Do any of these statements apply to you?
- You’re putting more and more energy and time into your business but not seeing the proportional increase in output from your efforts.
- You haven’t done any planning, training or systems development in your business in the past three months.
- The thought of bringing in new employees or part-time workers to help deal with an increased workload seems like more effort than it’s worth.
- Your business is almost totally dependent on the effort, ability and tacit knowledge of a few people. If any or all of these people were to leave you would be in serious trouble.
- If you won a dream holiday that you had to take in the next month, you would seriously consider not going for fear that your business would not survive without you being there.
The more of these statements that you identify with, the higher your chance of falling prey to the ‘sucked in syndrome’.
The mind-set for avoiding the ‘sucked in syndrome’ – or for getting out of it – is very different from the mind-set for solving problems in the business development process.
Up to this point, the natural and fruitful way to solve problems was to work hard, to put in more hours, and to do more in the business.
The mind-set for avoiding or getting out of the sucked in syndrome is to spend more time working on the business and to spend less time working in the business.
Working in your business means operating like an employee, doing the day-to-day tasks that are required to keep the business running. Working on your business means creating your business as something separate from you that is self-sustaining without your input.
When working on the business you establish the direction for the company and develop the systems and processes so that the business runs smoothly even if you are not there.
You train and empower others to do the work in the business. Michael Gerber, the best-selling author of the book The E Myth Revisited, suggests that the most constructive way to frame the concept of working on your business is to: “Pretend that the business you own… is the prototype for 5 000 more just like it… In other words pretend that you are going to franchise your business.”
The franchise mind-set
Adopting a franchise mind-set – pretending that you are going to franchise your business – is one of the most constructive pieces of business wisdom I have ever come across.
A franchise (Nando’s, McDonald’s, Mugg & Bean) is a business format that is replicated over and over again.
The founder of the franchise creates a system that delivers a product within very particular parameters (quality, taste, experience etc) at multiple locations across the globe. To do that, the creator of the franchise needs to:
- Understand exactly what value the business should deliver to the customer
- Create a set of processes that can be operated by people with the lowest possible level of skill
- Capture all processes and practices of the operation in an operations manual
- Provide training and development to new employees so that they learn the system
- Be deliberate about the culture they wish to create within the organisation
- Specify how the brand is to remain consistent across locations.
Although, on the surface, it may seem simple to adopt the franchise mind-set, it’s difficult to implement effectively. But if done properly it can have a massive impact on SMEs and lead to real growth, and building a business that makes more profits, has a higher cash flow, and can one day be sold. It allows you to step away from your business and have a better work life balance while all of this is happening.
Focus areas for adopting a franchise mind-set
If you were going to start franchising your business in the next few months, there would be five aspects of the operation that you would need to focus on intensely to get it to the point where it could be replicated multiple times over.
Even though you may have no intention of ever franchising your business, by focusing on these elements of operation, you will be creating a business which is independent of you and one which has value even if you’re not involved.
1. Planning and goal setting
If you were going to replicate your business many times over, you would need to be clear on what you expect each operation to achieve in both the short-term and the long-term.
As a business owner it’s easy to become so busy just trying to get through the day that you lose sight of where the business should be heading in the future.
Goals and plans drive behaviour, but as the leader of an organisation becomes more busy it’s easy for them to stop doing what’s important (setting and monitoring goals) and to only focus on what’s urgent (getting orders out, dealing with complaints etc).
When this happens, everyone in the firm loses direction and focus. They become less efficient in daily tasks and the organisation gets caught in a downward spiral of expending wasteful energy.
Take Action: To assess your focus on planning and goal setting, consider these questions:
- Do you have goals for the next 90 days, one year, three years and five years?
- Do your partners and employees know what those goals are?
- Do you have a plan in place to achieve each of those goals?
- Do you have measures and tools to regularly assess your process in relation to your plan and your goals?
2. Systems and processes
In the very early phases of a business development process, when only one person is responsible for a task, they can over time figure out the best way of performing it.
They learn through experimentation and slowly become an expert at what they do. A problem arises when that person leaves or wants to go on holiday, or when they are the business owner and have more pressing issues to deal with, or when more people are hired to do that same job but need to acquire the knowledge and skills.
There comes a point in a business’s life where the processes that have been developed over time need to be captured and documented. This entails creating an operations manual.
If you were to franchise your business you would need to pass on a manual describing all the major processes and systems in the business to the franchisee. Developing such a manual forces one to carefully consider whether all elements of a process add value and to identify the best person to carry out such a process.
Take Action: In adopting a franchise mindset in your business, consider these questions:
- Do you have an operations manual describing the major systems and processes?
- Have you reviewed those processes with the people carrying them out to look for inefficiencies and redundancies?
- Have you considered whether an appropriately skilled person is carrying out each of the processes in the business?
In most cases you should aim to have the person with the lowest level of skill necessary carry out a task. If people are too skilled you are likely to incur excess cost and over-skilled people will get bored and frustrated.
Related: How to Build a Business to Sell
3. Training and development
One of the fundamental mechanisms used to empower others is training and development. A clear sign that a business is falling prey to the sucked in syndrome is when none (or very few) of the people in the business have been on any kind of training or development activity in the past six months.
People in a business are either growing or they are becoming stagnant and unproductive. Training and development programmes are one way to keep them engaged and growing.
If you were going to franchise your business, you would need to spend a significant amount of time training other people. This is one of the critical tasks for a business owner of an expanding business.
Whether you are conducting the training or overseeing the process through which others are trained and developed, to adopt a franchise mindset, you need to take responsibility and ownership of the process.
Take Action: To assess the effectiveness of your business in this domain, consider the following questions:
- Have all your employees been on some kind of training activity in the past year? Who has not been exposed to any training and development? Why?
- Do you have informal activities within the organisation that encourage people to develop and grow, for example, brown bag lunch discussions, book clubs, mentoring arrangements, reading and discussing Entrepreneur magazine articles?
- Have you been on any kind of training activity in the past year?
- Have you spent any time passing on knowledge and training to others in the past 12 months? Could you do more?
4. Culture and morale
One of the biggest challenges to creating a franchise is replicating and distributing an organisation’s culture. To ensure the right culture and employee morale across multiple locations, one needs to be very clear on the norms, values and assumptions that are relevant within the organisation.
Organisational culture can develop a life of its own. Therefore, if as the leader of a company, you pay no attention to culture, you are likely to wake up one day and discover that the norms, values and assumptions that are driving behaviour in your organisation are out of alignment with what you want them to be.
A leader should own the culture of his or her organisation and as it expands, so the leader should pay attention to the culture that is emerging among employees.
Take Action: To critically assess the culture in your business, consider the following questions:
- What are the values of your company? Would all your employees agree?
- What sort of culture are you trying to create in the organisation? How is this culture demonstrated in your behaviour and in the behaviour of other employees?
- What are the things that carry and retain the culture – language, rituals, stories, traditions, people or activities?
- Is the culture and morale getting stronger or weaker? Why?
5. Brand and reputation
For anyone franchising an operation, one of the biggest risks is the potential destruction of the brand of the business. Prior to franchising a business, the franchisor needs to be clear about the important elements of the brand.
In some of my dealings with Nando’s I have found that this is the most critical element of the franchising arrangement for them. They can’t allow a franchisee to make a decision that puts the Nando’s brand in jeopardy. They’re absolutely clear about what the Nando’s brand means and how it should be represented in every aspect – signage, menus, greeting and customer service.
If you wish to build a business that is independent of you and has the ability to expand and grow in an effective way, you need to be explicit about what’s important for its brand.
You need to consider both tangible elements (logo, colours, signage, design, communications, mantra) and intangible elements of the brand (brand values, behaviours, routines, service delivery).
Take Action: The following questions will help focus your attention on brand and reputation related issues:
- What does the brand of my business stand for? Would employees agree? Would customers or the public agree?
- What are the brand’s strongest elements? What are it’s weakest elements and risks?
- What elements do I expect to evolve and change over the next three years? What elements should remain steadfast?
- What employees are best for my brand?
- What customer does the brand appeal to? Is this my target customer?
Adopting the franchise mindset is difficult when you start out. After months or years of being manically busy with day-to-day issues it is challenging to take a step back and focus on the bigger picture. It takes immense discipline to work on your business and avoid the trap of working in your business.
Your Organisation’s Values Must Generate Value – Otherwise Why Have Them?
Your values have to be the foundation of your organisation’s present AND its future if you are going to ensure sustainable value for your stakeholders.
In the modern world of business, where social media compels organisations to tell the truth, transparency and ethics have become essential. Consumers no longer only care about getting value for money, but also about what your company values and how that transpires in what you offer.
Defining a set of values that describes your organisation’s heart, i.e. your organisational culture, is immensely personal and, if lived, immensely powerful. Successful leaders realise that an important factor in building brand loyalty is getting their organisations to wear their proverbial hearts on their sleeves and to authentically honour it in the way they do business. Sadly, many organisations define their values as a tick-box exercise that serves as mere decorations for their website.
Just think of infamous examples like KPMG, SAP and Steinhoff as well as more recent culprits like Bain and Gartner: Besides the millions many of them had to pay back, their severely tarnished brands are still costing them dearly. It is clear that if the values you proclaim to espouse are not overt in your client-facing staff and the way you do business; this lack of integrity will eventually catch up with you. As what happened with KPMG, this not only leaves you with less clients, but with a diminished team too. High potential employees do not want to be associated with leaders who don’t honour the organisation’s values.
Related: Here’s How To Value Your Business
For the organisation’s values to truly become visible in how they engage and do business, it has to start with the leaders and their message. Those we lead must see it in our example on a daily basis. Our organisation’s values serve as a moral compass, but if the leaders responsible for steering the ship do not abide by this compass, our crew can’t get us to where we want to go. Our team members either follow us, become disengaged or abandon ship. They will not make an effort to uphold the values within a business where the leaders themselves disown it.
As a business, we make a certain promise or commitment to our clients. However, if our values do not underpin this promise and if we, as the leaders, don’t role-model our values to achieve this, it remains an empty promise. Therefore, it is important to keep the following aspects in mind when selecting or re-viewing your organisation’s values:
- Before defining your values, you should ideally define what kind of culture you want your values to underpin. Consider what is important to you and what is important to your customers: Is your organisation’s culture customer-centric, as it aims to exceed customer expectations, or quality-centric because of its strong focus on excellence? Perhaps your organisational culture leans more toward being cost-centric, as providing real value for money is important to you. A service orientated organisational culture, on the other hand, implies that providing your customers with the best possible experience is top of mind for you. Your organisation’s culture could be one of the above, or your culture could consist of a bit of an eclectic mix.
- Once you have defined the above, choose values that will help your desired culture become a reality and that your team members and customers will buy into. Again, ensure that it captures the heart of your organisation.
- Values are personal and we all interpret them in our own way. Although we don’t want to promote a homogeneous culture, we do have to communicate what we mean by our values. Therefore, the next step is to craft a set of behaviours that describe how the individuals in your organisation will live these values. Again, it is important to emphasise that the example must be set by the leaders but that it is the responsibility of every team member to role-model these behaviours.
- Finally, your organisation’s values must come alive and inspire, as they are intended to, and it is your responsibility as a leader to make this happen. Ask your team and your customers to tell you how they will feel if these values are lived authentically, and then measure the organisation against their feedback. If your team and your customers do not experience your values in this way on a daily basis, chances are your values are probably still dormant.
It is the responsibility off all leaders to inspire hope and trust in the organisation’s future in good times as well as bad times. To keep your team engaged, you constantly have to paint an emotive picture of what the future looks like for your organisation. If you connect this picture to your values and role-model them as a leader, they become a powerful tool for fostering the emotions and engagement that will help your team members buy into your vision.
How You Can Achieve Growth Through Access To Markets
If your goal is to scale your business, you need to increase your sales and access to markets. We found the best way to do that was through key strategic partners whose existing clients were our target market.
Many sales-led organisations have come to the same conclusion at some stage in their business growth life-cycle: In order to build a sales-led business for scale, you need to adopt a multi-channel sales distribution strategy. In our world, this means a combination of direct sales (boots on the ground), digital marketing and strategic partnerships.
After five years we had grown Merchant Capital as far as we could organically. We needed a much larger sales distribution channel. Understanding the need for a multi-channel sales distribution strategy is one thing, execution is something else entirely. After paying significant school fees, our strategic partnership distribution strategy was crystallised, and off we went to bring our chosen partners on board.
1. Finding strategic partners
Re-calibrating our sales strategy led us to the conclusion that we needed a strategic partner who could bring us ‘one-to-many’. In other words, we needed to identify potential partners (‘one’) who have ‘many’ sweet spot clients who are also our target clients, and whom they are already servicing with other products daily.
The end result of this three-year process has been strategic partnerships with Standard Bank and Discovery Insure. In the case of Standard Bank, every business that utilises a Standard Bank point of sale (POS) system can apply for a cash advance from Merchant Capital. Thanks to the partnership, Standard Bank POS merchants can access a cash advance within less than 24 hours of application.
It sounds incredibly simple and straightforward, but the process of identifying the right partner, creating the value proposition and then building a relationship that can result in such a partnership is anything but.
The most crucial element in this process was identifying partners who could benefit as much from a relationship with us as we could from them — in other words, ensuring a strong mutual value proposition.
When you have a business need, it’s easy to convince yourself that your prospect or potential partner needs you as much as you need them. Unless you are absolutely sure that this is the case however, there’s a strong possibility that you end up having a life-changing initial meeting and then never hear from them again.
This can happen for one of two reasons: Either you haven’t found the right partner who will also benefit from a partnership with you, or you haven’t been able to adequately distil that value. If this happens, very often you’ve missed your opportunity and won’t get a second chance.
We therefore had to be extremely disciplined in identifying which partners we wanted to approach. We focused on removing any subjectivity from the process by building an objective ‘partner scorecard’ that allowed us to weight certain attributes of the partner (such as a large client base, deep client relationship and mutual value proposition) with what we could offer them. This empowered us to make educated decisions.
2. Making first connections
Identifying the right partners is only the first step — now you need to make contact. By design, the partners we had identified were behemoth corporates with much larger priorities than meeting us, and convincing them on the upside of a strategic partnership needed to be robust and well-articulated.
Step one is getting your foot in the door. We began the process by identifying ‘champions’ within the partner organisation. This process takes time. We were able to secure meetings and found that running pilots was a good way to provide demonstrable evidence of the proposed ‘win-win’ proposition.
Early on in a business life-cycle (before any traction and brand equity exist), we found that leveraging off our network of shareholders and mentors to make introductions to the appropriate decision-makers within the organisation was of great assistance.
When we signed our previous investment deals, this was actually a key consideration for us. For obvious reasons, growth funding holds value, but the network and mentorship that the right board and shareholders bring to the table can be much more valuable.
Until you’re able to build brand equity and gain traction with a partner (or client), the right networks, introductions and referrals help you secure the meetings you need to prove yourself. And then you need to start small. Don’t expect a meeting with the CEO. Start with someone who could be your champion within the organisation.
3. Finding your champion
Finding a business sponsor to champion the partnership within the corporate partner is fundamental to your overall success. They will understand the internal friction and potential hurdles in navigating the naysayers within the organisation.
There will always be people, and rightly so, who challenge the partnership and ask why they can’t just do it themselves. If you don’t have an internal champion who is engaged and passionately buys into the partnership, then the initiative will most likely fall over and die.
Being the first mover in a partnership with an innovative start-up has many advantages if the product takes off. Often, these people want to be involved on the ground floor.
That said, big corporations are still taking a chance teaming up with young companies (brand risk and financial losses, to name a few). The upside of having already landed a smaller partner where significant traction can be demonstrated goes a long way in softening the initial concerns and risks from the large corporate’s perspective.
4. Nothing worth having can be rushed
The one word that comes to mind when thinking about this journey and the past three years is grit. In our experience, landing great partnerships takes many years of relationship-building and demonstrating solid business metrics and track record.
As I’ve already mentioned, our discussions with Standard Bank began three years before doing the deal. What we found useful in the early days of the partner discussions was communicating that in the next quarter we were going to achieve certain results and then coming back the following quarter and presenting the fact that we had hit our milestones, or hopefully exceeded them.
Just as you would do with an investor, this built a track record and credibility. The rhythm of checking in every few months and reporting back on progress is a great way to build the relationship over time without being too pushy as well.
Pulling it all together
There are two types of growth: Organic growth and scale. We’re an organisation that wants to scale. We’re aiming for exponential growth. This wouldn’t be possible without exponentially increasing our access to market.
We identified that the best way to do this was through the right strategic partner, but there are many channels that business owners can consider.
The important thing is not to just do what you’ve always done, unless you’re comfortable with organic growth. Evaluate your current model, and critically examine what you need to do to increase your sales, distribution and access to market. There is no one right way to do this. It took us time, and we needed to learn a few tough lessons before we were confident in the direction we wanted to take.
Related: My Business Is Growing… What Now?
5 Lessons On Scaling Up Your Company From An EOY Winner
It takes a combination of grit, hard work and the right strategies to navigate the challenges of the scale up journey. What do some entrepreneurs do differently to make it to the top?
Building a successful company is really hard. Even when you have made it through the start-up phase – product development, market fit, building a team, earning first traction – the process of scaling up remains a challenging road.
Louw Barnardt CA(SA), recently named the Emerging Entrepreneur of the Year at the Sanlam/Business Partners Entrepreneur of the Year® Awards, shared his five top lessons learnt from fast-growing clients and from their own journey of scaling up Outsourced CFO to twenty five full time professionals.
“There are many stumbling blocks that hinder exponential growth at the scale up phase. Successful start-up founders do not always have the right skill set and experience to build a business from five to fifty people or from twenty to two hundred.”
Louw and his team have taken the concept of an ‘Outsourced CFO’ – a go-to finance person for emerging companies – and built a very exciting business from it. “There are hundreds of lessons one learns on the journey of building a scale-up company. These five stand out among all of the biggest lessons learnt.
1. Invest in People
Doing business is all about people. In start-up phase, founders are able to manage almost everything. From the social media post to the invoicing to the recruitment – it all falls on you. One founder can manage this for a short while and a founder team for a bit longer, but somewhere between five and twenty people this changes. The founders can no longer make every call, have every meeting, answer every client query.
It’s critical to build a solid leadership team and then to equip them with enough autonomy and authority to run with the various portfolio’s within the company. Put a head of HR, head of sales, head of client engagements, head of operation and head of finance in place as soon as you can and keep investing in them – it’s the only way to scale out of start-up mode.
2. Manage Cash Flow
The finance function sits at the heart of every business. If the numbers don’t add up, everything comes to nothing quite fast. Founders need to make sure that they have a firm eye fixed on financials. New cloud systems enable entrepreneurs to have access to every detail of revenue, profitability, debtors and cash flow in real time.
That’s right – exact live financial information at your fingertips for decision-making. Foreseeing cash crunches ahead of time and actively being able to navigate to avoid them makes all the difference in the scale-up process. Growth eats cash, so be sure to manage yours on the way up.
3. Streamline and Automate
A start-up can afford to do what needs to be done in the moment. Scale-ups cannot. Automation of company processes is key to enable scale in various company functions.
Automate your sales process with a tool like Sales Force or HubSpot. Automate your marketing with a tool like Hootsuite. Automate your finance with a tool like Xero. Automate your company culture input with a tool like Hi5. Putting a good system in place and investing in the understanding and utilisation of all of its functions is a prerequisite for high growth.
4. Prioritise Strategy
As execution becomes a bigger and bigger part of your company, the strategy that directs that execution plays an ever-increasing role. The most successful management teams set and stick to good habits around strategy: Annual breakaways to direct long term strategy. Quarterly strategy days to cement key strategic priorities for the next 90 days and the likes.
It may seem counterintuitive to have your full management team out of action for so many full days of work, but putting the right strategy in place to execute is the real deep work required to scale.
5. Brand and Awareness is key
The value of owning a top brand and of being top of mind with all your stakeholders cannot be overstated. A stronger brand lifts the market’s perceived value of your offering. Continuously starting conversations and finding ways of reminding your networks and target market of who you are and what amazing things you are doing opens up ever-bigger opportunities that play a huge part in creating scale for our top entrepreneurs.
“Building a company is hard work. But if you do it smartly, the juice is worth the squeeze many times over. Make these five lessons your own to hack the scale up journey as you build the business of your dreams.”
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