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Coaching SMMEs to remove risky business assumptions
An opportunity for impact
• Coaching SMMEs to remove risks
• Better deals with less risk
• Can assess the entrepreneurs progress over time
Effectual thinkingThe logic of expert entrepreneurs
Source: Sarasarvathy (2011)
3 40 start upsto
$200 million to $6 billion
1IPO
Bird-in-the-hand principleBegin with your means
People
Knowledge
Resources
Market
GapPlan
Market
Research
Causal thinking
Opportunities
Knowledge
People
Resources
Outcome
Outcome
Outcome
Outcome
Outcome
Outcome
(Imaging a possible new end using a given set of means)
Effectual thinking
Opportunities
Knowledge
People
Resources
Outcome
Outcome
Outcome
Outcome
Outcome
Outcome
Effectual Thinking
(Imaging a possible new end using a given set of means)
Gum trees
Piping
Library
books
Bicycle pump
Motivation to
help
Think a lot. Let’s create a plan.
Make progress with what you have.
Minimum variable product
MVP definition:
A product you can create quickly that customers will use/buy
LESSON: LEVERAGE OTHER BUSINESSES
2 HOUR SEMINARS Book
Lesson: Be creative with delivery
ANAT FOOD CHAINFLEE MARKET STAND
Lesson: A low cost way to deliver the product
Lesson: Manually deliver the product
Skinned Wordpress sight
Filemaker to create PDF coupons and emailed
LESSON: USE EXISTING TOOLS AND PRODUCTS
LESSON: DO IT MANUALLY
Lesson: Leverage other businesses
2 hour seminars Book
Lesson: Be creative with delivery
ANAT FOOD CHAINFLEE MARKET STAND
Lesson: A low cost way to deliver the product
Lesson: Manually deliver the product
Skinned Wordpress sight
Filemaker to create PDF coupons and emailed
Lesson: Use existing tools and products
Lesson: Do it manually
Affordable loss principleProtect the downside
Richard griffin
Richard griffin
“It was the first time in business that I felt real shame,” he says. “I couldn’t pay bills, I couldn’t pay staff, family and
friends who had invested in me and the business lost huge amounts of money and it was all because of me. It was the first time in my life where I just couldn’t find a way to come
up with a second plan. There was this thing that was beyond my control that I couldn’t fix – and it just broke me.”
Risk takers?
Risk takers?
Risk Taking
I’ll start cheap make sure I… cover my cost don’t have to take huge risks…. uhm… one thing I’m sure about my
experience… never take any risk if you can help it… it is just the opposite of what most people think about….
Entrepreneurs [E5]
Source: Omidyar (2002)
“Back when I launched eBay on Labour Day 1995, eBay wasn’t my business – it was my hobby. I had to build a system that
was self-sustaining… …because I had a real job to go to every morning. I was working as a software engineer from 10 to 7,
and I wanted to have a life on the weekends. So I built a system that could keep working – catching complaints and
capturing feedback – even when Pam and I were out mountain-biking, and the only one home was our cat.
Jean Marc-Tostee
Time
Size
‘92 – Gotcha, Wrangler Agencies
& Biotribe factory
R30 million – ‘98
100 employee – ‘97
R50 million - ‘01
Time
Size
‘92 – Gotcha, Wrangler Agencies
& Biotribe factory
R30 million – ‘98
100 employee – ‘97
R50 million
Chinese Imports
R6 to R13 to dollar
- ‘01
Having lost my business so suddenly, I was now
setting up a licensing base and succeeding in
spreading my risk across a number of products,
licensees and manufacturers. We have the brands,
they have the factories. With this licensing model,
we find the best manufacturers and negotiate a
win/win partnership with them – I provide the
product ideas and brand knowledge and they
produce products they are already successful at
making, but under our brand. Together we have a
thriving business.
Time
Size
‘92 – Gotcha, Wrangler Agencies
& Biotribe factory
R30 million – ‘98
100 employee – ‘97
R50 million
Chinese Imports
R6 to R13 to dollar
2 employees – ‘05
- ‘01
R160 million – ‘09
’04 – 20 Licenses
‘01 – Licensing model
With the benefit of hindsight, I know now that back
in 2001 the business I had built was hugely
exposed to external risks. Today, I would not
employ that many people. I would not make and
distribute so many diverse products from just one
facility. It makes far more sense to outsource
production to manufacturing and distribution
experts who have all the expertise and channels in
place. I would, and do, take forward cover on any
international forex importing and exporting we do.
I keep overheads to an absolute minimum and
maintain tight control over all financial aspects of
the business.
Do everything you can to lower the risk of failure
and protect yourself if you fail.
I always go into a deal anticipating the worst. If you plan for the worst—if you can live with the worst—the good will always take care of itself.
Coaching SMMEs to remove risky assumptions
What would you suggest this entrepreneur do? (15 mins)
What would you suggest this entrepreneur do? (15 mins)
Conclusion
100 MILLION TREES SAVED
HAGEN STEHR
PROBLEMS
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