It’s often said that success in business comes down to being ‘at the right place at the right time’. There is, almost always, an element of luck involved when a company experiences exceptional traction early on.
But luck will only get you so far. As McDonald’s founder Ray Kroc famously said: “The two most important requirements for major success are, first, being in the right place at the right time, and second, doing something about it.”
And the longer a company is around, the less of a factor luck becomes. A bit of luck might get you to the top fairly quickly, but it won’t keep you there for thirty, forty or fifty years.
Surviving in business is hard, and it’s only getting harder. Thanks to constant innovation (and disruption) and a highly competitive global marketplace, companies are disappearing at an alarming rate.
It was widely reported a few years ago that, based on research from Yale professor Richard Foster, the average lifespan of a company listed on the S&P 500 in the United States has decreased by an astonishing 50 years. In the 1920s, the average lifespan of a company was 67 years. Today? A mere 15 years.
The secret to (long-term) success
But it’s not all bad news, of course. There are plenty of examples of companies that have managed to stay the course for years and years. The vast majority of the world’s most recognisable brands have been around for decades. They have survived tough economic times, disruption, increased competition and changing demands from consumers.
How have they done it?
Here’s some great advice from great brands. Read on to discover how they have managed to stay relevant for so long.
Turn challenges into opportunities
Jane Wurwand, founder of Dermalogica, believes in looking at challenges and asking yourself how you can turn them into opportunities.
In the early days, for example, Dermalogica was trying to talk about skincare and health while the rest of industry was obsessed with beauty. A lot of people didn’t understand why the brand was taking such a ‘medical’ approach to skin products. Instead of succumbing to the peer pressure, though, Wurwand and husband Raymond were committed to their unique approach.
“The fact that the industry didn’t understand our approach was a challenge, sure, but we also saw it as an opportunity to carve out a very specific niche for ourselves,” says Wurwand. “We were doing something no one else was doing.”
Another challenge was the rise of the Internet. Dermalogica had relied on a sales model based on real-world relationships. The company embraced the challenge, however, and now runs a successful online store, boasting a vibrant online community. By embracing the challenge instead of ignoring it, Dermalogica was able to grow and flourish in a digital world.
“You have to look at a challenge and try to see how it could become an opportunity. That’s the true entrepreneurial mindset,” says Wurwand.
Customer first, always
Spitz is a well-known brand, and its elegant shoe stores can be seen in just about every high-end mall in South Africa. Today, it is owned by the JSE-listed AVI, but it started out as a simple family business.
Spitz was started by Anthony and David Spitz in 1968, right in the centre of Johannesburg’s business district. The brothers eventually sold the store and Anthony Spitz moved to London in 1989, but he rejoined the company in 2000 as a non-executive director. He is still there today.
When asked why he believes Spitz has grown so successfully, his answer is simple: “Because it is still run like a family business. We used to know and care about our customers. We valued them, and did whatever we could to keep their business. The same is true today of the Spitz stores. The customer still comes first.”
According to Spitz, this is the secret to long-term success. Once you stop caring about your customers, your business goes into decline.
“Companies spend millions to acquire customers, and then throw all that money away with bad customer service. A marketing campaign might bring someone through your door the first time, but it’s customer service that’ll keep them coming back. Care about your customer, and your business will flourish.”
Innovate your own way
Consider for a moment the forces of disruption currently impacting a manufacturer of high-end luxury goods
Gadgets such as the Apple Watch and Fitbit are making people swop their flashy watches for something that can count their steps, track their sleep and monitor their heart rate. Laptops and tablets mean that most business people need a stylus instead of a pen. And then there’s the fact that simple yet elegant luxury items are no longer good enough. Everything needs to be ‘smart’ and ‘connected’ these days.
So where does that leave a company like Montblanc?
Many companies in the same position would probably try to jump on the bandwagon — try to push out their own line of smart items. But emulating competitors and chasing trends rarely leads to long-term success. So Montblanc has done something different. It hasn’t ignored modern trends, but it hasn’t let them dilute its essence either.
When Olivier Laurian, Montblanc’s international director of business development, visited South Africa, he explained how the company is keeping up with the times.
“A Montblanc pen or watch is a timeless piece — not something that will become obsolete in a year or two. So in order to balance modern demands with our classic approach, we provide alternative solutions to customers’ needs. We still sell a classic watch, but we put the modern tracking technology in the strap. So it remains something that can be passed on for generations. Similarly, we have a pen with a tip that can be swopped out to turn it into a stylus — modern and functional, yet timeless. These are all modern items that stay true to the heritage of the brand.”
Take risks, but stay consistent
Innovation and consistency can seem like opposites, but great companies manage to take risks and innovate, while at the same time providing customers with a consistent and predictable experience.
If you’ve ever had a Big Mac in Europe or the United States, you’ll know that it tastes exactly like it does in Joburg or Cape Town. And that consistency keeps customers coming back.
At the same time, though, McDonald’s has been a great innovator. Over the years, it has greatly modified both its menu and its services. In the 1970s, the company created the drive-thru. Today, it delivers food. Its menu has grown massively, and McDonald’s now even sells breakfast and premium coffee.
The key to success when it comes to balancing these opposing forces is knowing where you can afford to take risks, and where you can’t.
Ray Kroc expected the following from every franchise: “Consistent restaurant operations, procedures, service, quality and cleanliness.” But when it came to the menu, Kroc allowed franchisees to experiment. The Happy Meal, Hot Apple Pie, Egg McMuffin and McFlurry were all created by franchisees. Even the Big Mac was created by a franchisee.
It all comes down to knowing where you can take chances, and where you can’t. Coca-Cola has changed the design of its bottles and cans, it has even added Coke Zero and Coke Life, but it’s only tried to change the formula of Classic Coke once. If it’s not broken, don’t fix it.
Be obsessed with the consumer
We live in an era of big data in which everyone is always telling you to crunch the numbers and look at the big picture. This is important, of course, but it brings with it a certain danger: If you’re not careful, you can lose sight of the consumer at the individual level, especially when your business scales quickly and real customers are replaced by dots on a chart.
According to Charl Bassil, marketing director for Pernod Ricard South Africa, you need to be obsessed with the individual consumer and understand what he or she expects of you, regardless of how large your organisation is.
“Consumers are not just stats on a page that need to be manipulated,” says Bassil. “For us it’s incredibly important to not only know consumers — understand that they’re real people with real needs — but also to have genuine empathy for them.”
This isn’t only the ethical and socially responsible thing to do, it also makes good business sense.
“By understanding and having empathy for consumers, we believe that our business will grow and increase its market share,” says Bassil.
“If you add real value to consumers’ lives, more and more of them will migrate to your brand, which means you will benefit commercially. Selling consumer products has to be a mutually beneficial relationship. We can’t just flog stuff. In the modern business environment, you need to understand consumers and give them what they need. It’s the only way to survive long-term.”
Always be humble
Humility is something that large and fast-growing companies often lack. When everything keeps going your way, you start thinking that you can’t lose. But even giants fall… or at least stumble, on occasion.
Starbucks, which opened its first stores in South Africa in 2016, is a good example of a company that, despite exceptional growth, has stayed humble.
Starbucks, like McDonald’s, is all about consistency, but it also knows that you can’t just replicate the exact same experience everywhere. You need to be sensitive to different cultures and countries.
Visit the Starbucks store in Rosebank to see how the company incorporated local culture into the design of the shop. Artwork in the store includes woven leather ceiling panels that pay homage to the South African tradition of basket weaving and a 3D recreation of the famous Starbucks Siren in wood.
Related: Taste Holdings: Carlo Gonzaga
“This store will not only offer amazing coffee and world-class customer service, it is a representation of our commitment to South Africa through its localised design,” said Carlo Gonzaga, CEO of Taste Holdings (Taste Holdings is Starbuck’s official partner in South Africa).
“We have taken inspiration from rich local colour palettes and designs, with materials and artworks produced by local artisans. It signifies the start of our coffee journey in South Africa.”
In addition to opening its first store in South Africa, Starbucks will also be entering another new market soon: Italy.
Having been inspired by the coffee shops of Italy in the first place, the company is acutely aware of the fact that it can’t barge in without a lot of respect. Selling an Italian experience to the Italians is risky, which is why Starbucks is only going there now, decades after it first started operating.
“Starbucks history is directly linked to the way the Italians created and executed the perfect shot of espresso. Everything that we’ve done sits on the foundation of those wonderful experiences that many of us have had in Italy, and we’ve aspired to be a respectful steward of that legacy for 45 years,” says Starbucks CEO Howard Schultz.
“Now we’re going to try, with great humility and respect, to share what we’ve been doing and what we’ve learnt through our first retail presence in Italy.”
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.
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.
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.
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.
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.
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.
- 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.
- 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.
- 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.
- 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.
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.
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.
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.
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 Entrepreneur.com.
Start-up Advice1 week ago
6 Fundamental Steps To Consider Before Venturing Into The South African Cannabis Industry
Business Landscape1 week ago
How Algorithmic Forecasting Can Improve Business Efficiency In Challenging Economic Times
Business Ideas Directory1 week ago
300 Business Ideas To Inspire You Into Entrepreneurship
Start-up Advice1 week ago
Outdoor Versus Indoor: How Different Conditions Will Impact Your Budding Marijuana Business
Women Entrepreneur Successes2 days ago
How A Serious Car Accident Led Founder Relebohile Moeng To Starting Afri-Berry
Lessons Learnt4 days ago
(Slideshow) Top Advice From Local Entrepreneurs That Will Change Your Business In 2019
Start-up Advice1 week ago
4 Things Nobody Tells You About Entrepreneurship
Company Posts1 week ago
Success Fuelled By Partnership