How do you position your business within a customer problem, and not through product and service features?
Entrepreneurship has many attributes ascribed to it. Passion, creativity, interest in knowledge, adaptability, industriousness, and the list goes on. Over the years, we have developed an entrepreneurial assessment that looks at 14 attributes.
We use it for a number of purposes that can be roughly divided into two camps:
In service of the entrepreneur (your attributes; how they work for you and against you in your everyday life), and in service of building a business (the process of building a business into an asset of value requires particular support structures to achieve the end goal of a successful sale in three, five or even 15 years from today).
We build our business in the image of our personality, with all the attributes impacting on the end result. Being aware of them makes the difference between moving forward and remaining in one place, irrespective of how smart or hard you work. Being aware of them helps prevent self-doubt creeping in where awareness of an unproductive, personality-driven pattern of behaviour should be.
Separate your business from yourself
Andre has an interesting entrepreneurial profile. His attributes are weighted heavily in favour of interest in knowledge, innovation, adaptability and industriousness.
Backed by his technical skill set, these attributes fuel his desire to make his products better. And make more products. However, 16 years on, business growth eludes him.
His business seemed stuck in an annual turnover band of R18 million to R23 million. For the last seven years, the turnover bounced within this range. His furniture was well priced, well made, well designed and very competitive with many wonderful features that, as he explained in detail, set him apart from his competitors.
After further discussion, we agreed to work together to tackle this problem. The market opportunity in the furniture industry is in the billions. Doubling his turnover in two or three years should not be a hard task.
When I asked him why he did what he did, he spoke with excitement about his products. He was elated by the new CNC panel saw that he had recently acquired.
His meticulous nature had seen him break up his production process into neat, well-defined activities making up four business units of design, production, promotion and dispatch. This new investment would increase the efficiency of his operation by 13%, he proudly explained and showed me how the CNC machine would hopefully improve his sales performance.
I was doubtful about the acquisition and also struggled to see the link. He went on to explain that his sales staff could then take the multitude of briefs from clients and translate them quicker than his competitors into quotable, better priced designs. I continued to ask questions about the machine’s necessity.
Service, he said, better service builds trust and confidence in our ability to deliver, he told me with pleading eyes whilst he stood by the CNC machine, resting a hand lovingly on the control panel as if it were his star performer. I could see that Andre was not even that sure about his argument himself!
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Productive allocation of resources
We ran a business diagnostic on his operations. The results were not surprising. His business systems were heavily weighted in favour of the back-office activities of design and production capability. The front-office was very light in sales and marketing.
It was clear that Andre had built his business in the image of his personality, both consciously and unconsciously. He found his greatest meaning in design and production and his thirst for innovation, new product development, industriousness and conscientiousness had resulted in directing all his investment, time and energy into the part of the business that fed his personality attributes.
Immediately we knew where to look and went out to the market. He had a very exciting group of clients. Andre served corporates, big, medium and small business with office furniture. In some cases he secured work from the companies’ CEOs and designed and built furniture for their homes too.
He had a number of independent retailers on his books, some historical sales with a big brand discount retailer and had recently opened up business with a competing retailer group that served the middle market with furniture credit sales. Andre proudly told me how this left him with a well-diversified customer base to counter the risks of an uncertain economy.
Like Andre, many of us have to operate with limited resources. Directing these resources to give us the best result is one of the single biggest challenges we face as business owners. Andre’s ‘spray and pray’ selling strategy was tearing him, his staff and his business apart.
He could never build momentum in any one direction. His sales staff were all over the place and seldom was the same product sold more than three times. His design and machine repurpose costs were consuming the profit he was making and the business started and ended every year as it had started that year. There was no real progress being made.
One of the first tasks that I set for Andre was to segment his market. This required him to define the multitude of people and businesses that needed furniture.
Once this was done, we organised them into groups with common features. For example, businesses were broken up into corporates, big, medium, and small businesses and small-office-home-offices (SOHO). We further broke them up into regions and type. Some of the types were service businesses, manufacturing business and retail businesses.
Regions located the businesses — provinces and then proximity to Andre’s factory. We indulged ourselves further by organising these businesses into groups that included more features such as ‘care about design or don’t care about design’ and so on.
We landed up with 47 groupings all in all. The next step was to assess the sizes of the groups in market potential. Once done, we combined groups that had 80% similar features and settled on 15 groups of which eight were sizable groups in terms of market potential.
The fight began. Andre wanted to serve six of the eight and include three of the remaining seven since the work would be interesting. I locked the door of the meeting room. At 3am the next morning we had agreed on the single group Andre would focus on. It was to be the SOHO.
With the recession on hand, retrenchments likely and job growth slow, we believed that this would be a growing market. It was already sizable and Andre was getting 37% of current sales from this market. Full of enthusiasm, Andre started to create designs on his pad that he thought this market would love. We produced a ‘research questionnaire template’ for Andre to take to his current customers. It was designed to ask them what design features they wanted.
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Want to Grow Your Business? Just Let Go
Repositioning to achieve focus
What he came back with astounded him. The designs that he had played with three weeks before, after we agreed on the SOHO, were all ripped out of his file and torn up. Back at the drawing board, Andre created final designs that went well beyond furniture features.
They included the method of selling, now that he understood the problems of his SOHO clients. They incorporated annual sales calls to touch up the furniture at no additional cost, giving Andre a long-term relationship from his previous once off sales. It also gave him sight of which SOHO clients were growing; the leap from a SOHO to a medium-sized office for any of his clients was a small one. So too was the design capability that Andre offered and that his factory could deliver.
The designs were also exciting. They gave his clients versatility. A set of three tables could double up as a board room table as well as three separate workstations maximising the use of small spaces. The materials he used gave the furniture a very classy feel, something important to a SOHO entrepreneur who wants to lift his image for clients.
Three and a half years on from our first meeting, Andre’s business is approaching R49 million in annual turnover. He does one thing very well; design, produce, promote and deliver furniture suited to the SOHO market. He is now looking at the early stages of increasing his range to accommodate some SOHO clients moving into medium sized offices.
The lever to get Andre’s business to grow annual turnovers from R20 million to R50 million was largely one thing. He positioned his business to solve the problems of a well-defined customer group.
Have you considered the following when choosing your market segment:
- Separate your market into categories. Now give each category a % of your sales. Who is your biggest segment, and where is there room to grow?
- If you were to narrow your focus, which segment offers the biggest growth opportunity?
- Have you created a questionnaire for that segment asking what they want and need from you? You might be surprised by what they say.
- Based on the above questionnaire, does your product or service offering deliver on these needs?
- What can you change to meet those needs?
- What value adds can you offer that will make the lives of your clients easier
Taking Care Of Business
Do you want to grow your business in 2019? Bear these tips in mind.
SMEs are the lifeblood of the South African economy, accounting for approximately 29% of employment in the country and forming a critical pillar of the government’s 2030 National Development Plan. With funding scarce and the economy volatile, small businesses remain increasingly vulnerable to economic pressures, with many failing to last beyond the five-year mark.
Thanks to the abundance of new and affordable technology, bringing with it the potential for new industries and market gaps, there has never been a better time to conduct business without crippling costs. It is not all doom and gloom in the small business sector, despite findings in the 2018 SME Landscape Report that suggest that a meagre 6% of all start-ups have received government funding.
Do not be afraid to delegate
Many entrepreneurs are so passionate about their own undertakings that they are unable to simply let things go. Rather than empowering and enabling others to take responsibility, many Type A business leaders instead opt to do it all themselves – usually with disastrous consequences.
Learning to delegate is key to alleviating bottlenecking and freeing up capacity in your business, so make sure to utilise all your available resources if you want your enterprise to expand.
While billboards and TV ads are expensive, marketing a business can now be done quite cheaply, thanks to the abundance of relatively affordable digital channels. So while you might not be able to have your brand staring out at you from the pages of a glossy magazine just yet, digital channels like Facebook and Google now allow you to achieve the same audience reach for a fraction of the cost.
Offering the best service in town is one thing, but it is worth nothing if nobody knows about it. So make sure to pay close attention to your website and its search engine optimisation (SEO). By using the correct keywords and even putting a small investment into Google Adwords, you will ensure that people who are looking for what you offer are able to find you easily.
With over 50% of all web traffic in South Africa coming from mobile devices, businesses simply can’t afford not to take a mobile-first approach to business. If you are offering an online service, make sure it is optimised for a mobile experience and ensure that any communication touch-points – be they blogs, social media posts or online check-out pages – are designed with mobile in mind.
One of the key advantages SMEs have over their larger counterparts is their ability to be flexible. Without outdated systems and reams of red tape to wade through, small businesses are far better able to adapt to market conditions and revise their offerings based on consumer needs. So make sure to listen to your customers and be willing to accept that some of your great ideas simply are not feasible.
Your willingness to accept failures and move on, will ultimately be what gives you the edge over your competitors.
Plan your finances
Cashflow is king when it comes to entrepreneurship and many a micro enterprise has come undone thanks to their inability to manage it. As such, financial planning is a critical tool for any business, especially for those operating without significant investment capital. Understanding potential pitfalls and keeping tabs on your profit margins will help to ensure you keep your pricing realistic and enable you to avoid finding yourself in the red.
Operating in isolation can only get you so far, so it is important that you put yourself out there and make proactive attempts to connect with other like-minded businesses. By joining a business network or attending industry events, you will be able to arm yourself with useful contacts, handy insights and perhaps a few new clients in the process.
Remember that owning a business is like raising a child – it requires constant supervision, nurturing and care if it is to succeed to its utmost potential. So make sure to look after your business and one day it will end up looking after you.
MiWay is a licensed Short-term Insurer and Financial Services Provider (FSP. 33970).
How Taking Risks – And Failing – Can Lead To Business Success
Don’t let fear of failure stop you from taking the risks you need to, to carry your business forward. But as your business grows, you’ll have to re-evaluate what risks you can take.
Innovate, innovate, innovate. The war cry is so often repeated that it has become something of a bore. Yet, true innovation remains a rarity – and to our huge detriment. As South Africans, we seem to carry a deep shame associated with failure. Yet, facing the very real possibility of failure is the only arena in which a culture of innovation can take root.
The biggest business failure of my life was an investment into a software company that wrote a piece of software that was set to revolutionise the mobile landscape. It was going to be huge. It was going to take the world by storm. But unfortunately, we backed the wrong horse.
We developed the software for the Symbian platform because Nokia was way ahead of the pack. Nobody else even came close. But, given the fact that there’s a good chance you currently have an iPhone or Android device in your pocket right now, you know how that story ended. Nokia seemed untouchable, then almost collapsed. We lost a lot of money.
Get back up
But, we learnt valuable lessons from that. Of course, there’s the general lesson that everyone should take away from failure – to get up and try again. As General George Custer said, “It’s not how many times you get knocked down that count, it’s how many times you get back up.”
The other lesson was more specific to our business. In developing the software, we learnt a lot about different technology platforms and those lessons were invaluable as we took the next steps in Fedgroup. The same people who built that software helped in the initial stages of developing Azurite, which today is the backbone of our company’s entire operation.
Because we’d been involved so heavily in developing for mobility and the future, our minds were opened to what technology could do. It gave us the mindset to get where we are today.
Investing in education
It sounds like a terrible cliché, but there’s value in failure. Take the lessons you learn in failure – the genuine lessons – because even if you lose money, consider it school fees, and cheap at the price. Arguably, our failure was the “fees payable” that bought us our competitive edge.
In the United States, they are less afraid of failure. They wear their failures like a badge of honour. Elon Musk, for example, misses his targets, but he’s always pushing the boundaries. Recent (questionable) antics aside, Musk’s risk-taking drives innovation.
If people in an organisation are terrified of failure, they don’t try new things, they don’t innovate, they don’t move forward and they certainly don’t disrupt. Even though now, as the CEO of a large financial services company, I can’t afford to bet the whole business on a risky proposition, I still encourage risk-taking and a spirit of adventure – within reason.
Reckless vs reason
This is not to say that we can – or should – be reckless. There should be accountability, and the reasons for making the mistake should make sense. And, you shouldn’t make the same mistake twice. But if you take risks within those parameters, you’ve got a better chance of making a real difference in your organisation.
We have recently launched an app that is fairly disruptive, and as far as we can tell, the first of its kind in the world. Before we launched, we put our personal money behind the idea to test it. We had done our homework, but it was still a risk. If it hadn’t worked, we would have lost our personal money, but because we took that risk and proved it worked, we were able to launch it safely to the public one year later.
Parameters, limitations, and the ethics of risk
When you’re an entrepreneur, when you’re just starting out, you can bet the farm. You can take risks on new ventures and potentially build something out of nothing.
Once you’re an established organisation with staff and clients – and in our case, clients who have invested their pension with us – the scope of risk takes on a new set of parameters. When you are dealing with a client’s security, it is simply not acceptable to expose them to additional avoidable risk.
However, because risk taking is where the magic of innovation happens, encouraging a framework where creativity, experimentation, and risk is possible within your organisation, is critical. One of the ways to encourage this is to examine your attitude towards failure. Build an environment where failure is not taboo, but presents a strong learning opportunity, and ring fence those areas within the organisation which absolutely cannot be jeopardised. This is risk in a helmet – you might get a roasty, but you could win the race.
Proven Strategies To Grow Your Start-up On A Scale Following These Guidelines
The following strategies can help you make the start-up scalable and grow it to accommodate a larger demand.
Scalability and flexibility are important properties of any business. Let’s say you’ve managed to build a successful start-up. It’s profitable and promising, but you want it to become better. The scalability of a business involves its ability to adapt for bigger workloads without losing revenue.
Even if your business is currently small and doesn’t generate huge profits, scalability can help it turn into a large enterprise. The wrong approach to developing a start-up can deprive it of an opportunity to become better.
The following strategies can help you make the start-up scalable and grow it to accommodate a larger demand.
Scaling Vs Growth
Many companies make a mistake of thinking that scaling and growing a company is the same thing. In fact, growth involves increasing revenue or the size of the company (the number of employees, offices, clients).
Constant growth requires numerous resources and may not always lead to a proportional revenue increase. In many cases, the growing number of services or products needed to boost revenue involves high costs related to the growing number of employees and equipment.
On the other hand, scaling allows you to increase the revenue without the costs involved in growth. You can handle the extra load and boost your profits while keeping the costs to a minimum.
At some point, a successful start-up needs to make a choice between growing at a constant rate and switching to the scaling business model.
Even though a single clear method for scaling your business doesn’t exist, there are some guidelines you can follow.
1. Get Ready To Be Patient
Scaling is not a quick process so you have to be patient. The overnight success story is not about you. In fact, scaling too fast usually results in unfortunate failure.
Allow yourself to spend the time to understand who your ideal customers are and how you can solve their problems in a better manner. Make sure you understand how to be confident about the new volume of your work.
Do research to find out how you can find the right resources to achieve scaling rather than growth.
2. Choose The Right Software
The lack of time and team members is a common problem for a startup looking for scaling methods. That’s why they need to try and automate as many processes as possible. This can be done with the assistance of the right software.
- Trello – to simplify in-office and remote teamwork
- MailChimp – to improve marketing campaigns
- Brand24 – to get insights about your business
- Survicate – to collect customers’ feedback
- Voiptime – to increase connectivity.
3. Take Advantage of Outsourcing
Since you are hoping to limit the expenses while growing the revenue, you have to find ways to spend the revenue in the right manner. The biggest mistake made by business owners who think they are choosing scaling is hiring a big team. By doing so, they turn scaling into growing.
Your best bet to avoid hiring a large team and paying large salaries while achieving your plans is to outsource. Using your resources wisely involves finding freelancers and remote employees who are willing to work for a lower pay on a one-time (or several) contract bases.
For example, you don’t need a lawyer or a computer specialist sitting in the office all day long. Why should you pay them a monthly salary?
4. Don’t Do It Alone
Even though certain team minimisation is necessary to improve your scaling efforts, don’t try to handle everything on your own. It’s important to have at least one person you can rely on to manage the business-related problems.
Scaling your start-up is possible as soon as you understand what scaling is in detail. You need to be careful not to start growing your business instead of scaling it in the process. Once you have all the fundamentals figured, resources managed, and the right people in place, you are ready to start.
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