Bad Entrepreneur

Pardon my ignorance but I was under the impression that the residential property market was under pressure and those servicing this sector including lawyers, estate agents, publishing firms and supposedly moving companies were under pressure.

Apparently this isn’t the case for the moving sector….

As some of you know I’m in the process of moving house - the big day is on Wednesday - so lots of packing on the go at the moment.

Anyway logically one of the things needed for the move is a moving company so I hit the internet and went to one of these “we’ll find the best quote for you services” and filled in my details. Supposedly it went to 30+ firms where I explained what I needed moving and when.

Of those firms who got the request for quotation I got 6 who replied asking for my inventory list within the first 3 days and of those who I submitted my inventory list to I got three quotes back. I selected one of those and paid the money.

I kid you not - this morning (2 days before the move) I have had no less than 5 firms saying they will send me a list and a quote and try and can they move my goods on Wednesday.

Now this raises a few questions:

• Is the moving industry so busy that only a quarter of the firms bother to respond?
• Surely nobody is going to make a decision two days before they move about a service provider?
• Bashing off e-mails as responses to a request for quotation doesn’t strike me as the most appropriate response.

Odd….

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A fresh pair of eyes looking at your business can be very helpful asset - especially when things are tough and you can’t see a solution to your problem.

Sometimes you are so wrapped up in the day-to-day running of your small business that you don’t always see things that are staring you in the face.

Every now and then I like to step back - go out to lunch with one of my business partners or even touch base with him via Skype or MSN and let him interrogate my business. Sometimes he will ask for information around pricing, marketing or just overall strategy.

Sometimes he will hit me up for obvious information that I should have on hand or know off the top of my head but don’t. It forces me to go back and find that information.

A fresh pair of eyes looking into your business can make the world of difference.

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I don’t normally reproduce other people’s articles on this blog but I came across this one and I thought it was quite interesting. There was one line that stuck out for me:

“A business’s success stems from the ability to provide these things consistently better than competitors,“

Let me know what you think.

Downturn Survival: Outperforming The Competition

Guiding your business through the economic downturn and maintaining your performance levels relies on key issues, such as leadership, motivation, change and teamwork.

Despite the current economic climate, organisations can still perform well, albeit with a smaller staff and reduced customer base. According to Jane Macgregor, performance consultant and corporate mentor, good leadership, motivation and teamwork are the most important components to ensuring success. “Current business performance is, no doubt, affected by retrenchments, hiring freezes, budget cuts and the loss of customers. However, companies with leaders who understand the overall business and are always considering the bigger picture can still perform well and thus ensure their survival,” says Macgregor.

Adapting for survival “Business has changed and will need to continue to change in order to adapt to the new market place. Leaders must adapt the company’s vision, mission and goals to meet these new conditions, even if the company is smaller and is aiming at a smaller customer base.” These managers, CEOs and directors are responsible, not only for setting these goals, but also:

* For communicating the goals effectively to staff
* Inspiring passion, commitment and motivation
* Getting buy-in and understanding from staff “Regardless of the economy there are still customers out there who need your products or services and they are still willing to pay for them.

A business’s success stems from the ability to provide these things consistently better than competitors,” says Macgregor. Identifying valuable performance All members of staff from factory floor to management are skilled and need to continually upskill themselves to improve performance. In addition, each employee needs to understand the business processes and the value that they individually bring to the company. Enabling staff to determine their own performance on a daily basis contributes to their general understanding of the bigger picture and allows them to see the value that is generated from what they do.

Perform like a well-tuned orchestra Macgregor, who uses a musical model in her consulting, likens an organisation to an orchestra. “Bad performances result from a leader or conductor failing to motivate employees or players, or where everyone is playing their own tune. This leads to poor quality and a definite lack of audience or customers.” An orchestra can play the same piece of music with fewer instruments. However, it is vital that only the right instruments are cut out to ensure that the sound is the same. In the same vein, a company needs to ensure that performance does not start slipping in recessionary times with the associated cost and staff reductions. “A company is a complex system, just like an orchestra,” says Macgregor. “Each action, employee and resource of the business works together towards a common goal, and thus they all affect one another.”

“Relating the analogy to a company means that the basic business processes, and more importantly the value that each step adds, need to be understood. These define how the business hangs together. Once these are understood, rework and duplication of effort can start to be eliminated, thereby saving on costs.” Employee involvement Macgregor notes that the most important facet is the involvement of the employees. “Not just one or two, but all. Going back to the idea of a company as a system, each employee has a role that is as equally important as another. How they choose to perform in this role can make a company successful or go out of business. They can choose to play to their full talent or just play to get by.” If all employees and management have the right instrument; know when and what they must play; keep practicing to get better and better; know the overall tune and the value that they add to this tune, then a company will be successful irrespective of the economic climate.

Jane Macgregor is head consultant at Maestro Performance which enables companies – large, small, NGOs, etc. – to deliver maestro performances daily.

For more information, please visit: www.maestroperformance.co.za

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Just throwing this out to the SA blogosphere but are there any information bureaus / online resources where the general public can get a ballpark figure for South African online retail sales?

Seemed to have noticed a tapering off of online leads, click throughs and sales in the last few months via the PPC advertising and affiliate stuff and really just curious to find out if this is unique to me or a broader industry trend and whether it can be simply attributed to the SA consumer being under pressure on their credit card and not using it.

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One of the sectors which seems to be seeing a bit of interest from investors again is the South African education sector - specifically in the mainstream and remedial schooling space.

I was fortunate enough to get an invite down to the PSG Annual General Meeting in Stellenbosch this week and it was actually one of the sectors that their investment team were chatting about and one of the places where they are putting their money into.

One of the statistics that they rolled out in their presentation was that at the moment, only 2.5% of South Africans are enrolled in private education institutions - this despite the explosion in new schools over the last few years.

Their opinion is that this figure is likely to continue to grow as the government school sector comes under increasing pressure and numbers in schools continue to expand.

(Bear in mind when reading this post that one of the real tricks in developing an education offering is an ability to develop and manage scale - i.e. what is the “critical mass” that you need to achieve to make a profitable offering).

A couple of areas where I think there might be some promising opportunities for
investors and small business owners to look at are:

• Remedial school offerings - The number of small remedial school offerings in the last few years has exploded. My wife is very actively involved in this part of the education sector and she sees the trend continuing as people seek specialist care for children with remedial and special education needs.

• E-learning - This is without question one of the most promising but uncertain parts of the South African education landscape. Electronic learning has started to take roots in the universities and one can expect this to continue to evolve as it becomes a more mainstream education tool at all levels

• Middle level income primary and high-school offerings - Private education continues to be viewed as a tool for “the rich” but more and more parents in the middle-income bracket are making sacrifices for their kids to receive a higher quality education. I know that there are a couple of schools in this space due to come online over the next few years and might be another area to explore
• Basic financial eduction - This is one of the areas which our sideline business has been developing content for the last few years. The demand for basic financial education for your workforce has been further highlighted by the  current financial and economic crisis.

I think there are some genuine opportunities in education in South Africa for investors who can get their heads around the sector.

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For SME’s looking for a nice resource to assist them in getting started up, you should check out the Small Capital website.

“Partnered by the country’s top providers of three core business services – Standard Bank, MTN and Microsoft – Small Capital shares expert knowledge of the local market and business environment, while providing access to products, services and tools that will help you to turn your small business of today into the powerhouse of tomorrow.”

Standard Bank and Microsoft seem to be very active in the SME space at the moment - well done to both these teams for helping out local entrepreneurs.

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I’ve mentioned before on this blog that I enjoy day-trading and playing the stock-market as a way of generating some wealth. Yesterday I had four successful trades in a row that made me a little profit and then one trade today went pear shaped and I’m basically back to where I started.

The trade sizes themselves weren’t particularly big but at the end of the day, it was the principle of risk and reward and ultimate profitability that got to me.

I often blog about having multiple income sources but one thing that I haven’t yet managed to get really right is getting a big payday out of any / all of these businesses. They tick over but they don’t give me that real “wealth” that I need to be secure.

How many of us operate small businesses where we always feel like we are chasing the next few bucks? Where is that “free cash flow” that gives you freedom to pursue bigger ideas?!

Having chatted to quite a few venture capital guys in recent months, one thing that has become very apparent to me is how important a “big thinking, big delivering business” is. These guys aren’t trying to compete simply on price to try and undercut the next guy in the cycle - these guys want a business with weight that can weather the bad times and floor it in the good times….. does that sound like your business??

Mine certainly doesn’t sound like that and it’s a real reason for me to want to go out there and work out where the big scale is in my business and focus on building that aspect of it so that I can enjoy some long-term sustainability of my investments not be chasing the next buck…

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Anja Merret recently wrote a post entitled “Do you know how to sell” on her Marketing Fundi blog.

She made some good comments and they definately hit home with me - thought maybe I should document some of our SME experiences so that other entrepreneurs can pick up some tips and tricks and maybe give us some feedback about how they tackled this problem.

The reality is we had good products and concepts - we simply couldn’t turn the interest into money in our bank accounts - and this is a problem I’ve seen with many small businesses over the last few years.

When we started out, my wife and I had essentially come up with the business concepts so we had a pretty good idea of who the  target market were and what they wanted. Despite us probably having the better contact base and the better understanding of the offering we took on a couple of “sales” guys fresh out of school with no real experience and expected them to sell and market the product.

Suffice to say that didn’t work out particularly well… literally they managed about R350 worth of sales between two of them…

They hung around for the next few months as a one-way cash drag on the business before they were weeded out. After that my wife and I took over doing most of the sales work but just couldn’t get into it although it should be noted that the biggest contracts we signed were always the ones we generated.

Unfortunately we had to focus on so many different aspects of the business and with sales not being something we enjoy, we both steered ourselves away from selling - so we started exploring the agency route.

We signed agreements with two firms.

One lot (with very little track-record) promised a lot and told us how easy it would be to sell and delivered absolutely nothing and the other bunch - who seemed to have a more circumspect opinion of what they could deliver for us - they told made some genuine sales and are still selling for us to this day.

A track-record and understanding of your niche is seriously important if you are going to expect an agency to deliver - keep this under consideration before signing agreements. Remember also that a lot of them will try and tie you into long-term exclusive agreements - if you get stuck into an agreement where the agent isn’t delivering it can be costly.

Our third experience we took on a sales guy with a bit more experience (for a slightly higher salary) and the guy delivered a lot more - unfortunately we didn’t have the cash flow to sustain the guy even though we were starting to see results. If we had started with somebody with some experience I think things could have been very different for us.

Another aspect to take into consideration - and I’m sure Anja can speak more to this - is the subject of “brand maturity” for an SME. If you have ever tried to sell a new brand, you will find it extremely challenging - focus on establishing the brand up front before you start looking to “sell” on it.

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I was just walking through our local park this morning and had a bit of an eye-opening experience that really hit home.

The park has a small lake in the middle of it populated with some carp that from time to time attracts the casual family down to try their hand at teaching their kids some basic fishing.

This morning there was what looked like a husband and wife couple (white) with their life packed up in a trolley and trying to work out how to catch these carp with their bare hands.

I mention the fact that they are white simply because they didn’t look more than 10 years older than me and without making a race issue out of it - it really hits home when you see poor whites - something that is becoming increasingly obvious in South Africa.

I just couldn’t comprehend being in that situation where I was that desperate for food.

Before you read any further I want to put down the reasons why I didn’t give them some food or money. I’d like to point out that I have one adopted child of my own (whose parents were in worse shape than these 2 in the park), have sponsored to other kids after they lost their mother last year (including schooling) and do the usual charity bit…  so hopefully my next comments don’t come across as callous.

For me I don’t think twice about

• Throwing down R50 on Holland to beat England in T20 World Cup cricket on a whim (that was great)
• Or a couple of grand down on a derivatives contract that can make or lose R500 in a minute or two
• Or bash off a couple hundred word article and attach the invoice
• Waking up on any given morning and finding my Google AdSense account is on the way up and I’m going to get a cheque each month

I was chatting to a colleague at work this week and she was telling me a story about friends of hers. They are in their mid-twenties and expecting their first child in the next few months… unfortunately the husband has just been layed off and after plugging all the usual channels is battling to find any kind of work in the profession he has worked in all of his professional life…

… It is all he knows.

On top of all of that I read an article in the Wall Street Journal this week which had tracked the spectacular fall from grace of some of the top traders on Wall Street who had gone into 2nd hand car selling or waitering at a restaurant.

The point of this post was that we do have a choice in all of this in that you cannot sit back on your laurels and feel secure. The reason I can develop alternative incomes is because I look for opportunities to develop my skills or buy businesses that can diversify my income stream or teach me new industries.

The world is always changing and adapting and it is imperative that you develop your skills.

• When was the last time you went to a coaching clinic or learnt a new skill?
• How often does your work prepare some training courses and you try and find every possible excuse to get out of it?

Take the opportunities when they are there - develop yourself so that you can keep pace and constantly give yourself the choice as to how you live…

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It was quite interesting last week. I was at an SME who had asked me if I could maybe make some input on their sales and marketing efforts because they “needed” to grow their new business to keep their business afloat.

After a bit of chatting to them, it turned out that their biggest problem was not getting new business but actually getting paid for work they had done.

Basically their outstanding invoices totaled about R130000 while their short-term expenses - where all the business stress was coming from - were in the region of around R85000.

The business owners attitude was “Let’s get new business and eventually those clients who owe us will pay us.”

But when I asked him what his biggest stress was, it was the creditors looking for their money.

They had focused a lot on new business development and not enough on their administrative and financial functions and to be completely blunt, they didn’t like the unpleasantness of trying to “pursue” this outstanding money.

They were also complaining because their accounting systems were out of date and they actually were not totally sure who owed them what.

I suggested maybe just getting a temp in to chase up some outstanding monies and trying to get their debtors book up to date.

Seven days later they have seen about R17k go into their accounts which immediately starts to relieve some of the stresses and a couple of others will settle by Friday.  Some of the debtors hadn’t even had statements to reflect what they owed so they didn’t know what to pay.

On top of that, the temp bookkeeper also got their tax up to date and found a R2500 tax credit!

If the problem is that you are not getting paid for the work you have done, and you are trying to compensate that by doing MORE work then you need to tackle the real problem of not being paid.

Good luck entrepreneurs

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