choices, choices, choices

I was nearing the end of the first glass of red wine and chatting about business in general with a business owner the other day when she announced that she had decided to make no more significant decisions about her business until mid-January. When I pushed her for a little more background she pointed out something I have seen a lot lately – ‘I feel like I am running on empty and holding on tight till Christmas’.

She had lost a little of her mojo. She felt that it was not the right headspace to be making important choices about her business… or anything else for that matter.

I thought it was quite insightful for a couple of reason – firstly her own self-awareness and acknowledgment on where she was at, and as importantly the impact on her quality of decision making.

From there we got chatting about the choices she would be looking at next year. And splitting them into two groups - big choices = strategy. The smaller choices = planning

This newsletter is the second of two chatting about things to think about as we plan for next year. Here is a link to the first one discussing what is happening out side the business. This one looks at the choices we get to make about our businesses next year.

Strategy vs Planning

• Strategy is all about Why, Where, Should – shouldn’t. These are the choices.
• Planning is about What, How Who. These are your tactics and activities.

Frankly a lot of the ‘Strategy’ tools I have seen are designed for corporates, and in reality are planning tools. So here are few thoughts for owners of businesses who ‘live out in the wild’ and own growing businesses.

Sometimes its OK not to have a Strategy.

Most businesses I see go through a series of stages. For those who do something a little different or operate differently from the norm there are the twin challenges of getting cash in the door and figuring out your place in the market. It is very seldom I see someone succeed by sticking to plan 1.0.

When you are in this space the strategy is about operating and experimenting at pace. It is the openness to build on strengths in different places that one day gifts the ‘key’ to unlocking value. It’s a bit like applying the scientific method to business. My hypothesis is this, I will test it, I will review.

Hence the saying an overnight success after 7 years of practise.

This is not to say you do not need written goals, and a plan, it just means you don’t have enough information to double down on a real strategy.

The parallel here is branding.? Yes your company needs a name, a logo and a website. But a real brand is something that you earn, something you grow into. Its when you feel you know what you are doing, you know who you sell to, you have at some level figured out what makes you distinct that you want to spend serious money on a serious branding exercise with people who seriously know what they are doing. Sometimes you will crystalise what you know, sometimes you will feel like you are stepping into a new space, and sometimes you might end up completely changing the name of your business… because you have earned your place in the market. (if you are in this place I am happy to give you a couple of people to talk to whose work I have seen first-hand)

Strategy is Personal

Privately held businesses are personal. Their success is often closely tied to the owners, and the owners’ motivations inevitably have an impact on the business direction either consciously or unconsciously.

A couple of approaches I have found pretty helpful are -

Get personal: Set a date in the future, usually 5 or 10 years although several strategy clients I have are choosing 2030 as it has a ring to it. Grab a piece of paper and write that date, then your name, then your age at that date, and then the names of close family and their age on that date. And then under the heading of ‘family’, ‘personal/me’ and ‘how I want to work’ set out the picture of how you would like things to be. This ‘self-authoring’ approach will help you with clarity.

Get Impersonal: The other approach is almost the polar opposite. Put yourself in the position of a motivated investor with no emotional connection to the business. Then set out your goal as an investor and what the business will look like at a time in the future.

These can both help you clarify ‘why’ you are building this business, and ‘where’ you want to be.

A quick note. If there is more than one owner of the business, a fair amount of the tension that can occur is from a misalignment of the owners why and where, or sometimes one of the owners why/where shifts as their family grows or other life changes happen. In my experience if you don’t get aligned there is no point doing a business strategy as it will never get implemented.

What Are You Growing?

There is a big difference between planting a vege garden with the aim of plenty of salad greens for summer, and planting trees with the plan to harvest and sell them in 30 years.

In reality with growth businesses, we are doing a combination of both –

1. Cashflow – feeding the team and the family.
2. More cashflow – feeding the growth of the business.
3. Value – investing in the parts of the business that drives long-term value, to a trade buyer, to a potential partner, or as an enduring asset.

After all there is significant difference in a business with $1m profit and a value of 3 x profit, and a business with $1m profit and a trade sale value of 8 x profit… or more if you have built a valuable set of intrinsic assets.

Diving deep into this area and potentially a bit of research or help from the appropriate strategy ‘designer’ can lead to some pretty interesting insights and can really move the dial of business growth.

And remember – the rough rule of thumb is that 25% profit after shareholder salaries will fund 25% growth. And before you turn your nose up at 25% compounding growth remember that is nearly 10 x growth in 10 years.

A Path Well Travelled – Do you want a Guide.

The organisation or people that help you form your strategy are not necessarily going to be with you for the implementation. In fact three of the best people I know for developing strategy and deep value in your business are quite clear that they are not there for the ride. Although a couple will assist with aspects of the plan and with exit transactions.

So let’s talk about guides.

A mate of mine loves trekking in the Himalayas. He is a hugely experienced tramper and mountain climber and regularly disappears into the bush for weeks at a time. I asked him one day why he gets a guide when he heads to Nepal. His answer –

‘I will be treading a well-worn path, but it will be my first time.

I simply don’t know what I don’t know, and the stakes are too high’.

This is true for us. Millions of businesses around the world have walked this growth path, but the experience will be personal to us, and most of us have not walked this way before.

Many of the businesses I have seen have chosen to get a guide. It may be in the form of an advisory board chair, a business coach, an industry advisor and/or a mentor. I have also seen a number of companies get real growth with part time outsourced sales and marketing directors.

The key message I get is it needs to be someone who can ‘guide you from relevant experience’ and that they have relevant IP to help navigate your journey... and no, years working for a government department or a corporate is not relevant experience!

What, How, Who

As your business grows we move from

1. ‘what needs to be done, how do I do it’, to

2. ‘what needs to be done, who will do it’ to the

3. what/how/who?

The first two are usually when you are a small business. As you move out of small to emerging growth stages we are starting to look at how we make work scalable, repeatable, and predictable.

• What work needs to be done?
• How am I going to get it done? (staff here or offshore, partner/outsource and/or technology including increasingly AI), and
• Who will be responsible for it?

This is challenging us to rethink not only how we get the work done, but how we view, structure and run our business.

Essentially we start with the question "what do i need to do" when running this business and whether what you are doing is something you should be doing better, you can just live with the way it is, something that you could get someone else to do, or even something you should simply stop doing.

The key is not to get to detailed or look for the perfect model but objectively lay out what you are doing and decide What should be focused on and What can be changed.? It also provides an objective model to then decide – How I should be doing this, with staff, with partners/outsource and or with technology/AI?

Another thing to think about when choosing How?

What I am seeing with the rapidly emerging ‘smart phone’ business model is more willingness to use partners and technology to get things done.? Several themes are popping up when we discuss the choices to partner/outsource –

Better outcomes – as the world gets more complex we are seeing a return to deep specialisation.? It now makes more sense to hand over responsibility to people who know what they are doing than generalists, especially in fields that the owner and managers do not have experience.

Creating capacity – this is about several things –

• Freeing up the owner and managers to focus more on other parts of the business and business growth
• Lowering investment in supporting operating functions and growing internal capacity in income generating functions, or
• Creating capacity or bringing on a mix of skill sets you could not get with one or two staff.? This is particularly common with companies using business process outsource partners offshore across functions from administration, digital marketing, video editing and basic technology integration.

People – Seats, Stages and Levelling Up. And Building your Growth Engine

There are a couple of other key themes that pop up when we are looking at growth. Both require focus and deliberate design choices. The first is about people and especially our leadership team roles and ability and our own evolving role as we grow. The other is about the growth engine. This is about clear replicable systems to keep great customers, win great customers and attract great customers.

I had hoped to cover this in this email, but I am reaching my (self-imposed) word limit… after all I don’t want to bore you. So I will cover these off in my next email – which will be in January.

Connector Auckland & North Harbour

Great news. After an awesome get together in November we have decided to merge Connector North Harbour and Connector Auckland together into a single vibrant community. Those of you involved will get details early next year – and the dates are below.

Unlocking Growth

Growing a business from small (under 20 staff) to mid-market (with a full leadership team) is like navigating a maze with a series of invisible barriers in the way. Sometimes you take a wrong term and there is no way through, and sometimes it feels like your wheel are ‘spinning in the mud’ and you are stuck, you a blocked by an invisible door. Often things have been going well then bang – yet another invisible door blocks our path.

After nearly 15 years working with emerging businesses in my communities, one on one, and across to many coffee/red wine chats to count I have come across a number of themes. Some are mentioned above.

I have also been lucky enough to build relationships with the true secret heroes of our space, the ones who hold the key’s to unlocking many of these doors. ?

So, in 2024 we are trying something a little different. I will be hosting these experts on emerging growth businesses in a series of workshop masterclasses.? These will be designed to uncover these invisible doors and give you the keys to unlocking them. And because of the nature of the challenges, we will keep attendance to a small number of company owners/leaders to ensure you can dig into the challenges you have.

I will publish details of the Unlocking Growth Masterclasses in January.

Xmas

If you want a chat I am around until Friday 22 December. I am back on board on 15 January. If you have an urgent question feel free to text me, I won’t be checking emails ??

Until next year – have a great Christmas break and have fun out there!

Cheers

Ben

Mobile: 027 4799 950

Website Link: Connector Communities

?About The Author: Ben Marris runs a business community called Connector Auckland, hosts Unlocking Growth Masterclasses for the owners and leaders of emerging ($2m + turnover) growth companies and works with a small number of companies on growth strategy.

?He believes that these companies are vital for the prosperity of our communities in a fast-changing world. He loves red wine and a good story. He is also dyslexic, so if there are any spelling mistakes or grammatical errors blame his spell check, he does!

?Connector Auckland 2024 Dates: Usually the first Tuesday of the month. Tuesday 13 February, Tuesday 5 March, Tuesday 2 April, Tuesday 7 May, Tuesday 4 June, Tuesday 2 July, Tuesday 6 August, Tuesday 3 September, Tuesday 1 October, Tuesday 5 November.

Contact Debra on [email protected]

Unlocking Growth 2024: Dates and details to be published in January.