It seems fitting that on the 4 July as America celebrates the declaration of independence from British rule we acknowledge the contribution made by the proliferation of independent businesses. Power, ownership and control are the hallmarks of an institutionalised world and this is particularly evident within an industrialised economy.
Amidst a rapidly changing landscape buoyed largely by technological advances and the global gateway we now know as the internet, the playground for real transformational change both at a personal level and a business level is the micro economy. As the nature of work becomes more transient and itinerant larger numbers, by necessity or choice, are opting out of the mainstream and into the world of freelance, self-employment and enterprise.
The digital and knowledge economies give the people a voice. Social media and viral marketing channels allow us to communicate in real time across the globe. Whilst there remains a healthy cynicism about the influence of big brother we have access to a wider range of non-mainstream information channels.
The raison d’etre of independent business owners differs at its core to large public companies and corporate institutions. The strongest catalyst for Independent business owners going out on their own in pursuit of their dreams is not primarily for wealth creation but rather lifestyle choice. The most discernible difference between the economic drivers of big business and small business is not the pursuit of profit but rather the MAXIMISATION of profit.
Entrepreneurship, at its core, is the place where materiality and spirituality meet. A heartfelt mission or passion fuels the drive to do what you love, make a purposeful contribution and leave an enduring legacy. It’s essence is creative. It is an invitation to create value. Sure, an institutionalised world offers employment opportunities and many of these are built around compliance and regulatory activities.
The heart of the entrepreneurial world beats as a conscious, creative collective and in large measure this is due to those that took a risk to pursue their dreams – in much the same way as our forefathers before us. So, today on Independents Day we salute those brave entrepreneurs who dared to dream and dared to pursue their dreams. Long may you prosper.
by Dennis Roberts
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by Dennis Roberts
It is an urban myth that you can create sustainable growth in your business. Just as life is followed, or preceded, by death, all growth is followed, or preceded, by periods of stagnation or decline. We have much to learn from the seasons of nature.
It is folly to assume that we can create sustainable growth rates, however we can create a sustainable business that recognises, plans for and adapts to these seasonal ebbs and flows.
Growth will take one of three forms - linear, step function or boom and bust. You may experience any or all over the life of your business. To understand growth is to understand life (and death). It’s all part of the life cycle.
At some point your business may die, or at the very least, experience mini-death (le petit morte) just as the branches of a tree die. You can expedite what occurs naturally just as you can prune the branches of a tree. When you know the cycles of your business you can pre-empt nature by pruning where appropriate.
Let’s explore this growth phenomenon a little further.
Linear (or incremental) growth
This is the basis upon which most business plans and revenue forecasts are created. It seldom reflects reality or seasonality. So what, you may ask? Well, if your revenue forecasts assume steady growth then your resourcing levels will also. This impacts hiring and firing decisions, capital and plant acquisition and expansion, service delivery and all business processes that support revenue growth, client retention and acquisition. Put simply, if you grow faster or slower than expected you are left without contingency strategies to upsize or downsize or take remedial action. It seldom works this way.
Step function growth
Your revenue growth may rise exponentially and flat line for a time. This is often due to seasonal factors, marketing campaigns, product launches and environmental factors. The biggest issue you face is when your organic growth exceeds your capacity to deliver triggering capacity issues. This will require capital investment, labour hiring, outsourcing, business process re-engineering, multi-site expansion and a range of commercial decisions that take you into unchartered territory. When you grow from a one man band with no management infrastructure to having to lead and delegate responsibility the personal challenges rise. It may also trigger a need for debt or equity raisings and greater personal financial exposure. Directors guarantee anyone?
Boom and Bust
This is volatility at its best. Rapid growth followed by either a plateau or downward spike. It is often triggered by turning your marketing pipeline on and off, or your infrastructure not keeping pace. It is easy to invest in the front end of your business, eg sales and marketing because the measures of success are tangible. If you are reluctant to invest in business systems, processes and service delivery capability then you are asking for trouble.
I once worked in the wholesale telco space and witnessed one of our retail customers grow from virtually nothing to $100m in eighteen months by acquisitions and promptly collapsed. The model was not sustainable. The tragedy was that you could see it unfolding before your eyes.
I have been a judge of small business awards and have also worked with small businesses on the brink of collapse. The sweet smell of success or bitter taste of failure is quite intuitive.
How can you better manage your growth?
1. Manage your risk tolerance – most people have a risk tolerance of +/- 10% and entrepreneurs significantly more. What is important here is not your personal risk tolerance but the robustness of your business systems. If you have a high risk threshold and it is not reflected around you, something will break … and it may be you! It is highly desirable to surround yourself with balancing influences not yes men. Engage a coach/ mentor, seek wise counsel from your accountant/ CFO and appoint an Advisory Board.
2. Know when to slow the flow – create your marketing and sales pipelines to be independent of you. As an Owner/ Operator you have the primary role of overseeing business development even if you have sales and marketing people. the buck stops with you as the CEO. If, by good management or good fortune, your lead generation and conversion exceed your capacity to deliver then slow the flow. Don’t turn it off but slow the acquisition.
3. Build robust business systems – you are not your business. Appoint a project team or external consultant to build business systems. This is about working smarter not harder. Build the foundation for your future success. If your marketing budget should be 10% of your revenue then equally a percentage should be allocated to building your backend. How much varies in each case.
4. Build a buffer – expect cost over runs and time delays by as much as 50%. It doesn’t mean blindly tolerate 50% inefficiency in your business but understand that as human beings are estimates are based on best case and life is seldom best case.
5. Keep a tight rein - on your money and your time. At a minimum conduct monthly reviews. Ideally conduct real time reviews. So in order of preference - real time, daily, weekly, monthly. If you don’t have a handle on your monthly performance by the 10th day of the following month you are setting yourself up for a fall. Remember 80% of businesses fail. It doesn’t have to be you.
6. Retain faith in your vision - and back it with the facts. Faith is one thing, blind faith is another. Solicit independent professional opinion, eg coach, mentor, advisory board, accountant. Build a mastermind team around you.
7. Plan you work - it’s actually much more than planning your work. Planning your work suggests time and task management. To succeed in business you really need to think strategically. So whether your plan is one page or fifty pages, it must be strategic. A good strategic plan consists of three core elements in this order – vision, strategic objectives, strategies. Your principle responsibility as the CEO is to formulate this plan and execute it. Do this well and you won’t know yourself as an enterprise leader. Day-to-day challenges will still arise but now you will have a context within which to lead, and not just respond. When Einstein said, “You can’t solve a problem with the same level of thinking that created it” he was talking about your strategic thinking, your strategic plan and your enterprise leadership. I’ve been around the block a few times and this strategic planning and execution element is THE difference between mediocre business and elite performing business.
I hope you have found this article/ blog useful. If you have any questions or issues that I can help you with post a comment or contact me directly.
by Dennis Roberts
by Dennis Roberts
Much of success in business is formulaic. Crack the code, follow the formula and guarantee your success. Franchising is a very popular and proven business model largely because someone has had the creative idea, proven the concept and then copied and cloned the formula.
Sure there is a role for both artist and scientist. The art is in the creative idea, the concept phase and some elements of executing the strategy. For the most part business is a science. So, let’s explore where these well trodden paths lay so that you can make life easier for yourself.
Business Cycles – daily, weekly, monthly, quarterly, yearly. Knowing economic or business cycles, riding them and planning forward for them can make your journey as a business owner/ operator much easier than it otherwise might be. Keep your cycles short, financials self-funding, generate quick payback periods, and plan a quick break even point. Long cycle time is a redundant concept for small business. The world changes too quick for commitments beyond a three year window. There may be exceptions for major lease commitments, plant acquisition or capital works but tread carefully with any long term commitment. If it has a tangible asset backing then it may merit consideration on a stand alone investment basis.
Performance Benchmarking – internal or external. If it’s your own business then your benchmarking measures must pay cursory attention to what returns you might get from investing your money elsewhere. You may play two distinct roles – Owner and Operator. Benchmark them separately, reward them separately. The easiest place to start with benchmarking is you versus you, eg this year versus last year, one product versus another product, one salesperson versus another salesperson. Find the balance between camaraderie and challenge.
Sales Pipeline – the process is the same. Find a successful strategy and repeat it. This is not about reinventing the wheel it is find what works and do it again and again. And if you’re clever automate it. There are two fatal mistakes in small business:
1. Turning off your pipeline when your capacity is full.
2. Not investing time or money in your marketing effort. Marketing precedes selling. Remember that the number one objective of marketing is to generate qualified leads for your sales people.
Decision Making & Review – the more decisions you make the quicker and better you will make them, unless of course you don’t learn your lessons. Engage fresh eyes. An astute coach/mentor will quicken help you identify patterns – of both success and failure. Don’t be the mouse on the wheel. Eat the cheese.
Financials – I’ve written previously that variance reporting or management by exception empowers you to track your performance and take prompt, decisive corrective action. Shift your focus from backwards to forwards. Reconcile past financial results and decisions and plan, forecast and budget forward decisions. Don’t worry if you get it wrong or do it on the back of an envelope for the key is to shift your thinking from past (reactive) to future (proactive). It’s not about getting it right. It’s the orientation and therefore the personal empowerment that you create for yourself when you look forward. If you need to escape your busy day-to-day environment then do so.
I’ve outlined a few basic ideas here to improve your chances of business success. There are many more. If this is a theme that you’d like to explore further then leave a blog post or flag an issue and I’ll do my best to address it for you.
by Dennis Roberts
by Dennis Roberts
An addiction is compulsive behaviour. If free will is part of our human nature then when we exhibit compulsive behaviour we give up our free will, our power to choose, and our automatic response system kicks in. Now my interest here is not your typical addiction to substances or dysfunctional behaviour that may invite a twelve step remedial program. My topic of interest is our addiction to success.
Have you ever played a social sporting match? Remember the scene in “Meet The Fockers” where they are playing pool volleyball and Ben Stiller gets wound up by his father-in-law and smashes a spike into his mother-in-laws face. Classic!
I’ve played in my share of social sporting matches and the white line fever that elite sportsmen talk about is prevalent in social matches under the influence of a few beers as well. Is it healthy? Well just ask Gaylord Focker’s in-laws.
Sometimes you have just got to let go. If you possess this compelling instinct to win, if it is part of your conditioning then your ability to judge when to hold them and when to fold them is critical to your effectiveness a leader. Your perfectionism, competitiveness and control of situations may stifle the creative input and engagement of your people. It certainly isn’t conducive to having them step out of their comfort zone, take a risk and back their own judgement. If they do, it may put them at odds with you, and if you hold the position of power then that’s an unwinnable war. A war on terror of a different kind.
Beyond success there is a bigger game. A game that the likes of Bill Gates and Warren Buffet and many others have discovered in later life – the game of philanthropy. It is the evolution from success to significance. Right now you may be building your business, as many of us are, and giving away all that you have created might be out of comprehension for you right now. Maybe not.
Einstein said, “You can’t solve a problem with the level of thinking that created it.” If you conceive a time in your life when you have acquired all of the material riches your heart desires, maybe there a tipping point awaiting you where the game changes. A game worth playing. You don’t have to smash a volleyball into your mother-in-laws face to win the respect of your peers (although it would be funny).
Learn to let go. Elite sportsmen will tell you when you are driving a high performance vehicle, riding a fast galloping thoroughbred or catching a cricket ball in the deep, it is your ability to retain soft hands that will allow you to grasp success without effort. Create an inspiring vision for what you may create beyond the limits of your current thinking and watch as life’s synchronistic events unfold before your eyes. This magic is truly within your grasp if you only retain soft hands.
by Dennis Roberts
by Dennis Roberts
I must admit the promotional angle taken by reality television show The Biggest Loser has puzzled me for some time. Mainstream media exploits tragedy, drama and crisis. It sells. Biggest loser is not a clever play on words and twisting language to convey a motivational message is nothing short of a cheap gimmick to get people in.
In any context to win a contest to be a loser is a nonsense. Our world is peppered with mainstream messages selling negativity. The media circus has a vested interest in promulgating drama. It feeds the shadow within us. Yet it does nothing to enrich our lives and help fulfil our latent potential and that includes The Biggest Loser.
Messages of optimism and hope are so few and far between that positive psychology has become a stream of leadership development. Viewing the glass as half full/ half empty has become so skewed to the negative that we have a school of philosophical thought to restore the balance.
Ken Blanchard, author of “One Minute Manager”, popularised the phrase “catch people doing things right.” Positive behavioural reinforcement was, and still is, sadly missing. Practical parenting classes also offer positive behavioural reinforcement. It is so easy to criticise failure and, more is the worry, so acceptable.
Executive coaching programs train us to give employees feedback. Many of these programs erroneously cite methods to give positive feedback. The essence of feedback is neutral. It is objective. It is neither positive nor negative. It should simply be constructive.
The participants in programs like The Biggest Loser come with baggage – physical and mental. To their eternal credit they achieve substantial changes in their lifestyle. I commend the outcome of taking personal responsibility for changing their lives.
A common question in leadership development circles is, “Are you playing to win, or are you playing not to lose?” The latter is motivated by avoidance. It is a ‘moving away from’ strategy as distinct from a ‘moving towards’ strategy. Playing a game motivated by not losing is a catch 22. The best outcome is that you return to neutral. The transformative shift in your motivational strategy is to play to win.
How does a loser win?
by Dennis Roberts