By Pavlo Phitidis, co-founder of Aurik, business growth specialist, author and speaker
As a business owner who dared to start, found the creativity to do it differently, and the care to sustain and grow your business, asking this question is critical to ensure all of that effort and investment is rewarded.
My work with mid-tier business owners across South Africa, the UK, the EU, and the US offers me privileged engagements. All the engagements are centered on one of two outcomes for their companies:
- Scale, growth, and domination within a sector.
- Growth, focused on deepening profits to sell and exit the company.
Within this context, I thought to share five insights that apply consistently across their companies, despite their locations, that could be useful to any business owner.
For more on these and other business building insights join me for a 55-minute online event on 17 May – register here
1. A single focus
A single focus is essential in a world of constant change and increasing uncertainty. The most valuable commodity available to us is time and having a key focus maximises the impact of our economic prime. Have a single unwavering purpose despite inflation, ESKOM, currency, skills shortages, poor economic management, trade wars, floods, fires, etc.
An absolute truth should drive your single purpose: every business only has two destinations - a sale or a closure. Yet, 94.6% of companies started close, globally. Understanding why this happens, what causes it, and how you can design your business to be in the 5.4% that do sell should surely be a sensible and urgent requirement of any business leader.
Across 10 000 mid-tier companies we surveyed, 88% said they wanted to grow, but less than 15% spent an hour a month discussing growth. Some 95.4% of their employees had no idea that growth was a goal, and 68.2% of them had misaligned commercial functions that would mean chaos in the business if any growth occurred. Wishful growth seldom works. Planned growth and working that plan often does.
2. Leverage your South Africanship
The changing environment across developed economies opens up opportunities for South African business owners. These economies (at the time of writing) are facing the dual forces of inflation and interest rate hikes. Last experienced 48 years ago, companies in these economies have lost their muscle memory on how to handle this new reality.
As Saffers, we know these conditions all too well and know how to ride this uncertainty. Across the globe, initial reactions will be to pull back and shed risk across big business. It will and is translating to extensive and increased outsourcing of services, opening the door to able, capable businesses operating in weak currency environments. Today, a new approach to building your business is opening. Stabilise your home base, reorganise your intellectual property smartly, find and serve markets in Dollar, Pound, and Euro economies and outstrip the tepid growth of South African and local competitors.
3. Progressive Leadership
How you lead the start of your business must differ from how you lead its build and scale up. Accelerating income growth requires different leadership to deepen capital profit for an exit. On selling and exiting, a fundamentally different leadership is needed to secure a transaction and sustain your purpose and meaning post the transaction.
4. Understanding Value
Know this - businesses are not bought; instead, they need to be built to be sold.
How we build businesses to generate income growth is fundamentally different from how we build a business to generate capital value. You need both to monetise your years of business investment and create your most significant wealth-generating asset. To get this right you must build in the five levers of growth and value. At Aurik, we call it having your cake and eating it.
5. A Nose for Growth
In a low growth, inflationary environment, there will always be four distinctly different types of growth that any business leader should constantly pursue:
The choices you make in how you position your business in a competitive environment, build a delivery system by organising your commercial functions into processes and procedures, and then delegating it all to your team achieves organic growth.
It releases time to focus on accelerated growth. The choices you make here either disentangle your entire business or bring in new revenue streams that can be serviced by incremental cost increases only. This helps fund your capital growth focused on deepening your profitability and introducing innovations to lock it in. With a business performing at this level, strategic growth nearing the end of your career is key to unlocking an exit and a company valuation that exceeds industry benchmarks.
The challenge that you need to overcome in achieving this is time. Time to lead instead of time doing. Many of us find ourselves wrapped up in daily, weekly, and monthly operational activities. When you are constantly being driven by your business, team, customers and suppliers, there is no time to drive the business.