Entrepreneur SmartTips Guide Business Growth Rapid Steady Growth

7/28/2019 Entrepreneur SmartTips Guide Business Growth Rapid Steady Growth

1/10

TheHow-to

Handbook

smartp


2/10

d e f i n i n g t h e b u s i n e s s m o

Take your start-up to the next level with thiscollection o business growth articles selected

rom Entrepreneurmagazine. In this booklet,expert writers will guide you through the disciplinesand principles necessary to build a solid platorm or

protable and sustainable growth.

A Platr r Rapid, Steady GrtcoNsIstENt ANd AggrEssIvE growth cAN BE rEAlIsEdthrough thE dEvElopMENt of BusINEss dIscIplINEsANd succEss prINcIplEs.

Businss Advi Tls:

1Habits for success & ProsPerity

World-renowned expert Brian Tracy onwhich habits to develop to take your business

to the top. Pg 2

2Define roles & structureBuild your business as i it were a ranchiseand dene roles upront to build a solid

oundation. Pg 6

3get your Plan in actionHow to use ROI (return on investment) tond the most avourable strategy to grow your

business. Pg 8

4Dominate your marketFind out what it takes to get ahead o the

competition. Pg 10

5get more business from

fewer clientsRather than planting new accounts, cultivatethe relationships with the customers you

already have. Pg 12

6avoiD Diseconomies of scaleFor years business owners have been strito grow their businesses bigger and bigger to

achieve economies o scale. Pg 14

7aDaPt to surviveWealth expert Robert Kiyosaki on buildingyour company to be tough and tenacious, or

lithe and limber. Pg 16

i

PUBLISHING CREDITS

plh Andrew Honey maa Nicole Lombard cpy Lesley Lambert a c NikkiEntrepreneur South Africa is published by Smart Business Solutions (Pty) Ltd. A KreditInform Group Company

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The absence o any one o thesekey habits can be costly, even

atal, to your company. Whenyou become competent and capablein each o these areas, you will be

able to accomplish extraordinaryresults ar aster and ar easier thanyour competitors.

1Plan thrughly. The rst re-quirement or business successis the habit o planning. The betteryou plan your activities in advance,the aster and easier it will be or

you to carry out your plans and getthe results you desire once youstart to work.

There is a Six P acronymthat says, proper prior planningprevents poor perormance. Very

oten, the rst 20% o the time thatyou spend developing completeplans will save you 80% o the time

later in achieving the business goals

you have set.You need to ask yoursel very

specic questions and be sure tohave crystal-clear answers (seebox, page 5). Once you have asked

and answered these questions,

the next stage o planning is toset specic targets or sales and

protability. You must determine theexact amount o money, adver-tising, marketing, distribution,

acilities, and administration andservice people you will need in orderto achieve your goals.

2Get rganised bere yuget started. Once you havedeveloped a complete plan or your

business, you must then developthe habit o organising the people

wANt to tAkE your BusINEss to thE top? dEvElop thEsE hABIts ANd ENjoy

A sMooth jourNEy. By BrIAN trAcy

Habits r Success & Prsperity01

smart tips: platform for rapid, steadY growth

S m A R T T I P S S E R I E S4 S m A R T T I P S S E R I E S www.enTrepreneur mA g.co.zA

and resources you need beoreyou begin. In organising, you bringtogether all the resources you have

determined youll need in the plan-ning process. In the military, thereis a saying: Amateurs talk strategy,

but proessionals talk logistics.Its essential that you determine

every ingredient youll need beore

you begin business operations andbring them together so they areready to go when you open your

doors or begin your project. The ail-ure to provide even one importantingredient in advance can lead to

the ailure o the entire enterprise.

3Find the right peple. The thirdhabit you must develop is thehabit o hiring the right people tohelp you achieve your goals. Fully

95% o your success as an entrepre-neur or executive will be determinedby the quality o the people you

recruit to work with you or to workon your team. The act is, the best

companies have the best peop

The second-best companies hathe second-best people. The th

best companies have the averaor mediocre people, and they atheir way out o business.

4Delegate isely. The ourthabit you need to develop obusiness success is proper deletion. You must develop the abilitdelegate the right task to the rig

person in the right way. The inabto delegate eectively can be thcause o ailure or underperorm

o the individual and can even babout ailure o the business.

When people start in busines

they usually do everything themselves. As they grow and expanjob becomes too large or one p

so they hire someone to do partHowever, i they are not careul,try to retain control o the task a

never ully hand over authority responsibility to the other perso

Whether youre an executive o

entrepreneur, you need to identi

two or three things that you do thcontribute the most value to you

pany and then delegate the rest. to think in terms o getting thingdone through others rather than

trying to do them yoursel. Its the

Q tp: Th thuhly yu plan ah

sta f yu businss ativitis

bf yu bin, th at th

pbability that yu ill sud

hn yu n patins.

you need

to identify

the two

or three

things that

you do that

contribute

the most

value

to your

company

and then

delegate

the rest.

more

infoi

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innovation

and growth

strategies

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o selecting and dening specicgoals, measures and activities thatare then used as benchmarks or

perormance. In his book FromGood to Great, author Jim Collinsreers to the importance o selecting

the economic denominator or acompany, and or individual goalsand objectives within that company.

Whichever number you choose, itmust be clear to everyone, and itmust be monitored continually to

make sure everyone is on track.

7

Keep peple inred. The

seventh habit or businesspeo-

ple is the habit o reporting resultsregularly and accurately. People

around you need to know whats go-ing on. Your bankers need to knowyour nancial results. Your sta

needs to know the status and thesituation o your company. Your keypeople, at all levels, need to know

what results are being achieved.In a study on workplace motiva-

tion, several thousand employees

said the most important actor lead-

ing to job satisaction was being inthe know. People in an organisa-

tion have a deep need to know andunderstand what is going on aroundthem in relation to their work.

The more thoroughly and acc

rately you report to people the d

and situation o your business, thappier they will be and the bett

the results they will get.

way you can leverage and multiplyyour special skills and abilities.

5Inspect hat yu expect.The th requirement or busi-

ness success is or you to develop

the habit o proper supervision. Youmust set up a system to monitor thetask and make sure its being done

as agreed upon. The rule is: inspectwhat you expect.

Once you have delegated a task

to the right person in the rightway, its essential that you monitorthe perormance o the task and

make sure its done on schedule

and to the required level o quality.

Remember that delegation is not ab-

dication. You are still responsible orthe ultimate results o the delegated

tasks. You must stay on top o them.When you have delegated a task,set up a system o reporting so thatyoure always inormed about the

status o the work. Be sure the otherperson knows what is to be done,and when, and to what standard.

Your job is then to make sure heor she has the time and resourcesnecessary to get the job done

satisactorily. The more importantthe job, the more oten you shouldcheck on the progress.

6measure hat gets dne. Thesixth practice o successulentrepreneurs and executives is thehabit o measuring perormance.

You must set specic, measurablestandards and scorecards or theresults you require. You have to set

specic timelines and deadlinesto make sure you make yournumbers on schedule. Everyone

who is expected to carry out a task

must know with complete claritythe targets he or she is aiming at,

how successul perormance will bemeasured, and when the expectedresults are due.

Dont underestimate the importance



This article is excerpted from Mii DHis from Entrepreneur Press EntreprMedia, Inc. All rights reserved.

b b P

DEvELoP THE HABIT oF

ASKING AND ANSwERING THEFoLLowING qUESTIoNS:

what xatly is y pdut

wh xatly is y ust

why ds y ust buy

what ds y ust

b f valu?

what is it that aks y p

svi supi t that

ptits?

why is it that y psptiv

ust ds nt buy?

why ds y psptiv

buy f y ptit?

what valu ds h/sh p

buyin f y ptit

H an I ffst that pp

t y ptits ust

buy f ?

what n thin ust y u

nvind f t buy f

than f sn ls?

everyone

who isexpected to

carry out

a task must

know with

complete

clarity the

targets

he or she

is aiming

at, how

successfulperfor-

mance

will be

measured,

and when

the expected

results

are due.

more

infoi

inormation

on demand

Over 800 pages

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business

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5/10

try keep up with the everydaydemands o the business.

This is a common situation orbusiness owners. Early in theliecycle o the business entre-

preneurs land up doing every-thing themselves, rom productdevelopment, marketing, sales

and accounting, to delivery. As thebusiness grows, so these demandsincrease. With the increasing

demands, the entrepreneurs do nothave the time to put in processesand systems to deliver on the

companys oering. They get drawn

more and more into the detail o ev-ery aspect o the business and the

business becomes more and moredependent on the owner to keepdelivering. This turns into a vicious

cycle that restrains the growth othe business and can lead to burn-out on the part o the entrepreneur,

or to poor quality products andcustomer service.

what can entrepreneurs do

to structure their business

so that it can grow without

consuming them and becoming

totally reliant on them?

One o the answers to this question

is to approach the building o a new

business with a ranchise min

as described by Michael Gerber

excellent book The E-Myth RevisIn other words, as you build you

business, set it up as though yogoing to ranchise it. A ranchisa recipe or a business that can

replicated many times over. Youhave no intention o ever ranchbut i you adopt the ranchise

mindset you are orced to denvarious roles in the organisationup the systems and processes

product and service delivery anthe goals and measures in plac

ensure success. This establishethe oundations or eectivebusiness growth.

It is not easy to bring this so

o rigour and discipline to a smgrowing business. It is much mun to just create, sell and deliv

But i you dont dene who doewhat and how things should bedone you will eventually nd

yoursel doing absolutelyeverything and orsaking every

other aspect o your lie to keepthe business growing.

what canentrepre-

neurs do to

structure

their

business

so that it

can grow

without

consuming

them and

becoming

totally

reliant on

them?

Defne Rles & Structures

Recently I called three o myriends to nd out i theywanted to join me or a Sat-

urday morning mountain bike rideollowed by a leisurely breakastand catch-up session. All three

are business owners and all threeturned me down. One had to spend

time compiling and sending outinvoices that were three monthsoverdue, the other had to work allweekend to push out a tender that

was due on Monday morning andthe nal person had to visit a client

who had called in that aternoon

with a major problem that neededto be sorted out by noon the nextday. As I pondered the situation

I realised that my riends werereally working hard and becomingoverwhelmed by the challenge o

managing a small but growing

business. They were eeling thestrain o being responsible or too

many acets o the business; theyelt like they were being pulled in20 dierent directions and they

were working crazy hours just to


02


GREG FISHER CA(SA), MBA, is an associatefaculty member at the Gordon Instituteof Business Science (GIBS) and is currentlyresearching Technology E ntrepreneurshipthe University of Washington

BuIld your BusINEss As If It wErE A frANchIsE ANd dEfINE rolEs upfroNt

to BuIld A solId fouNdAtIoN. By grEg fIshEr

more

infoi

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budgets &

fnancial

orecasts

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I the business is currently enjoy-ing an overall 25% ROI, the questionthe owner must answer is, Should

I invest R300 000 in the addition

o the new product line to earn anROI that is nearly 9% less than my

business is currently earning(25% - 16% = 9%)? The correct an-swer appears to be an obvious no,

but there may be other businessreasons that would cause the ownerto decide to add this product line,

such as the presence o a strongmarket demand or the new items.

In any event, once each growth

strategy is converted into an ROI per-

centage, you can compare dissimilargrowth options, and ROI can be used

as a critical nancial componentin any business growth decision.Furthermore, just as ROI analysis can

be used to evaluate these additional

growth strategies, it also can be

to evaluate business ideas, suc

those o entirely new businesseAnd ortunately, ROI analysis ca

applied to these new business iwell beore an owner ever decidinvest in that new business.

d e f i n i n g t h e b u s i n e s s m od e f i n i n g t h e b u s i n e s s m o

Most entrepreneurs haveavailable to them morethan one way to grow their

businesses. The process o decidingon a growth strategy is ongoing, andthe decisions that result can be criti-

cal to uture success.The search or real business

growth, by creating permanent in-

creases in prot as a direct result omeasurable and sustained increas-es in sales volume, may not only

be a reaction to opportunities in the

marketplace, but also a requirementin order or your business to main-

tain market share.The right decisions can conceiv-

ably have a major positive impact on

your businesss bottom line, therebycreating real growth. However, iyou choose unwisely, or decide

to do nothing when action isclearly warranted, the resultscan lead to a loss o growth

potential, or even a period o

negative growth (decreasedsales and protability).

As with so many issues inbusiness, growth decisions shouldbe based on objective nancial data,

consisting o relevant estimates

and projections. Not every growthstrategy can be expected to impact

a business in the same manner, andover the same time period.

Think o your decisions in the

context o ROI analysis. Eachgrowth opportunity has an invest-ment component, rands you will be

required to spend as a part o theprocess o implementing a specicgrowth strategy. The corresponding

return you can expect rom yourinvestment in business growth can

be represented as the increasedprot your business is projectedto incur, directly as a result o thesales increases created by your

growth strategy.

or example: A retail business

is considering growing by addinga new product line. The requiredinvestment to add the line is

R300 000. This addition is expectedto add R200 000 in annual sales,

and as a direct result, a correspond-ing R50 000 increase in annual netprot. Thereore, the anticipated ROIrom this additional (product) line is

in excess o 16% (R50 000 dividedby R300 000).


Get Yur Plan in Actin03

the process

of deciding

on a growth

strategy is

ongoing,

and the

decisions

that result

can becritical

to future

success.

usE roI (rEturN oN INvEstMENt) to fINd thE Most fAvourABlE strAtEgy

to grow your BusINEss. By dAvId MEIEr


Entrepreneur Media, Inc. All rights reser

s rdp:

1. All quality ti f

stati thinkin

2. Kp th plan sipl

3. mak tuh his

4. Fus n all phass f th

pss: assssnt, psit

plannin, iplntatin

5. gt yu idas/

assuptins hallnd

6. chk th roI

7. rvi ulaly

more

infoi

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3They generate real slutins.The big word today inbusiness is solutions, Jennings

says. But most companies arestill just selling stu, slammingboxes. Entrepreneurs who manage

to stay ahead o the competitioncreate authentic win-win solutionsor their customers. Jennings cites

the story o one entrepreneur whostarted out by sewing nursesuniorms, then began providing

all kinds o disposable items orhospitals, and now is taking overthe purchasing unction or entire

hospitals saving their customers

millions o rands in the process.Thats a win-win solution,

arms Jennings.

4They get eery eplyeet act like an ner.They do so by basing pay and

bonuses on the value eachperson adds to the business.You cant have everybody think

and act like an owner until youpay everybody like an owner,

Jennings stresses. Ownersdont get paid unless they createvalue, but i they create lots ovalue, they get paid a lot. I they

create tremendous value, they gettremendous pay.

5They base their businessa set fe r six aluesprinciples. It became very poa ew years ago or companiescome up with a loty set o 15

20 values, Jennings notes. Thung them on the wall, publish

them in the annual report andtalked about them once a yeacompany meeting. Then they wback to doing everything the w

they did it beore.

when an

entrepre-neur has a

manageable

number of

key prin-

ciples more

people are

able to make

decisions.


Jason Jennings the author oIts Not the Big That Eat the

Small... Its the Fast That Eat

the Slow and Think Big, Act Small

reveals the ve characteristics ocompanies that stay ahead othe competition:

1They hae executies h keep

their hands dirty. That meansentrepreneurs are on the rontlineswith customers at least 50% o thetime. Jennings explains: This helps

them keep their ngers on the pulsein the market they serve.

2They are uick t let g yesterdays breadinners.I a product, service or methodworked once but its day has

passed, they let it go. Theydont cling to the attitude that isomething has always been done

this way, it must be done this way,says Jennings. And they let go o

the idea that the CEOs ideas aresacrosanct. Businesses wastetoo much time trying to breathelie into something thats dead or

trying to make something workbecause its the CEOs idea.

fINd out whAt It tAkEs to gEt AhEAd of thE coMpEtItIoN. By MArk hENrIcks

Dinate Yur market04

more

infoi

big marketing

ideas or small

budgets

Log on to www.

entrepreneurmag.co.za or low

cost, highimpact ideas

k Pp

whn an ntpnu has

aabl nub f ky pinand vyn in th pa

kns th, ppl a

t ak disins. eply

dnt ait f th hiahy

disins, hih spds up

akin indibly.

Bin fast stayin aha

ptitin has nthin t

physial spd, Jnnins s

has t d ith thinkin fast

in fast, ttin t akt f

aintainin ntu. An

nly ay yu an b fast is

in su vybdy in th

kns h disins a

Entrepreneur Media, Inc. All rights rese



8/10


The next step is to anticipate the

needs and concerns o each depart-ment through a measurement o the

pain they are likely to experience.For example, i you are supplyingparts or production, you might

guess that their pain includes thelost production time rom equip-ment breakage. In response, you

might oer to warehouse spareparts, so their equipment will nevergo down or long. Make the sugges-

tion beore it even occurs to them

to ask. Or, oer to provide them withparts on a consignment basis that

they can keep on the premises.In other words, the goal is to pro-

vide meaningul solutions that not

only generate additional business

or you, but also create a barrie

your competition.Once youve dened addition

products and services your acc

can use, determine to whom yoshould present your solution. Tstart preparing your presentati

initiating your marketing plan. ing a concentration o businessa legitimate concern. But by div

siying your existing account, ycan make your relationship mosubstantial. Is putting all your e

in one basket really so risky? Nyou hard-boil them rst.


05rAthEr thAN plANtINg NEw AccouNts, cultIvAtE thE rElAtIoNshIps wIth thE

custoMErs you AlrEAdy hAvE. By rAy sIlvErstEIN


Its both a problem and a blessing:You have one or two very largeaccounts that make up the bulk

o your business. According to whatyou may have been told, such a con-centration is very risky; you should

never put all your eggs in one bas-ket. Or should you?

Most experts would advise you to

get more accounts, reducing yourconcentration o business. But yourmajor accounts are likely to grow at

a aster pace than your new ones.

The concentration will remain andyou will continue to be vulnerable.

Theres nothing wrong with tryingto grow other business. But Id liketo suggest a dierent approach.

Instead o reducing your businessconcentration, consider providingservices outside your core business

or activity. In doing so, youll addvalue to your account.

With that in mind, ask yoursel:

Do I know all the key players in-

volved in my main account? I not,get to know all the departments and

personnel involved in the account.The more you can learn about

your account, the more you can help

it with its endeavours. Knowing a

companys internal workings allowsyou to move seamlessly within the

business, solving more problemsand taking on more projects.

Bankers believe that i they touch

base with a customer ve or sixtimes, the probability o losing thataccount diminishes substantially. It

takes a great eort or a customer tomove all his or her business rom asource thats providing multiple ser-

vices. The same rule applies here.Knowing your customers busi-

ness gives you the knowledge toprovide extra value. This value maytranslate to oering any number oadditional services, rom packaging

and markings to engineering andsub-assemblies.

But dont just fy by the seat o

your pants. Create a customer mar-keting plan, a special plan just orthat key account. Starting with your

knowledge o the company, developaction plans or building relation-

ships in unamiliar departments.To do this, youll want to create

an organisation chart o your cus-tomers business, including all lines

o responsibility and authority thatimpact your product or service.

moreinfoi

beat the

competition

Log on to www.

entrepreneurmag.co.za andaccess the

sales archiveor hundredso smart tips

knowing

your

customers

business

gives you the

knowledge

to provide

extra value.

Ray SIlvERStEIn is the president and fouPRO: Presidents Resource Organization, of advisory boards for small business ow Entrepreneur Media Inc. All rights rese

mre Business r Feer Clients


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Build in space and tie r

relaxatin znes. Providing areas,

such as chat spaces or coeerooms, where employees cangather, relax and interact.

Identiying and using the natural

cunicatin echaniss that

eerge in the rganisatin. For ex-ample, the ounder o Geek Squad,an IT services provider, discovered

that his employees used onlinecomputer games to interact andcommunicate with one another.

Duplicatin ert. With growththere is an increased risk that

two or more people carry out thesame tasks. Aim to create an openworkplace where people share

what they are doing and can seeand hear other employees. Openworkplaces are enabled with open

plan oces, shared coee breaks,social interactions at work andheightened communication

across the board.

Tp heay cpanies. As thebusiness grows, too many chiescan creep into the system. An

oversupply o bosses can slowdown decision making and cause

conusion among employees.Avoid having too many managand be clear on each manager

accountability. Ensure that emees know which chie does wh

ofce plitics. Nip it in the buwhenever you see or hear it an

avoid getting drawn in at all coSet the example.

Decisin akers islated r

the results their decisins

Get decision makers to the ro

line. In larger companies this o

requires a deliberate eort, buis critical. Managers must inte

with customers and ront lineemployees at least weekly.

Inertia. An unwillingness tochange. Create a burning plat

when change is required. Makpeople uncomortable with thstatus quo by highlighting the

rent reality and how that mayto a very bleak uture. Be visu

well as verbal in drawing peopattention to the need to chang

make people

uncomfort-

able with

the status

quo by

highlighting

the current

reality

and how

that may

lead to a

very bleak

future.

GREG FISHER CA(SA), MBA, is an associatefaculty member at the Gordon Instituteof Business Science (GIBS) and is currentlyresearching Technology Entrepreneurshipat the University of Washington

S m A R T T I P S S E R I E S

The concept o economieso scale implies that the

bigger the business gets, thecheaper it becomes to produce ordeliver products or services. This

happens because the more unitsthe business sells the more unitsthere are to absorb xed costs.However, as an organisation grows,

certain additional costs creep in.

These costs are real and in somecases the cost o growing big can

outweigh the benets.So as your business grows, be-

ware o the ollowing diseconomies

o scale:

the cost o

communication.

With organisational growth, it

becomes more and more dicultor employees to communicateeectively within the organisation.

To overcome this, business ownersshould consider:

Size atters. Keep teams and

business units small.

Create a irtual eeting space.

Consider collaborative online work

spaces such as discussion boardsor wikis


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Aid Disecnies Scale06


10/10

Adapt t Surie07Is your coMpANy tough ANd tENAcIous, or lIthE ANd lIMBEr? By roBErt kIyosAkI

18 S m A R T T I P S S E R I E S www.enTrepreneur mA g.co.zA

T

here are two interpretations

o survival o the ttest. Therst and more widely accepted

is the idea o being competent and

able as in being physically t.This interpretation ts well with thesaying, Only the strong survive.

The second and less accepted in-terpretation is survival o the mostadaptive or fexible survival be-

longs to those who can t in a newenvironment.

In January this year, General Mo-

tors Corporation announced it was

seeking to cut costs by $11 billion(about R80 billion). It planned to

achieve these cost savings by reduc-ing worker healthcare benets, let-ting go o 30 000 workers and clos-

ing or consolidating a dozen plants.In that same month, Google

opened an oce in Phoenix. Sud-

denly, local companies were losingIT workers to the high pay and ben-ets Google was oering.

General Motors and Google are

examples o the two denitions osurvival o the ttest. Suddenly,

the biggest and strongest automak-er in the world was nding it moredicult to survive, simply because

it wasnt fexible or able to adapt.

At the same time, Google, ayoung company, ts into the new

economic environment and hasbecome the new 800-pound gorillao the business world.

The comparison o General Motorsand Google holds valuable lessonsor all entrepreneurs. What kind o

t do you and your company wantto be? Do you want to be t by be-ing the biggest and the strongest, or

by being adaptive and fexible? Areyou building a company that lookslike a muscle-bound bodybuilder,

or are you building a company thatlooks like a yoga instructor?

As an entrepreneur, my companys

growth and success are dependenton being strong as well as fexible.Adapting means keeping an open

mind and not becoming too attachedto yesterdays successes. It alsomeans hiring strong and fexible peo-

ple rather than bodybuilders bulkedup with degrees and corporate titles.

Though both types are strong, the

question is: Which body type and,ultimately, which company type, isbest designed or survival?

RobERt KIyoSaKI is author of the RichDad series of books, as well as an investor,entrepreneur and educator. EntrepreneurMedia, Inc. All rights reserved.


only the

strong

survive

(is one

interpreta-

tion.) the

second

and less

accepted in-

terpretation

is survivalof the most

adaptive

or flexible

survival

belongs to

those who

can fit in a

new envi-

ronment.

The How-to Guide

for Starting & Improving a Busines.eneenema..za

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Entrepreneur SmartTips Guide Business Growth Rapid Steady Growth