls the six-step growth cycle of digital technologies. These Six Ds of Tech Disruption are digitisation, deception, disruption, demonetisation, dematerialisation, and democratisation.

The first step is digitisation. Once something enters the digital realm it gains the potential for exponential growth. Think of the radio and CDs. You no longer need either, instead you can stream online, listen via YouTube or download music. After digitisation, growth appears slow, even deceptive. Sadly that’s when many companies opt out. Be patient!

Related: How To Build The Right Mindset For Start-up Success

No one imagined Kodak would disappear after a century. Kodak thought they were in the business of printing photographs, while they were in the business of memories. Think about the need your business solves. Kodak invented the digital camera, but was too scared to disrupt its own industry. It didn’t realise that people were no longer taking photographs in the same way, so their competitors disrupted the industry instead.

Today, the camera has become part of the smartphone and photographs are predominantly shared via social media. Instagram epitomises the next step in the equation: demonetisation. With time technology becomes cheaper and even free. Instead of printing photographs, many people instantly share them on a free smartphone app like Instagram.

Next comes dematerialisation. The radio, camera, video recorder, GPS, calculator and calendar are disappearing from the physical world as they’re being built into the smartphone. The wallet will dematerialise next with the advent of online transactions and cryptocurrencies.

Finally, democratisation happens when government, corporates and the wealthy no longer hold control and masses of people have access. Just think, the average South African with a smartphone has access to much more information than the president of the United States of America had 20 years ago.

In the age of exponential technologies, it’s a risk not to take a risk.

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Business Survival

Why, When You Fail, You Should ‘Fail Forward’

So, you’ve fallen on your face? Consider that you’re walking in the footsteps of some ‘famous failures,’ like Steve Jobs, Oprah Winfrey and Stephen King.



Arianna Huffington

5 Inspiring stories to keep in mind

1000 times he failed

Teachers described him as “too stupid to learn anything.” He got fired from two jobs because he was “non-productive.”

Then he tried inventing something completely new. What’s even crazier is that he tried 1 000 times, unsuccessfully. When a reporter asked him how it felt to fail 1 000 times, the story goes, he replied, “I didn’t fail 1 000 times. “[The invention] was an invention with 1 000 steps.”

Through pure determination, Thomas Edison – initially a failure – made the world a brighter place to live in. If such good things come from success, then why do we choose to always look at the brighter days and completely disown the tough times?

Here are five more inspiring stories to keep in mind, should you ever feel that you’re the biggest failure.

The woman whose book got rejected 36 times

Arianna Huffington

Arianna Huffington

You’d think that once one book you’ve written becomes a bestseller, publishing another one would be a walk in the park. But it’s not that easy. At least not for Arianna Huffington.

Having produced that first bestseller, The Female Woman, when she was only 23,, Huffington tried to pitch her second book, but none of the 36 publishers she approached said yes. Still, she didn’t give up.

And that’s just one of a couple of failures from The Huffington Post’s co-founder. She has been dropped from hosting a BBC show, garnered 0.55 percent of the vote (when she ran for governor of California) and been unsuccessful when she called for then-President Bill Clinton’s resignation through her website.

But now The Huffington Post gets millions of visitors every month; she’s had a successful book career; and, if it helps, she’s very rich. Clearly, “failure is a stepping stone to success.”

Related: How Failing Fast was Nomanini’s Ticket to Creative Innovation

The woman who was “unfit for television”

Oprah Winfrey

Oprah Winfrey

Oprah Winfrey is worth more than $3 billion. But it hasn’t always been like that. And, considering that a Baltimore TV producer called her “unfit for television” right before he fired her, it’s telling that the main source of Oprah’s success was a TV show that ran for more than 20 seasons.

Oprah also tried to get into the movie business with the movie Beloved. It lost to Bride of Chucky in terms of revenue and consequently lost the $80 million invested in it. Oprah has said this failure sent her into a state of depression.

But then, in 2013, she got back onto the horse (speaking cinematically) with The Butler.

See? Even when you make it, you’re still at risk of failure. Henry Ford, William Crapo Durant and Walt Disney (among so many others) all went bankrupt after they’d already made it big. But each one sprang back in his own way.

The man who was fired from the company he’d founded

Steve Jobs

Steve Jobs

Not all of Apple’s products have received mass acclaim. More specifically, not all of the Apple products launched by Steve Jobs have been successful.

One such failuret was the Lisa computer. This was supposed to be a desktop computer targeted at personal business users. For a purchase price of $10,000 (about $24,000 today) consumers could buy the first desktop that would allow them to use a mouse to work with a 5MHz processor and up to 1MB RAM. The Lisa sounded like a magnificent idea, at least at the time.

However, the pricey computer sold poorly, and then-CEO John Scully, someone Jobs had chosen for that position a few years earlier (there are so many lessons in this story), helped remove Jobs from the Macintosh division in 1985.

So Jobs left Apple. Then he founded NeXT, and failed again, but sold the software division of NeXT to Apple in 1997. Then he returned and became CEO in 2000, and this time he was determined to make Apple something special. He succeeded.

Related: Why Balls to the Walls Could Mean Failing Fast

The man who almost gave up after 30 rejections

Stephen King

Stephen King

Stephen King was just selling short stories and teaching English when he had the idea to write Carrie. However, despite the $2,500 advance he received for the novel, he decided to give up on the book after 30 rejections.

But his wife wasn’t going to let him do that. She urged him on, and he finally agreed to submit the manuscript again.

Carrie is one of King’s bestsellers and went on to become two film adaptations, one of which won the lead actress Sissy Spacek an Oscar.

The man who quit – just before striking gold


Talk about hitting a gold mine

One last story comes from Napoleon Hill’s book, Think and Grow Rich. In it, the author writes of an interview with a millionaire named R.U. Darby who in turn described an uncle of his who, having heard of the riches that came from finding gold, set out to do just that. After weeks of commitment, this miner finally spotted a vein of shining ore. He raised the money for the necessary machinery and went ahead and he started shipping the gold. However, before long, he’d lost the vein of the gold ore.

Related: How Tebogo Ditshego Transformed a Failing Business and Tripled his Revenue

He tried to find it again and was unsuccessful. Then his workers quit and sold the machinery to a junk man. The junk man called in an engineer to inspect why the project had failed, and it was determined that the vein was just 3 feet (three) away from where the Darbys had left off.

The lesson? Before you stop trying, try again. If not for yourself, then for other people. What would the world be like without Thomas Edison’s invention? How about Alexander Graham Bell? Use failure as a step to elevate you because it’s by learning to accept failure that we can see great success.

This article was originally posted here on

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Business Survival

How To Recession-Proof Your Business

South Africa is in a technical recession. Here’s how to navigate the turbulent times ahead.




For the lay-man like myself, it’s important to understand that a technical recession is an economic term that describes two consecutive quarters of negative growth in an economy. For South Africa, gross domestic product (GDP) declined 0,7% during the first quarter of 2017 after contracting by 0,3% in the fourth quarter of 2016.

Why is this a big deal? Because the economic outlook, even without the technical recession, was bleak. Ratings agencies are losing confidence in South Africa. S&P downgraded the country to junk status earlier this year, followed by Moodys, which revised South Africa down a notch.

Related: Can Your Business Survive A Recession?

How organisations respond to recessions

There are a number of knee-jerk reactions to a recession as a direct result of decreasing revenues and profits. The most relevant to SMEs are:

  • Cutting R&D spending. This means no new product lines, and no incremental innovation expenditure unless it returns direct value to the business.
  • People get fired. In a time where underperformance has a double impact on the business, people that aren’t performing are performance-managed out the door.
  • Market shares shrink. This is often due to reduced R&D spends.
  • Processes are evaluated. Companies start looking for efficiencies that should have already been in place.

Outlook and opportunities for SMEs

For SMEs, sales and product planning in a recession is key and must align to the way big business is responding to the recession.

Fundraising for capital expenditure is more expensive, but not impossible. It may be valuable to invest ahead of the curve to capture the emergent big businesses during this period and therefore external investment may make sense.

In an increasingly collaborative economy, SMEs should look to each other for partnerships and complementary projects that cost little to assemble, but amount to great value for a big business.

Survival of the nimblest

Cut down

SMEs have the ability to be nimble and move quickly to change organisational structures and deliver on just-in-time value. This can be hamstrung by unpredictable fluctuating expenses like cell phone contracts that may vary in cost in an unpredictable way from month to month. The fewer of these costs on your books, the better.

Related: How Renay & Russell Tandy Have Survived 2 Recessions And Built A Successful Agency

Sell harder

The term ‘always be closing’ is a famous sales mantra, it’s also applicable in a recessionary context. First, because you don’t know what they don’t know and unless you tell them — who will? Second, the feedback loop of understanding the concerns and actions from your customer or client can only be understood through interaction.

Position smarter

Is it clear that you are the best provider for the job that needs to be done? If not, it is important to build a stakeholder strategy that puts your business in front of the key procurement and strategy custodians. This may be a great opportunity to exhibit demos, case studies and showcase the efficiency that you offer.

Focus on value

I can’t over-state this. Value, value, value. It goes without saying that one of the key reasons anyone would consider an alternative supplier is because of the specific problem they solve, so this should be your approach in reinforcing the value you bring to the table. Repetition builds memory structure.

One recession doesn’t fit all

It’s important to understand that for SMEs a recession can have an expansionary effect in the same way the lipstick effect applies to luxury goods and services.

The lipstick effect is the theory that when facing an economic crisis, consumers will be more willing to buy less costly luxury goods. Instead of buying expensive fur coats, for example, people will buy expensive lipstick.

A series of psychology experiments have confirmed for the first time that while tougher economic times decrease desire for most items, they also reliably increase women’s yearning for products that boost their attractiveness.

Parting shot

So, for SMEs, the formula is simple — don’t panic, analyse your customer value chain and position your solution accordingly and then sell, sell, sell.

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