Entrepreneur

The Three Profits of SME's WCP 2013

YOUR CHECK LIST FOR RAISING CAPITAL

As check lists go this one has been kept pretty minimal, see it more as a thought starter for a list of your own! 

Check your must do list!

 

  • Have all your legal documents prepared and in order including all of your corporate information (ABNs, taxation summaries, core financials, assumptions, insurance, contracts etc) centralised and easily accessible so that it can be supplied to potential investors upon request.

  • Ensure the information you provide to potential investors is easily understandable, clear and accurate. The business may seem simple and straight forward to you but remember it may well be complex to them. Keep your presentation simple but ALWAYS have every detail close to hand for the investor who asks that curly question. With cloud storage solutions and tablet mobility there can be no excuses for poor preparation.

  • If successful you will end up in a relationship with these investors, so make sure your new partners and you both have the same goals (equity splits, exit strategy, founders’ roles etc) and that the culture is right.

  • Be prepared to negotiate and give some ground to get a deal done.

 

Understand your don’t do list!

 

  • Don’t think you have the investor’s cash in the bank until it’s in the bank

  • Don’t be cocky. You need to show investors that you not only have a good idea, but are willing to listen and learn off them. Most of the time, they are investing 80 per cent in you and 20 per cent in the product.

  • Don’t hold to an unrealistic goal on valuation – its always better to have 10 per cent of something than 100 per cent of nothing.

Yes it’s a very small list, perhaps the missing advice is that wherever possible seek experienced professional advice, yes it will cost you but long term it will prove to be a very sound investment.

______________________________________________________________

By, Neil Steggall

The Barking Mad Blog

Business Advice with Bite

Logo Small wcp 2014

businessmanagement1

How to structure your startup for investment

Most Australian startup’s will never raise a first round of funding. The recent Startup Muster survey puts the number at just 14%. For those startups that do raise a seed round, the chances of securing VC funding at Series A is even lower. Nevertheless, it’s important to understand what potential Angel and VC investors will want to see from a legal standpoint before investing. This article will set out some of those requirements.

 Incorporate!

You’re not going to raise money unless you’re running your business through a limited liability company structure. Better yet, set up a holding company/operating company structure. Investors will invest in the holding company, which will own 100% of the operating company. This structure can protect the assets of the business from risk of seizure, should the operating company be sued.

A small number of more experienced Australian founders are now setting up their company structure in the US, even if they’re running the business from Sydney or Melbourne. If you’re looking to secure investment over in the US, this approach can make a lot of sense. That being said, it’s definitely only worth doing if that’s your goal.

Founder vesting – sensible for founders and investors

The reality is that a startup isn’t worth much, particularly in the early days, if the founders leave. It makes no sense at all to issue yourselves with equity that doesn’t vest over at least a couple of years, and investors know this. The standard startup-founder vesting structure is a four-year vesting schedule with a one-year cliff, meaning you get nothing if you leave before you’ve been working in the startup for at least a year, and you earn the rest of your equity over the four years.

Many VC investors will require founders to “revest” upon investment. This means that even if you’ve been working on your startup for a couple of years before securing funding, you’ll have to work for another four years to get all of your shares.

Founder vesting obviously make sense for investors; they don’t want you ditching the startup two months in, but it also makes sense for founders. If your co-founder leaves the business with his 25% stake fully vested, the business is pretty much guaranteed to fail. You’re either going to end up working away building up the value of his shares while he chills out on the beach, or you’ll end up quitting too. Vesting means he’ll leave with a smaller amount of shares, which is much more manageable.

Preference shares

VC investors will often only invest through preference shares. The basic idea behind a preference share structure is that it gives investors a liquidation preference in the event of a sale. Preference shares are a way of ensuring that investors get repaid their initial investment before founders and employees get anything.

Obviously if you can avoid issuing preference shares, and simply issue ordinary shares, that’s great for you and your co-founders.

Employment contracts

No one ever bothers putting together an employment contract when they first launch their business. Why would you? You’re probably not even paying yourself!

If you’re looking to raise a round, you need to sort out your employment contracts for a couple of reasons. First of all, investors will want to know you’re not just pocketing their hard earned cash; they’ll want you to set out a small salary etc. Most importantly, though, they’ll want to ensure that you’re entering into a non-compete with the company. If you don’t get on with your investors, they don’t want you quitting and setting up a competitor business the next day.

To conclude

Investors are a diverse bunch, so they’re not all going to be looking for the exact same structure before investing. If you’ve got a great team on board and you have significant traction, you might be in a position where you can dictate terms. Unfortunately that’s not very common! It makes sense to structure things professionally and to be pragmatic about what you’re going to offer investors. It might just help you end up as one of the 14% of Australian startup’s who raise a round!

______________________________________________________________

By, Neil Steggall

The Barking Mad Blog

Business Advice with Bite

Logo Small wcp 2014

Added Value

Do you know the true value of your customers?

 

Customer numbers, revenues and retentions are in many ways the rocket fuels of business success. Certainly if you wish to impress bankers, investors and the market in general with corporate growth under your leadership and management you had better understand and pay homage to this important trilogy.

Do you know the true value of your customers?

What is the key metric you use to measure and drive your business?

When asking this question I find that most answer with “EBIT”, “margins”, “revenues”, ROI or some other fairly common KPI, however, I believe “Customer Lifetime Value” (LTCV) is perhaps the most significant measure to indicate the general health, sustainability and true value of a business. It is one of the most overlooked and least understood KPI’s or metrics in business, and yet it is one of the easiest to quantify.

Why is this particular metric so important? Because truly understanding it will deliver rewards, it will give you an accurate indication of how much repeat business you can expect from a particular customer, which in turn enables you to accurately forecast, cost and develop your business.

The value of LTCV in determining marketing spend and direction is immeasurable as it will not only help you to decide how much you can afford to spend to “buy” each new customer for your business, it will also motivate you to grow your business by showing you when and when to spend.

Once you understand how frequently a customer buys, how much they spend and for how long you retain them you will better understand how to allocate your resources to optimize customer growth and retention programs.

An easy calculation to estimate CLTV is to insert actual or estimated (if you’re in the planning stages or just starting out) numbers into the following equation:

(Average Value of a Sale) X (Number of Repeat Transactions) X (Average Retention Time in Months or Years for a Typical Customer)

A simple example would be the calculation of a service subscriber who spends $20 every month on a 3 year average retention. The CLTV would be:

$20 X 12 months X 3 years = $720 LTCV

We can see from this hypothetical example why so many successful businesses offer a free or discounted service to attract new customers and grow their business. Savvy entrepreneurs know that as long as they spend less than (say) one year’s revenue of $240 to acquire a new customer, the customer will quickly prove profitable and add a further CLTV to the business.

Further refinements can be made by calculating the margin value of each customer and the cost/benefit of a stronger customer service and or retention program.

Once you can demonstrate the multiples of CLTV you place your business in a very strong position should you later require additional funds for expansion from banks and financiers or equity from investors

Growing your CLTV

Once you have some idea of the lifetime value of your customer, you have two Targeted Marketing options in deciding how much to spend to acquiring each new customer:

  1. Allowable acquisition cost: This is the maximum amount you’re willing to spend per customer per Targeted Marketing campaign – In this instance ensure the cost expended is less than the profit made on the first sale. This is an excellent short-term strategy for an emerging business or one in which cash flow is a concern.

  2. Calculated Investment acquisition cost: This is the calculated cost you expend per customer in Targeted Marketing where you know that you will take a loss on initial and occasionally subsequent sales as you have pre-determined that you have the available cash resources to fund your marketing investment. This is a longer-term strategy ideal for mid-life to mature businesses looking to consolidate growth patterns and market share.

Marketing: Expense or Investment?

This is an interesting question which all entrepreneurs should resolve very early in their careers. In my assessment marketing must always be an investment with a measurable ROI. Understanding the LTCV of your customers provides you with such an ROI, a metric easy to establish and measure.

You will struggle to develop an optimal marketing budget unless you know what the return on your investment needs to be. This knowledge is essential as it will lead you to make sound marketing decisions based on the reality of sound and supported metrics rather than the ethereal promises of a new media promotion or program.

Understanding your LTCV’s provides you with specific knowledge as to how, or if, you can discount or offer incentives to attract new business. It will help you avoid the potentially disastrous effects of discounting when your business needs cash flow to survive. In addition, you will find innovative ways to build value upfront and create offers that drive enough volume to support and eventually increase your overall LTCV.

Think this through and take some time to calculate the LTCV equation as it applies to your business no matter if you are established, growing or just starting out. This is the metric for everyone.

In summary, the LTCV will determine the planning and frequency of your marketing spend, the ultimate success and thus the ultimate value of your business.

______________________________________________________________

By, Neil Steggall

The Barking Mad Blog

Business Advice with Bite

http://www.neilsteggall.org/?p=1216

Logo Small wcp 2014

Transition - WCP 2014

Strength Through Diversity & Change

Diversity and Change are catalysts to growth and development, to new ideas and to improvement throughout the world in which we live. Darwin’s evolution of the species demonstrated how through diversity and change the world is able to constantly evolve and improve.

Why then are so many of us suspicious of both diversity and change, why do we fight to protect the status quo? Is it as simple as a fear of the unknown? It brings to mind Franklin D Roosevelt’s famous speech “….the only thing we have to fear is…fear itself”

If we are to get the best outcome from any human endeavour we require continuing diversity and change at all levels. Diversity of age, experience, education, gender, race, outlook and expectation, imagine a team encompassing such diversity tackling the big and complex issues within your business. Can you envision the team’s potency and its potential to drive change?

Increasingly business is global, multi-cultural and can no longer assume the gender of decision makers on either buy or sell side transactions. Successful teams and organisations need to reflect this diversity and change to embrace it.

Managing change requires both vision and courage but the rewards are enormous, when we think of Apple today we think of iPhone’s and iPad’s first and computers second. This reflects their ability and capacity to change and yet it still overlooks their leading edge position as a global leader in integrated retailing.

The days of proud “national manufacturers” are a fading memory as global organisations position differing operations in the global location most suited. R&D may take place in California, IP is held in Ireland, manufacturing close to the source of labour or raw materials. Management and staff are drawn from universities and institutions from all points of the globe and across many faculties.

A modern corporate board is just as likely to include a female graduate in PP&E as a male holding an MBA. Shareholders are increasingly focused on “whole of business” concept as opposed to the out dated “short term profit” position. The CBA board must now be wishing it could wind back the clock a few years to avoid its current publicity.

Change isn’t always good, some mistakes will always be made but hand in hand with diversity we are now more open to the faster assessment of ideas and their success or failure and prepared to act quickly to recognise mistakes, clear them out and move forward.

Don’t just accept diversity and change, embrace them, use them and remember:-

“….the only thing we have to fear is…fear itself” – Franklin D Roosevelt    

_________________________________________________________________________

By, Neil Steggall

 The Barking Mad Blog

Business Advice with Bite

http://wp.me/p401Wv-ji

Logo Small wcp 2014

 

Win-Win WCP 2014

 

How To Become A Great Negotiator

Most of our successful leaders and entrepreneurs are great negotiators. The skill of negotiation is recognised as one of the important ingredients of success and yet so few of us truly understand what it is that makes a great negotiator.

It is often said that children are great negotiators; they are persistent and return to their objective time and time again, attempting differing angles to win their parents around. From here it often goes wrong as well-meaning parents impose rules and suggest that this constant negotiation is both bad manners and plain naughty!

Recovering from childhood scaring we recognise that negotiations are a fact of life, we are constantly negotiating in both our personal and professional lives.

Those that are not strong negotiators tend to fall into one of two camps: the first dislike or avoid negotiating and this can lead to problems in resolving issues or progressing their careers, the second see the first rule of negotiating as the need to “win”.

Both attitudes are problematic the first is both self-defeating and confusing to others and the second is always going to leave behind a bruised “loser” – neither is a good outcome.

There are THREE key steps essential to becoming a great negotiator:

Applying these three negotiation processes will significantly increase the impact and success of your future negotiations.

1.0 NEGOTIATING ATTITUDE

What you bring to the table in terms of your attitude and approach will have a significant bearing on the outcome, you should always:

Show Respect & Trust

See the other team or person as an equal and treat them with the courtesy and respect you would expect, it’s surprising how this opens real discussion.

Listen to what isn’t said

Look carefully at what the other side is really saying, this will tell you what they really want.

Remain Flexible

Successful negotiators view each key point from multiple perspectives; they are flexible in which points to concede to achieve the end game. Be prepared and willing to change.

Target Continuity

Always view the other team as a valuable, respected and long term contact. Armed with this attitude you will never be tempted to “rip off” the other team.

Win-Win Outcomes

This is the ultimate outcome in any negotiation; it will leave all parties satisfied and lead to productive, successful long term relationships. Sound groundwork, an open mind and a fair approach will find more win-wins than you would at first imagine.

2.0 THE NEGOTIATION

A successful negotiation is usually based upon 3 distinct stages: Preparation, Negotiation and Documentation. Each stage is of equal importance; a great negotiator knows this and allows for it when planning.

Preparation

“By failing to prepare, you are preparing to fail.” (Benjamin Franklin).

The key to preparation is to place yourself mentally into the other party’s position. Assess where they are at within the negotiation, what they want, what they need and what they can live with. Understand their motivation, perspective and opinions on the topic. What are the minimum conditions they can accept and at what point are they likely “to walk away”.

Define your own goals and objectives, analyse what you must have, what you can concede and where your fall-back position is. Develop several potential options; identify your best possible outcome and your least attractive “fall back” position.

Search for “win-win” solutions

Negotiating

Be relaxed, respectful and most importantly be prepared to really hear what is being said and retain an open mind.

Listen rather than speak, silence is your friend. Search for common points of agreement rather than the differences; agree these early to develop trust and comfort.

After the initial discussion take the initiative and start the actual negotiation by tabling your offer. This initial offer forms a subconscious reference point, a middle ground if you like. If you are buying start low and if you are selling start high.

An excellent tactic is to make multiple offers each with different terms and conditions this demonstrates your flexibility whilst the other party’s response to the choices tells you much about what they really want or need.

Always show “Samurai Sympathy”; that is do not box the other party into a corner from which they cannot escape without a loss of face.

Once you have established the other parties bona fides and you are satisfied they want to reach a genuine solution don’t be afraid to be the first to concede points but do so in a “give and take” scenario. Know what you want to take. Focus on the end point rather than the current position. Being pro-active will build trust and goodwill.

Showing respect for the other party does not mean that you cannot show strength or participate in the theatre of negotiating. If unreasonable demands or proposals are put forward demonstrate your dissatisfaction, show your surprise and your disappointment strongly but do not allow any genuine anger or frustration to develop, remain calm and remain in control.

Don’t be in a hurry, abide by your timetable (especially when buying), confrontations will occur, board approval may need to be sought, lawyers consulted all of which are normal. A great negotiator allows for this, allows time for parties to cool off when discussion becomes overheated. If tension builds, ask if you and your team can have 10 minutes alone to discuss the situation, be pro-active, remain flexible and remember your objective.

In the closing stages of a negotiation the great negotiator seeks a creative solution, they look beyond the box, they expand the available options rather than fight the detail and they stand firm to their position. This is the time to bring everything you have learnt into play in the best win-win solution you can offer.

3.0 DOCUMENTATION

I have seen people leave a negotiation “pumped-up” by the result and ready to party only to find out a day or two later that the other party has had a “change of mind” and called the deal off.

After reaching agreement around the table it is best to re-iterate the key points of the agreement, hand write them have two copies made and each party sign them off. This isn’t a binding agreement but it is a moral statement.

Confirm the agreement in a written Heads of Agreement and get this document signed within 24 hours of the meeting. The HOA should cover any conditions precedent and a timeline to contracts.

Call the other party as soon as appropriate after the meeting to thank them for their time and professionalism, work with them and strengthen the bonds for the future.

Finally food for thought…………….

“Let us never negotiate out of fear, but let us never fear to negotiate”

Unknown Quote        

_________________________________________________________________________

By, Neil Steggall

 The Barking Mad Blog

Business Advice with Bite

http://wp.me/p401Wv-jd

Logo Small wcp 2014

Seven steps to getting rich  

Nest of Riches - WCP 2014

The accumulation of wealth is easier than most realise. Once your antenna is raised to embrace wealth potential and you commence the journey riches will follow. In recent times wealth and its creation have been seen as less than desirable perhaps even a little dirty, not quite the done thing.

I find this attitude strange as throughout nature creatures nest and those capable of building a better nest live longer, breed more successfully and generally enhance their bloodlines and community. Surely that’s a good outcome for all?

Wealth and its creation should not be considered ‘dirty words’, but remember the discrete and careful enjoyment of its benefits are attributes to be admired. True wealth is a state of mind and an ongoing way of living which embraces so much more than your bank balance.

As with so much in life a steady, incremental plan, will deliver a surer chance of success in the creation of wealth. Yes it is slower than “doing the great deal” but it is also more certain in outcome and you will have more chance of holding onto and enjoying the wealth you create.

It doesn’t matter how much you earn, whether you are a Gen Y first time investor or a seasoned baby boomer with multiple assets, there are seven key strategic behaviours that set apart the wealthy from the rest of us.

  1. Spend less than you earn – this sounds obvious but many of us live from pay cheque to pay cheque, which indicates it’s a lesson that is quickly forgotten. Save and invest because the law of compound interest will help ensure your nest egg grows quickly. Start as soon as possible because time is your best friend.

  2. Invest as much as you can in assets whose underlying capital value will grow – remembering income is usually taxed at a higher rate than capital growth.

  3. Reinvest any capital growth – as this adds to the amazing power of compound growth.

  4. Do not be afraid of debt – leverage accelerates your net worth but keep a suitable buffer for the unexpected.

  5. Invest in yourself – it pays to broaden your fundamental investment knowledge.

  6. Have a mentor – a coach will help drive you and keep you focused on your long-term goals.

  7. Have a team of experts – remember you don’t have to be the smartest person in your team.

Above all, generating wealth is about having a purpose and focused determination. We are all living longer and will need more wealth to look after ourselves when we are older. State pensions are no longer the safety net they once were and advances in medical research keep us healthier for longer, but at a cost.

Start today by determining how much wealth you want to hold and by which dates. Write a game plan detailing how you are going to achieve wealth, refer to it daily and update it regularly as change occurs. The sooner you start the easier it is!

_________________________________________________________________________

By, Neil Steggall

 The Barking Mad Blog

Business Advice with Bite

http://wp.me/p401Wv-j2

Logo Small wcp 2014

Connect with me on LinkedIn, Twitter or Wardour Capital:

LinkedIn

Twitter     

Wardour Capital

Passion

 

We are often told that great leadership and success flows from the passionate vision held by the entrepreneur or CEO and how they followed their dream fuelling their passions as the company prospered.

I may be a sceptic but this raises two questions in my mind, firstly what is it about “grey widgets” that fuelled such passion and secondly is the passion story really true or a heroic post script?

Passion (let’s set aside the boy meets girl and….) is a much confused state, for instance is it about the activity or the outcome? Let me give you a couple of examples:-

  • As a teenager I really enjoyed dismantling and reassembling cars and motor cycles. Learning all I could about the intricate detail of what enabled these machines to function was a wonder to me. Wow a natural engineer claimed my parents!

  • As a mature adult I turned to cooking in my spare time, restaurant quality food perfectly plated. Wow, open a restaurant my friends cried!

Let me be clear I not passionate about engineering or restaurants but I am passionate about taking a complex problem and delivering solutions. I am not rewarded by the repair or the cooking but by the solution, one could say I am indifferent to the action but passionate about the outcome.

Today I watched a Barista making my regular coffee, her face a study in concentration yet as she placed the coffee on the table in from of me her face was a picture of happy satisfaction. Whether she realises it or not her passion is in pleasing people.

Back to our successful entrepreneurs and CEO’s; are they really passionate about the production of “grey widgets” or are they in fact passionate about a task well done? I think it is generally the latter!

Perhaps we should look at what turns us on rather than our passions – a new take on the Chicken & Egg?

Neil Steggall

Barking Mad with Neil Steggall

http://wp.me/p401Wv-hZ

Business Advice with Bite

www.wardourcapital.com

   Logo Small wcp 2014

Who is.....WCP 2014

Don’t F*** With Your Business. Plan For Success.

I apologise for the title, but I see so many smart people with so many great ideas fail to make the grade and do you know why? They simply fail to develop and implement an effective business plan.

In my experience in leading dozens of business planning workshops across the world, I’d say only around 10% to 15% of the small to mid-cap teams I’ve encountered have an effective business planning process.

Why is this? Why do so many business owners fail to understand that good planning equals good management and that in turn, builds a great business? Am I missing something here? Can it truly be such a hard concept to sell, so hard for a burgeoning entrepreneur to grasp that a sound business plan could secure their future?

So back to the title……simply put it reflects my sense of frustration!

It’s not hard; business planning is about managing resources and priorities in an organized way. It is a function of leadership, and good leadership and management is directly related to productivity.

How can we fix this?

Well here are three very easy steps to help get you planning and, in turn, improve your management, productivity and performance.

1. Write a plan. Many business plans are written to look good and impress investors, banks and other external parties. What we are looking at here is a simple document designed purely to help you as the business owner manage better. Start simply and just jot down the essential points of your business as bullet points, tables, and short explanations. The strategy element of planning is to focus  on  where you want to be, what you’re good at, what matters to you, which people are most important to you and what you can do for them. It’s about positioning, determining your target market and product focus.

It’s important to write these details down in order to commit to your vision and to communicate your vision to close stakeholders such as employees. If you don’t have a team, there’s value in being able to refer back to your original thoughts and ideas for your business and to compare them to your actual results.

2. Set Milestones. In order to check your progress, define and then include your long-term goals. Think in general terms about how you see your business developing over the next three years.

From there, get specific. You’ll want to establish milestones for when you want to accomplish certain goals, and know who you will want to carry them out. Go beyond sales, costs and expenses, and look at what really drives your business. It might be conversions, page views, clicks, meals, trips, presentations, seminars and other engagements.

Then, establish a review schedule — when you and your team review changed assumptions, track results and make changes as necessary.

3. Implement Your Plan. Involve your team and encourage ownership of ideas. Tracking and analysing numbers can help you manage the work behind the numbers. You’ll be in a better place to recognize and highlight what’s working and what isn’t working for your business and your team.

Suppose enquiry is up, but conversions are down or revenues are up but margins down. You collect your data, review it with your team and develop a plan to make changes toward reaching your goals. That’s management.

Managing your business successfully requires more than just praise and pats on the back. Sometimes it means focusing attention on problems, helping people solve them if possible, discussing and embracing mistakes, and, in the worst case, weeding out people who don’t care about bad results. This can all be accomplished more efficiently when you have a plan in place.

Related article: – The Power of Marginal Gains |  http://wp.me/p401Wv-di 

Either way, whether results are better than expected or worse, the planning and tracking makes your follow up easier. The process itself adds commitment and peer pressure to the team. Highlighting good performance is easier when there are agreed-on numbers to define it. And, probably most important, dealing with poor performance is always hard, but not quite as hard when you can focus on the specific numbers instead of personalities or office politics.

Which brings me back to where I began: Planning is management. Without planning, your management is at a real disadvantage.

Neil Steggall

Barking Mad with Neil Steggall

http://wp.me/p401Wv-hE

Business Advice with Bite

 

www.wardourcapital.com

   Logo Small wcp 2014

Creating an Entrepreneur - WCP 2013

Creating an Entrepreneur!

Is it possible….YES it is!

 

Entrepreneurs can be seen as the rocket fuel of new ideas, they create new businesses and form new industries and in common with such dangerous fuels entrepreneurs can occasionally end with an explosion, yet despite the occasional explosion we have to accept that entrepreneurs have driven commerce and commercial ideas forward for millennia.

Why are entrepreneurs and sound corporate management generally seen as oxymoronic? A commonly held corporate view is that entrepreneurs are too highly individual, unpredictable, difficult personalities and when it comes to team work and the subtleties of the office culture…..well perhaps it’s best not to go there!

Is this a fair view in today’s market or a historical carry over? Well perhaps it is time to re-assess, as entrepreneurs are changing and today’s business schools and universities are turning out business and law graduates with specific qualifications in entrepreneurship.

Having a brilliant, yet well rounded entrepreneur within a company could provide a much needed boost for most organisations. Imagine; a manager who embraces autonomy, who can not only see the problems but looks beyond to the solutions and the potential opportunities which can flow from the solutions.

A new generation of innovative and creative executives who can transform  ideas into profitable ventures. They strike the perfect balance – they look, act and think like entrepreneurs, but they work for the corporation. As any manager knows, such entrepreneurial team members are a rarity; however, this need not be the case.

Why not change your management culture to enable your future leaders to become more creative and entrepreneurial by developing a focused culture where innovation and creative thinking is encouraged, supported and of course rewarded.

One of the main problems facing many organisations is that they have lost sight of the importance of fostering creative thinking and innovation. They have become afraid of change and in doing so they are placing their business at risk and allowing their competition a valuable advantage.

Innovation should be seen as your ultimate corporate advantage and innovation springs from the minds of motivated and engaged employees, yes your entrepreneurs!

In the sixth century Sun Zu said “you may survive though defence but you can only win by attacking” and more recently Peter Drucker said “Business has only two functions — marketing and innovation.” Of course the most efficient and lasting method of attacking your competition is through marketing and innovation.

So what can your business do to be more competitive, to as Sun Zu recommends, “go on the attack?”

A decision to attack can filter down from the board through the CEO or an entrepreneurial culture within the organisation of creative thinking and visionary innovation can develop the strategy and sell it up the ladder.

Either route is possible but the latter will always deliver a better result.

A successful organisations culture inevitably stems from good leadership. This doesn’t mean that the board or the CEO have great ideas, they may have, but more importantly they create the environment in which managers are given the freedom and confidence to experiment and innovate. A management team encouraged to think and innovate will be motivated and will form a strong and positive corporate culture.

So how can we turn this into reality and create an entrepreneurial environment in your organisation? Here are my 7 steps to creating an entrepreneur:

  1. Create the environment. Ensure that management feel free and secure in scoping new ideas, in testing the established methods, in questioning and innovating at all levels and across all ideas. Allow for failures, if one out of ten ideas succeeds that’s probably a good trend line, eventually one of these ideas will boom!

  2. Thoroughly research and understand your customer and market needs and how well those needs are being met, look at how your organisation and products are perceived and then turn the table and examine your competitors. Equalling the value of competitive offerings is not going to “cut the mustard” if you want to win you must always ensure that you are leading the field in Marketing and Innovation and following through on customer service. Encourage your team to be bold, be different and be the best.

  3. Assume responsibility for your organisations cultural change and encourage and empower people to bring forward and implement their ideas and innovations.

  4. Support, learn from and work through the failures. If you get two or three successful new ideas and one absolute winner out of every ten pursued you are ahead of the trend line.

  5. Constantly strive to improve, to innovate and to lead, implement a strategy of marginal gains (The Power of Marginal Gains http://wp.me/p401Wv-di ) you will be surprised by the strength of results.

  6. Never underestimate your competitors, look at today’s automotive brands compared with those of 30 years ago. The industry initially laughed at Japan’s underpowered, small cars with floral carpets and upholstery but few would laugh today. Again Marketing & Innovation win!

  7. Your staff are outstandingly flexible and reliable assets to be deployed in the building of your business. Never see them as a cost, create an atmosphere of respect, treat employees as the rare and valuable resource they are and you will both reap the rewards of an exciting and vibrant corporate culture.

Some of the best ideas and simplest innovations are from businesses that already have had such a drive or survived times of stress. Don’t always look to reinvent the wheel, occasionally take the world’s best wheel and simply improve it. Sometimes copying is the best route forward, look at how the Japanese destroyed the UK motorcycle industry in the 1960’s and 70’s, they initially copied the UK machines and then introduced innovative and more advanced products.

 In the end, innovation is an state of mind. Train your key people to think and see differently, to search every day for the new, the better, form, function, value and service. This is where Steve Jobs was masterful in transforming not only an industry which he had helped create but in transforming the culture of a major global enterprise.

The value of leadership and empowering your management is enormous and in truth no one has a choice in the matter. Everyone must adapt, change and innovate and we can all with training, help and enthusiasm become entrepreneurs.

Empowering employees to be innovative and creative, and encouraging a ‘can do’ attitude can reap rewards for everyone – whether monetary or reward based – and companies that do this are more likely to survive the recession.

A recent show on the ABC called Redesign My Brain, hosted by Todd Samson, shows just how adaptable to new ideas, concepts and skills our brains are.

It has been said so many times but the answer is to constantly look beyond the horizon and use 360 degree vision and thinking.

 

By, Neil Steggall

The Barking Mad Blog

Business Advice with Bite

http://wp.me/p401Wv-gv

 www.wardourcapital.com

Logo Small wcp 2014

Advisory Boards - WCP 2014

“Rain-makers, Prophets & Angels”

The

Business Catalysts

Wow! This sounds like the team for me. Where can I find them?

Its not a hard team to find just look around. Team members tend to carry a little grey hair, a touch of authority, plenty of business experience and perhaps the chink of available cash in their pockets.

Yes we are speaking of experienced Advisory Board Members.

As management turnaround specialists and consultants when we start to restructure a company or write a new business plan or turnaround strategy to drive profits forward we often wonder why such a potentially strong company hadn’t sought out the skills, knowledge, contacts and potentially equity of one or more sound Advisory Board Members

Businesses are often partnerships of two, three, four or however many shareholders and everyone starts off enthusiastically sharing a vision and a common goal. As the business grows so does its complexity, so do peoples roles, so does the risk profile and one or more of the partners starts to feel less sure about direction.

Being basically respectful individuals nothing is said but there again nothing is agreed upon and out through this crack in solidarity leaks direction, strategy and growth until the business suffers.

When any business reaches this stage something has to give and a positive action will usually result in a better result. Its often at this stage Advisory Board Members are recruited.

Our three tips for a positive Advisory relationship are:

PRE-EMPTION: Ideally you avoid the problem through forward thinking and planning. Manage this is by maintaining honest and open channels of balanced discussion between all shareholders and a good way to do this is to invite one or more independent skilled mentors to join your board as “Advisory Board Members”.

 An advisory member is not a director in a legal sense but the directors agree to include the advisory board member in all board meetings and in all key discussions and decisions. Often the advisory board member Chairs the Board Meeting and records the minutes to help maintain independence.

 INDEPENDENT CALM: If you have reached a stage at which the board is struggling to function consider appointing a qualified professional mediator who can bring a fresh and independent approach to the matters at hand and advise the board accordingly. Once the matter has been mediated you may consider asking the mediator to act as a temporary Advisory Board Member and Chairperson until you can make a permanent appointment.

THE SAGES: Smart operators don’t wait for problems to occur. They get in early and appoint an Advisory Board from the beginning. As an example, a company we advise in NYC appointed a strong advisory board when forming the company.

This board gave them credibility, depth of knowledge, skills, and contacts and made a significant contribution to the results of the first round fund raising. Three years on the company is now in pre IPO.

 The Advisory Board has helped with strategy and top level management along the way.

 Over the past three years the young entrepreneurial management team has been free to drive the business, implement key growth strategies, see a concept become reality and know that during the tough times, and there have been many, they had mentors to speak with and well-connected friends to help raise additional cash from time to time.

ADVISORY BOARD MEMBERS?

 Who are they: They are usually experienced, successful, well connected business people who are no longer fixed into an 8.00am to 6.00pm position with a single entity. They are usually over 50 years of age and very well qualified.

 What do they offer: Other than huge experience they offer balance.  A little grey haired reserve to offset and complement youthful entrepreneurial vigour.  They have usually experienced much in their careers and very little surprises them, a single phone call can open many doors and independent advice protecting shareholders and the company is invaluable. Little is new in the world and a really top Advisory Board Member has experienced most problems and many opportunities over their career,

 What do they cost: Well how long is a piece of string? I prefer to look at what they will add but on the issue of cost it varies enormously. Most will look at working on a minimal cash basis tied to success fees and share options, others look for a fairly nominal sum valuing the challenge.

 Why appoint an Advisory Board: Because on almost every level it’s a real win, win, situation. Managing start-ups or young high growth companies is about as hard as life gets, you need all of the help you can get and strong, independent, experienced help with great ideas and connections has to work.

To me bringing on board such skilled and connected advisor’s is a no brainer, it is a rapidly growing model globally and as I commented earlier offers so many win, win, benefits to all parties. Choose each other carefully, respect each other and reap the rewards.

 By, Neil Steggall

The Barking Mad Blog

Business Advice with Bite

http://wp.me/p401Wv-fI

 www.wardourcapital.com

Logo Small wcp 2014

 

3 Short Steps to Success 

3 Short Steps to Success - WCP 2014

Some years ago, a small number of our organisations global executives, myself included,  met in Buenos Aires to engage in an intimate three day intensive workshop with a “management guru” who was at that time considered to be one of the world’s greatest “thinkers”.

This was my second session with this guy in 18 months and I knew he would drive us hard and along unconventional routes. On the second day and without warning he asked “Neil take a pad and paper into the interview room and over the next 30 minutes prepare in as few words as you can, a presentation on  – what you need to be a success – you have to be fully prepared to discuss and defend your theory on your return”……WOW!

Shaken and nervous I found myself 45 minutes later presenting for the first time my “3 Short Steps to Success”.

I hear you ask: “Can it really be so easy as to define a path to Success in 3 Short Steps?”

Yes. I believe it can. I believe I later used this 3 Short Steps to Success method to achieve my first real “non-corporate business success” and I believe you can use it too. The lesson I was taught in Buenos Aires is that often the simple path is best.

Note I used the word believe three times in the previous sentence. It’s not bad writing or bad editing its positive discrimination, more on belief later.

There are three core common factors in achieving anything of significance be it in sporting, academic, professional or business arenas.

THE VISION:

“Dreaming, after all, is a form of planning. –Gloria Steinem”

If you know what you want to achieve, if you can close your eyes and envisage it, taste it, feel it then you are already well along the first step to success. You don’t have to know the detail but you need to understand on a subconscious level where you are going.

I am sure Ray Kroc didn’t wake up one morning and say “hey I am going to build the world’s largest burger chain today”. But I am sure that as an American of Czech origin he knew he wanted his part of the American dream and that dream was something, a vision or dream, he carried with him every moment of every day.

The Success Vision you develop is about your destination rather than the journey. To a large extent your destination will determine the journey.

The first important step is to envisage that destination because if you don’t know where you are going you will probably never arrive!

THE BELIEF:

“Believe you can and you’re halfway there. –Theodore Roosevelt” 

Once you have developed the vision you have to develop the belief in your ability to complete the journey, to follow that vision through to journeys end.

Part of building belief is to break the journey down in your mind into manageable chunks, to start to fill out your vision, understand it and believe in it implicitly.

Essentially you have determined where you are going and you have to train yourself, body, mind and soul to reach that end point.

We each train our bodies and minds in different ways. In this example we are reinforcing our belief in a vision of our making. Quite a task but by imagining scenarios, dreaming, thinking through our vision that vision starts to become reality and when that happens you develop a belief in your vision and your vision starts to become reality.

THE PERISCOPE:

“Certain things catch your eye, but pursue only those that capture the heart. – Ancient Indian Proverb”

Once you have locked in Vision and Belief the journey begins and the specifics of how success is going to be achieved come into play.

When I first started speaking on the 3 Steps to Success I used the phrase “Keeping  Your Periscope Up”  to describe a subconscious search that would be constantly scanning the horizon to  highlight the occasional “blips” of potential opportunity.

Imagine as you go about your day to day business carrying your vision and belief whilst the “Periscope” of your mind is scanning the horizon and filtering the signals to uncover opportunity.  Over a number of years this “Periscope & Filter” approach has thrown up for me many more quality opportunities than I have found or devised brainstorming in the office or any other method.

Let’s return to Ray Kroc once again. Do you think when in 1954 as a kitchen equipment salesman he wandered into the MacDonald brothers store in San Bernardino, California thinking of buying it? No. But he had his Vision and he had self-belief and his periscope radar “pinged” loudly..

His had been a long, tough, journey, he was 52 years old and yet his periscope was up and operating. The fact that this small burger store was so popular as to need 8 new “multi-mixers” started him thinking, the fact that the store was so efficient fed that thought process and his Vision saw a chain of burger outlets.

Never lose sight of the fact that success is many things to many people. A good friend of mine was an acclaimed AFL player for a major team yet he never played in a Grand Final. I asked one day how he felt about that and he said “every time I walked onto the ground and heard our supporters roar, I couldn’t believe I was so lucky or so proud. Win lose or draw I was doing what I had dreamt of”.

This is success. My friend later enjoyed a successful off field business career and now he throws his still considerable energy into chairing a not for profit organisation. A successful life lived well.

Two favourite quotes of mine which have relevance here are:

“The most difficult thing is the decision to act, the rest is merely tenacity”. –Amelia Earhart

Limitations live only in our minds.  But if we use our imaginations, our possibilities become limitless.” –Jamie Paolinetti

 

By, Neil Steggall

The Barking Mad Blog

SMS Advice with Bite

http://wp.me/p401Wv-fZ

www.wardourcapital.com

Logo Small wcp 2014

 

Perception - WCP 2014

The Importance of Market Perception

Perception Marketing has become big business and until recently I had applied little thought to the question of Perception versus Reality. People apparently now build entire careers around Perception Management, they are not involved in Product Development and Product Improvement, their mission in life involves changing us! Changing our Consumer Perception!

My regular readers are familiar with my commitment to Peter Drucker as the essential marketing guru. His definition of marketing is: – “to take something useful and turn it into something desirable”. I believed I understood this, yet recently I have encountered some surprising and strangely lasting, examples of perception marketing driven desirability.

A couple of weeks ago I was having a product discussion with my son, the CEO of a US based FINTEC company, and I offered the opinion that the product (under discussion) was crap! He answered promptly, “I know that, you know that, but the market perception is different and the market perception is reality”.

At first I was disturbed by this, isn’t it wrong to sell a substandard product, even if the customer is satisfied?  Well let’s think again before we decide.

New Scientist magazine recently published an article describing how researchers at Harvard tested a new painkilling drug as well as placebos on migraine sufferers. The placebos, despite their lack of real painkilling ingredients, were remarkably effective. “The placebo… accounted for more than 50% of the drug effect,” the scientists found.

To most of us this is hardly news; drug trials routinely incorporate control groups who are given placebos to assist in identifying results that are outside the standard placebo effect. Other drug trials have shown that tiny placebo pills can have stronger effects than large ones because they are perceived as especially potent. Placebo colour can make a difference, too.

I had to ask myself are placebos “my crap” or “market reality”?

The lesson for marketers is that our experiences are shaped by our expectations

Do we have other examples of “placebo marketing”?

Until recently we had a substantial investment in the wine industry. Wine is the ideal product to illustrate how marketing perception affects consumer experience.

Most of us and even those within the industry don’t have the honed palate of a master of wine, and how we enjoy wine is heavily influenced by what we think we know about the wine.

Perception marketing experiments showed that the same wine thought by a taster to cost $45.00 rated better than when it was thought to cost $5.00. Not only was this a win for the perception marketers, it actually lit up a wider area within the pleasure centre of the taster’s brains. In other words the perception became reality, it really did taste better to them.

It’s an example of consumers really believing “You Get What You Pay For” – yet again Marketing Perception has trumped reality.

This brings me back to Peter Drucker’s quote. Desirability may not be a product of quality but of expectation.

By, Neil Steggall

The Barking Mad Blog

SMS Advice with Bite

http://wp.me/p401Wv-eC

 

www.wardourcapital.com

Logo Small wcp 2014

entrepreneurs

Creating an Entrepreneur!

Is it possible….you better believe it!

 

Entrepreneurs are often the rocket fuel which drives new ideas, creates new businesses and indeed new industries. In common with such inflammable fuels entrepreneurs can often end with a bang but overall they have driven commerce and commercial ideas for millennia.

Most entrepreneurs tend to be highly individual, difficult and unpredictable and lacking in reputation when it comes to team work and the subtleties of the office culture. This is changing as most business schools and universities are turning out graduates with qualifications in entrepreneurship.

Having tame yet empowered entrepreneurs within a company is the dream for most business owners. These are employees who will undertake something new, without being asked to do so. They are innovative and creative – they are people who can transform an idea into a profitable venture for your business. They strike the perfect balance – act like entrepreneurs, but they work for you.

But as any business manager will know, such individual entrepreneurs are a rarity, however, this needn’t be the case. Every employee can become more creative and entrepreneurial if their company adopts a different approach to their development and cultivates a culture where innovation and creative thinking is encouraged and supported.

One of the main problems facing many Australian businesses is that they have lost sight of the importance of fostering creative thinking and innovation. In doing so, they are placing their business at risk and giving the competition a serious advantage.

We can’t lose sight of the fact that the economic crisis has turned many offices into high pressured working environments, where employee engagement and confidence has been eroded. In such businesses energy, creativity and innovative thinking has been lost.

However, what has also emerged is a (it’s not us) blame culture where business people are blaming their current poor business performance solely on the recession and external factors. But this is a bit like complaining that you are wet because it’s raining. How about wearing a raincoat? Businesses have a duty to prepare for the future upturn and ramp up their competitiveness.

The actual ‘raincoat’ for business is not to cut costs and act in defence; it is to build resources and attack. Sun Tzu in the sixth century said that you may survive though defence but you can only win by attacking. One of the oddest paradoxes of the business world is how many business owners never even see themselves in a competitive situation. Absurd! Competition in so many forms is ever present and can never be ignored.

So what can businesses do to be more competitive? It is in times of adversity that some of the greatest innovations have appeared and in today’s straightened times there is a healthy pressure to differentiate, become more competitive and establish more intrinsic value in the organisation. Does this come about by exhortations by the CEO or by establishing a culture of freedom to think and innovate? It may be the former but it must be the latter.

It is down to business managers and the HR department to establish a culture where intellectual power within the company is harnessed to the betterment of innovation and in so doing equals motivation, productivity and profits. An energised workforce is an effective and content one.

Most people in an organisation have enough insight of what is going on to be able to contribute to innovation. However, we are not talking just about suggestion boxes. I am referring to special projects and cross functional work groups to establish innovation in products, service and operations.

Managers need to make it clear that this is not a one off; to create sustained motivation, people must feel valued. Leadership has to be consistent and authentic in the way that it empowers teams to be create

Here are some ways of encouraging creativity and innovation:

Innovation       

1. Understand and know what the market wants, but know more about what your competitors are offering and how they behave.
Competitors of all kinds are the minimum benchmark for which to aim. Equalling the value of competitive offerings is rarely going to suffice – always ensure you are moving to stay ahead. Look at every weakness in competitor offerings and operations and use advanced brain storming tools such as ‘meta planning’ to develop and refine the winning concepts. To win you must find that point of difference and it’s usually a combination of ingredients which becomes – your winning recipe

2. Empower people to implement their innovations.

3. Make it clear that a business must always rethink, reposition, invest and develop its products and services.
NEVER stand still. Even those lucky enough to have patent or intellectual property protection must seek to acquire more advantages. If in any doubt about this then compare the car manufacturers on the road today with those of thirty years ago. GM laughed at the Japanese cars with their floral carpets and tiny engines. England was the undeniably solid centre of motorcycle production.

4. The customer is always a good start point for innovative thinking and should be a central focus for the whole business.
The customer and their relationship is central to business success. Do not rush to copy some competitors’ ways of caring for customers (e.g. automated telephone services!). Develop new ways to engage with customers in a way that customers want. They will repay you over and over. This is how Virgin took so much business away from the likes of Qantas

5. Treat internal employees as customers and friends.
The best innovation can come from co-operation between employees – this is an effective way of bringing out entrepreneurs. Identify and appoint innovation ‘champions’ around the business. These people will be the leaders on innovation development and manage the process. They must drive the culture.

6. Any function has scope for innovation – always.
HR, finance, customers service, manufacturing, legal, they all must innovate and an innovation culture that embraces all the functions will be a better joined up organisation.

7. Lead people to look externally for inspiration and don’t be afraid to steal other people’s ideas.
Some of the best ideas and simplest innovations are from businesses that already have had such a drive or survived times of stress. Don’t reinvent the wheel copy the world’s best practice then improve it.. Sometimes copying is the best route. However, copy it, and then improve it. Look at how the Japanese destroyed the UK motorcycle industry, they initially copied the UK and then made the products better.

8. Managers should promote external focus from all departments.
Many businesses suffer from internalism and parochialism. They stunt growth, innovation and sap energy. Assume that your business could be killed off by new entrants to the market or new innovations – people or technology based. Get people to think the un thinkable, develop thinking around scenarios that may seem unrealistic. In the 1960’s Black & Decker was the world’s largest and most trusted power tool maker. Which of the analysts and business commentators wrote or though in 2007 the major global banks would fail, that the system was unsupportable and a crash inevitable.

9. Lastly, companies must look forward, and by looking forward I mean 360 degree vision and a strategy to see through it. Most look back when setting budgets and design parameters.
Create a ‘can and will do’ rather than ‘can’t do’ culture. There are ‘no but’s’; only ‘yes and’

In the end, innovation is an state of mind. Train your key people to think and see differently, search every day for the new, the better, form, function, value and service. This is where Steve Jobs was masterful in transforming not only an industry which he had helped create but in transforming the culture of a major global enterprise.

The value of leadership and empowering your management is enormous and in truth no one has a choice in the matter. Everyone must adapt, change and innovate and we can all with training, help and enthusiasm become entrepreneurs.

Empowering employees to be innovative and creative, and encouraging a ‘can do’ attitude can reap rewards for everyone – whether monetary or reward based – and companies that do this are more likely to survive the recession.

A new show on the ABC called Redesign My Brain, hosted by Todd Samson, shows just how adaptable to new ideas, concepts and skills our brains are.

It’s been said so many times but the answer is to look out of the box or in more 21st century terms constantly look beyond the horizon and use 360 degree vision and thinking.

The Barking Mad Blog

SME Advice with bite!

13 October 2003

http://wp.me/p401Wv-73

If you enjoyed this article join the 15,000+ professionals who follow Neil on line. Take a moment to leave your email address and follow The Barking Mad Blog.

www.wardourcapital.com

Logo Small wcp 2014