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.
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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