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Performance & Growth

Lead The Charge By Building Your Business Momentum

Results matter, but they are not as critical as momentum.

Lizwe Nkala

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Business-momentum

Momentum builders

Your business is the sum of many parts that need to work in unison to crank up the flywheel of results. Staff attitudes and self-belief are momentum builders.

Connect your best people with your product factory, your systems and processes and your customer needs in a system that generates career growth and fulfilment.

Momentum is achieved when staff are passionate about delivering solutions to customers while continuously seeking opportunities to stretch their own abilities.

Related: 5 Signs That You’ve Lost Momentum In Your Business

Leading the charge

As an entrepreneur, you lead the drive for excellence. In tough times, there are many reasons why results cannot be achieved. Find and communicate reasons why they can.

Digging deep for self-drive and positive energisers will translate into team momentum building that ultimately pulls the entire business forwards.

Engaging the market

Shape the market by creating a presence for yourself and your business. Join industry forums and participate in conferences that will lift the spirit and ‘can-do’ attitude of your team.

Related: 4 Keys To Early-Stage Growth That Will Maintain Your Momentum

Some businesses have momentum, others don’t; only conscious and deliberate drive to create it in yours will change your fortunes and achieve results.

Lizwe Nkala is an influential corporate strategist working at executive and board levels of large corporations. He is the MD of Flamingo Moon Consulting and a founding partner of the Strategic Thinking Institute, where he coaches executives and presents tailored strategic thinking seminars and webinars, and provides strategic thinking tools and templates on a subscription basis for corporate clients. For more, visit www.flamingomoon.co.za

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Performance & Growth

First Rule Of Securing Growth Capital: It’s Not About The Product

Paragon CEO, Gary Palmer, discusses the pitfalls facing business owners searching for capital to fund expansion.

Gary Palmer

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A common mistake made by entrepreneurs looking for growth capital is fixating on which product they should choose. When looking to finance growth in your business, the decision process should be focused on longer-term strategic priorities and then finding a partner to help you access the right product to deliver on those goals.

Let’s get real

At the outset business owners need to look at their business realities and decide whether they should be looking for debt or equity financing. For example, if a business can only support debt of 2.5 times EBITDA (Earnings Before Interest, Tax, Depreciation and Amortisation), and they are already at that limit, then they will need to look for equity financing to achieve their growth goals. In many instances, a combination of both debt and equity financing will hold the key, allowing the organisation to benefit from cheaper debt funding, but ensuring that it is not overextended.

Related: Dragon’s Den Polo Leteka Gives Her Top Tips To Attract Growth Capital

Even if the growth project can be funded through debt alone, business owners face the challenge of dealing with a multitude of institutions, each of which puts emphasis on different aspects of the deal. No business owner can know the minutia of their requirements, and so working with a partner who can help you prepare your presentations is a must.

The challenge becomes all the greater when companies may be looking to finance a non-traditional project. We have a client who is looking for finance to build roads leading to his development. This is not something traditional lenders usually deal with, and so in this instance he will need to access more creative funding options not offered by the banks. Another example is when a founder is looking to buy out other partners, this too may need to go to a lending institution which is able to structure deals for out-of-the-box requirements.

Square pegs, round holes

A common frustration faced by business owners is that some lending institutions sell products rather than solutions. Too little time is spent understanding the needs of the client and designing an appropriate solution, tailored to the client’s unique requirements. These lenders are literally forcing the client’s needs into the limited number of financial products they offer.

It’s going to get more complex

Another challenge for business owners is the sheer number of institutions out there. New funds, new lenders and the plethora of fintech offerings are making it harder for growth companies to find the best offer available. In the US and Canada, more than half of the big property deals are now funded by non-banks. We believe South Africa is headed the same way. The added competition, is of course great for the market and will encourage better service and more creative options, but it does make it difficult for business leaders to keep track of everything available.

Don’t fall prey to borrower’s remorse

In so many cases, companies are in a rush to secure funding and often end up choosing a product which is not suited to their longer-term strategy. Getting out of a transaction can be exceptionally difficult. Far too often companies wake up to better options too far down the line. If more appropriate finance is found, companies will be left carrying the settlement fees attached to their previous funding, not to mention the administrative pain of changing lenders.

Related: Funding Growth

Paragon has over 150 lenders on its books and a network of angel investors which we can access to find the right deal. It’s our job to know exactly what is available and more importantly, to work with business owners to ensure they access lending which is not going to result in borrower’s remorse. The only way to ensure good results is to start the lending hunt with a partner who can help you first determine the right lending strategy, based on your business reality. The alternative could prove both expensive and painful.

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Performance & Growth

How Well Do You Really Know Your Customers?

Staff are more secure, and turnover is decreasing.

Nathalie Schooling

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All businesses go through 4 distinct stages of growth. In the early start-up days everyone is thinking on their feet, few formal processes are in place and sales funnels are still being constructed. Then the business enters the growth stage where things become more formalised and client relationships are maturing into the three to four-year mark. Staff are more secure, and turnover is decreasing.

Next is into the maturity phase, growing by about 5% annually with early employees entrenched with 8 – 10 years’ tenure. This is the stage where you feel most secure, with operations being predictable and revenue steady. But it is also the most critical period in your company’s life as this is when complacency may set in. This leads to the last growth stage for a business – renewal or decline.

Renewal equals customer growth

Your business’s final growth stage must start with identifying what customer value is still untapped in the business. The Pareto Principle or 80/20 Rule, says that 80% of your business wealth will come from 20% of your customer base. Since it costs 10 times more to acquire new clients than to sell to the ones you already have, focusing on existing clients should be a no-brainer.

To talk to and retain these all important existing clients, it is essential to provide value through the entire customer lifecycle; from when you acquire them to engaging them in meaningful conversations to retaining them by continually providing value – ultimately turning them into brand advocates.

Related: 5 Reasons Why Your Business Is Losing Customers

Key relationships not just transactions

Engaging with your customers this way moves you away from a transactional approach to a more long-term partnership. But to do this your clients need to trust your company. Not just the sales team, but everyone at every touch-point. I have found this to be especially true for the B2B market. Clients want to do business with a business that continuously adds value to them – not taking their account for granted and making them feel that their business is important.

This more long-term approach means greater value to the right clients, in the right ways at the right times. Collectively, the long-term effect should result in greater customer retention, preventing churn and attrition, turning your clients into loyal advocates. So it is vital to have an ongoing and robust helicopter view of your clients’ sentiment. Don’t put your head in the sand. Be brave, ask the tough questions and then listen to the answers.

It’s not just up to Sales

Identifying who you regard as key clients must be done carefully with clear criteria, leaving you with a core group (your 20%) that is a manageable size. Implementing a more customer-focused approach is a different way of doing business and will require buy-in and advocacy from the highest levels within your organisation.

There will need to be acknowledgement and agreement to work differently with certain priority clients. If a key account is promised priority access to urgent products or service, Operations will need to provide it, not Sales.

Protecting your business against decline can most simply be done by growing value that is already in your business, both by investing in staff and by growing revenue from your key clients, renewing not only your business strategy but also your relationship with the people that enable you to do business.

Read next: Effective Ways To Bring Customers To Your Door

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Performance & Growth

What Should I Do If My Business Has Outgrown Me?

Here are a few tips that will help you get ahead of your business’s growth.

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If you’re reading this and thinking, “Yes, I’m there right now!” then first of all, congratulations. Your business is thriving and in this economy that is a testament to your vision, your drive, and your team. Well done.

However, you might also feel less celebratory right now, because your growth has reached a point where you feel the control and insight into your business is slipping through your fingers like water.

Here are a few tips that will help you get ahead of your business’s growth:

  1. Be honest. This is probably the most important step and the best place to start. Be honest with yourself that your business has outgrown what used to work when you were a startup or a smaller SME. If you’ve lost sight of your business’s day-to-day operations, the staff issues, the stock and production queries, and your bottom line, then be brave and own it. Many people have stood in your shoes and bounced back, and you can too.
  2. Recognise your own limitations. Yes, you are the founder and visionary of this business and it has risen to this state of success on your back. However, at this point in your business, you cannot be the only wellspring of productivity or experience. Invest in yourself, and your business, by meeting with a reputable business coach for a fresh set of eyes on your business processes in order to increase your business’s capacity.
  3. Invest in people. When you start a business, it is often difficult to hire an expensive, well-experienced, weighty management team. This might be the right time to start. Invest in your senior management team by hiring the right people, even if they come with a higher price tag. Their experience and expertise in managing people, as well as steadying the ship in this growth phase, will help you tremendously as they shoulder some of the burden of leadership in their departments.
  4. Outsource. This point is not a new idea in South Africa, but servers as a good reminder. If your part-time bookkeeper is not up to the task of running full financial reports and handling your VAT and Tax payments, but you cannot justify the salary spend of a full-time CA, then investigate outsourcing for your financial management requirements – you get CFO expertise at a portion of the cost. The same goes for marketing management, as well as any other secondary but vital function that you and your team don’t have capacity to get to.
  5. Upgrade your systems. Immediately. If you have several applications to handle the various functions of your business – such as warehouse management tool, time tracking app, accounting software – and these don’t communicate with each other, then this is a tower of cards waiting to collapse. If you’re still using paper, or a spreadsheet to quote, or manage stock, or write reports, then I guarantee you that you have very little clarity into your business, and even less control of what’s going on. More than that, you are using valuable time for admin tasks that can be automated with ease, and for an affordable price. South African ERP systems offer SMEs what international systems offer big corporates, but for a fraction of the price. Only a robust system that communicates with itself can carry the weight of your growth, and provide you with the data you need to steer the ship with care and confidence.
  6. Goal-set through. Be careful of this one; it is an easy trap to reach your goals, and then fail to create a new one in the process. This can often lead to depression and lack of motivation. If growing your business to a certain annual turnover or production rate was your only goal, then take the time to goal-set through. What will you aim for once you have reached your goal? And once that goal is reached, what is your next goal? Human beings are teleological – we need a goal, or purpose, a reason in order to thrive. Keep on giving yourself – and your team – a reason to grow, and communicate it regularly.

Read next: Learning To Let Go: 5 Realities Of A Scaling Start-up

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