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Performance & Growth

How To Have A Business That Offers Profit With Purpose

The role that ‘profit with purpose’ should play in building a sustainable business that consumers want to support, that solves real market needs, and that also makes a profit.

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Entrepreneurs are inherently problem solvers. We identify unmet needs and try to solve them by creating businesses to meet these needs. This may be why as a third generation business owner in my family, creating shared value resonates so strongly with my entrepreneurial journey.

Having cut my business teeth as a teen in the southern Johannesburg township of Eldorado Park, spending weekends and school holidays working in my family’s businesses, I learnt quickly the trials and triumphs of business ownership, particularly in a resource-scarce environment.

The entrepreneurial journey is often fraught with the hurdles of changing market conditions, resource constraints, business growth and team building. As the custodians of the business vision, we are required to be resilient in the face of obstacles and shortcomings.

Purpose will keep you and your business going

One of the most important tools I’ve come to learn in meeting such challenges is that of purpose. For many in business this purpose is personal, a growing family, a generational legacy or even survival.

As citizens of a country with soaring unemployment, deepening poverty and inequality and poor access to basic services for much of society’s most vulnerable, it’s incumbent on businesses to ensure that we put at the centre of our commercial gain a sense of societal purpose.

Related: 4 Rules To Tame Complexity And Bring Back Your Start-Up Agility

CSR is out; Creating Shared Value is the future of business

For too long now, business has been seen as a major cause of social, environmental and economic problems, generating income at the expense of society. More and more, business’s relationship with broader society has become vital in determining its value.

What is required is a rethinking of how we do business, and shifting to the new model of profit with purpose. We must internalise and adjust our approach to value creation in order to stay ahead and thrive or be relegated to the business strategy history books.

The Corporate Social Responsibility Model (CSR) has been a means thus far for business to address these issues and has been important for reputation management, however as peripheral activities limited by budget these falter in generating revenue for business.

Make a profit while addressing social and environmental issues

An evolution of the CSR model is to be found in Creating Shared Value (CSV), a business strategy that provides a means for companies to make profit in a way that addresses social and environmental issues.

Business has moved from philanthropy, through responsibility, to driving growth by creating new products and markets through CSV. This vital shift in business thinking and its implementation is an essential strategy for entrepreneurs to future-proof business for long-term gain.

By leveraging resources, market access, scale and their capacity for innovation, businesses can advance and accelerate development while generating commercial returns.

Related: 3 Signs Your Business Is Ready To Expand Internationally

Shared Value in practice

So, how can your business create Shared Value? It starts with an in-depth business analysis — and the commitment to a shift in strategic approach. Each business is different, and has the opportunity to engage with CSV in a different way.

Harvard Business School Professor Michael Porter, considered the father of Shared Value, shares practical insights on how businesses that intend to transition to Shared Value can do so.

1.Find a social or environmental cause

CSV is a business strategy that provides identifiable economic benefit to business while having a measurable impact on social or environmental issues. Identify a systemic social or environmental issue such as youth unemployment, access to healthcare or emissions reduction, which will serve at the core of your business strategy and inform all business activities.

A social entrepreneurship-based company can effectively utilise the UN Sustainable Development Goals as a basis from which to identify key areas of focus.

2. Innovate new products, services and markets

Create marketable new products and services that address this societal need. This can be done by gaining deeper insights through collaboration with stakeholders such as staff, customers and the communities in which your business operates. Open untapped markets by reimagining and, if necessary, redesigning existing products to cater to unmet needs.

As an entrepreneur I am inspired by stories of social innovators such as Sizwe Nzima, a 24-year-old from Khayelitsha, Western Cape and the founder of Iyeza Express Medicine on Wheels, a service that collects chronic medication from clinics and hospitals and delivers them to the sickly and elderly of the community. Sizwe is providing access to healthcare for users and simultaneously generating profit.

Related: How Ivan Epstein Grew A Bootstrapped Start-up Into An International Organisation

Another social ‘intrepreneurship’ story is that of Dr Gavin Armstrong of Lucky Iron Fish, who identified that nearly 3,5 billion people worldwide suffer from iron deficiency and innovated a solution in the form of a small iron fish that is placed inside a pot when cooking and has been shown to substantially reduce instances of iron deficiency and iron deficiency anemia. It’s a growing social enterprise working to improve the health of its users.

3. Redefine productivity in the value chain

Look inward and identify areas for improvement in internal operations and supplier relationships. The value chain includes everything from human resources to marketing to procurement and logistics. By reassessing the way your company does business, operations can be streamlined, suppliers can be empowered and costs saved.

4. Enable local cluster development

Create a conducive environment for optimal business operations to take place by addressing societal needs around the business. This also includes developing and empowering elements of the supply chain in order to encourage stability while benefitting the local community.

Nestlé, for example, has implemented a rural development strategy to support and empower the farmers on whom they rely for much of their raw material production. Having recognised that farmers earning a decent income and supported by a thriving community would produce more and better-quality produce, Nestlé has committed to working directly with farmers across the world, providing them with training and support and engaging with their communities.

This investment has resulted in higher yields of raw materials and a growing network of stable, productive suppliers.

The global shift towards Shared Value-driven companies operating in all fields and of all sizes is fast becoming a powerful movement. Business has the power to make positive change at scale, without compromising quality or revenue. CSV requires a commitment to making a core strategic shift to structuring operations around addressing societal and environmental needs, while maximising profitability. CSV is a new kind of capitalism, shifting the paradigm to profit with purpose. As entrepreneurs we must develop commercially competitive businesses that build our societies.

Less risk, more opportunity

Ryan Short, a partner at Genesis Analytics and a visiting lecturer at GIBS on its Creating Shared Value executive course, says Shared Value is a lens that companies should put over the whole business.

“Through Shared Value, companies are creating more products and accessing new markets that they haven’t thought of before. It’s changing the way we view and approach business.”

One key example of this philosophy and strategy in practice is Discovery’s Vitality programme. “Vitality is making people healthier and therefore serving a societal need, and it does it profitably,” says Short. “Discovery has found a way to twin social impact with profitable impact.”

WATCH THIS

Michael Porter: The case for letting business solve social problems

Acclaimed business strategist Michael Porter makes his case for why businesses should be solving social needs: Because when business solves a problem, it makes a profit — which lets that solution grow.

FIND OUT MORE

If you’d like to understand more on Creating Shared Value and how it can work for your business, the 2017 Africa Shared Value Summit will be held at the Sandton Convention Centre on 25 and 26 May 2017.

Visit www.africasharedvaluesummit.com for more information

Cindy Langeveld is a serial entrepreneur. She is also the co-owner and content producer at Shift Social Development, a consultancy that partners with business to co-create Shared Value solutions that address societal issues. Visit shiftsocialdevelopment.com

Performance & Growth

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.

Brian Eagar

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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.

Related: Harnessing Value-Based Delivery To Create Customer-Centric Solutions

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.

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Performance & Growth

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.

Dov Girnun

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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.

Related: How Merchant Capital And Retroviral Were Built To Sell

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.

Related: 5 Lessons for Entrepreneurs from the Most Famous Sling in History

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?

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Performance & Growth

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?

Louw Barnardt

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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.

Related: The 4 Steps To Scaling Your Start-up To The Next Level

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.

Related: Infanta Foods’ Marisa da Silva On Why Scaling Is Tougher Than It Seems

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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