Article by entrepreneurmag.co.za

For any successful business, safeguarding its future through careful succession planning should be an important focus. This applies whether you’re running a large listed business, a family owned business, or a small to medium sized unlisted business. There are interesting parallels to heading a successful family and preserving long term family wealth.

This was borne out in our latest survey of over 150 ultra-high net worth individuals, many of whom run or have run successful businesses, often across jurisdictions and generations. Over two thirds of the respondents identified succession planning as their current primary concern in preparing financially for the future. This represents a shift from our 2017 report which identified capital preservation as the primary concern.

What is driving this change? According to our findings, the answer is the rapidly changing and uncertain socio-political and economic environments. Against this background, our respondents said they see a certain urgency in preparing the next generation of leaders to respond to future challenges and opportunities. This means a more sophisticated, better structured and increasingly democratic approach to leadership, greater emphasis on training and development of young people, and better communication and renewed emphasis on long-term planning. The risk of failing to prepare the next generation is now seen as the highest priority for long-term sustainability.

In the family business scenario, and given the rate of technological, social and political change, intergenerational relationships are also transforming. Nearly all respondents agree that the impact of societal change on a family business must be reflected in the way they prepare for the future. Traditional, informal approaches are thus being challenged as families look to more sophisticated governance and communication.

For many of our clients, a successful business is the principal source of wealth and frequently represents a substantial proportion of their assets. Below are some practical, actionable insights from the report that came out of the survey, Four Pillars of Capital: Practical Wisdom and Leadership for Changing Times.

Concern #1: Succession Planning

As mentioned, the survey showed a shift in the primary concern by respondents from capital preservation to succession planning. We found that 69% of respondents identified succession planning as one of their top three concerns for future financial planning, followed by capital preservation (62%) and tax planning (48%).

Our Recommendation: Planning for the long-term is crucial in any business. Discuss strategic planning for future ownership with your Board, your mentor, your family and or key business stakeholders, which could include raising external finance or planning for an exit. Develop a purpose or planned vision for your business.

Partner with an independent professional to help advise and implement suitable and practical strategies to support governance and succession.

Concern #2: Leadership Selection

We asked families how they selected their leaders and how this should change in the future. One of the most interesting results of the survey is that 28% of families interviewed still currently operate on the basis of primogeniture (the right of succession belonging to the first-born child). When asked about their intentions for the future, however, the figure is now around a third of that at 10%. There is a growing preference for wider consultation for the selection of new leaders, possibly including a formal process. Currently only 13% use a committee to select the leader, however at least a third (33%) expect leadership to be selected this way in future.

Our Recommendation: Our experience tells us that having a clear leadership structure and process will provide the best chance of managing unforeseen risks – both internal and external – pursuing opportunities and ensuring that the business prospers. Most business owners need to employ leaders who can keep pace with the modern world and are able to adapt to a fast-changing environment. This means more broadly-based preparation than in the past.

The counterweight is that there is greater need for leadership responsibilities to be shared with others who have both the knowledge and stature to debate the key areas of risk and ensure the interests of all stakeholders are properly protected. Having an experienced mentor to help think through ideas and handle challenging relationships is invaluable.

Concern #3: Failure to prepare the Next Generation

Respondents identified that the top risks to long-term family wealth relate to family disputes (68%) and lack of planning (67%) as well as the failure to appropriately engage or train the next generation. This happens in businesses too, whether or not they are family businesses. Partners in a business can fall out, leaving the business and its employees to an uncertain future and often resulting in detrimental impact to the value of the business.

Our Recommendation: Increasingly, we suggest that families and business owners should engage in ongoing, regular and transparent communication with all company stakeholders, regardless of their responsibility or position within the firm. Employees should be given an opportunity to contribute towards defining the company’s core values and owners should invest in continuous development training programmes for their younger, more inexperienced employees.

Article by entrepreneurmag.co.za

Article by: www.growthinstitute.com

Experiencing a major growth spurt in your business for the first time?

Then chances are, you’ll be making some mistakes. Though some are a natural part of the growth process, the rest should be avoided at all costs. And here’s your chance to learn from those who ventured out before you.

Growing from a startup or mid-market company into a scale-up is a challenging transition. Even the most experienced CEO or executive will admit that growing pains are inevitable once you start scaling. However, the faster you overcome the hurdles, the smaller the chance your business fails.

One of the biggest problems when you lack experience with scaling up, is that you don’t know what you don’t know. But fortunately for you, others have already made some mistakes in the process. Knowing what they are can help you prevent them.

Over the past decade, I have personally helped thousands of startups and mid-market companies move from one phase to the next. By now, more than 70,000 companies have successfully scaled up with my elaborate framework of tools and tactics, the Scaling Up methodology, which is described in detail in my bestselling book Scaling Up: How a Few Companies Make It…and Why the Rest Don’t.

One of the main reasons CEOs and executives of fast-growing companies struggle and fail is that they try too many things at the same time. It’s really important to have focus, be disciplined, and gather the data you need to be able to know what works and what doesn’t.

Here, I’ve listed 10 of the most common and dangerous mistakes CEOs and executives of scale-ups make that you can avoid.

1. Scaling up too fast

One of the most common mistakes companies in the startup phase make is that they scale up prematurely. After getting one or two clients, they believe they have already proven their market-fit.

Although the excitement is understandable, you really have to validate your business model before you scale. Because even when you already have more than one or two clients or users as a startup, you still have to gain traction on the main market.

Geoffrey Moore wrote an interesting book about this phenomenon, called Crossing the Chasm. It describes the challenge of getting from very few buyers to a lot of buyers. You have to realize that at first, it’s the early adopters that are buying your product; people who generally like to try new things. But after that, you need to reach the majority. The majority of buyers are very different and the gap between the two can be a difficult one to bridge. Therefore, this point is also the one in which most companies get stuck or even go down entirely. Make sure to test your product-market-fit thoroughly and that you know exactly who your ideal customer is.

Also, without proper preparation and strategic focus, rapid growth does not necessarily mean profitability. You have to be ready to scale. CEO and Co-founder of Fracture, Abhi Lokesh, said they had to learn this in his company the hard way: “It’s a euphoric feeling to see orders flood in, but you have to make sure you’ve got an ironclad grasp on the unit economics of those orders and the efforts that led to those orders. How much did you pay for them? Are they actually profitable?”

Lokesh’ advice was not to be seduced by top-line numbers: “Along with rapid growth also comes additional overhead costs – more employees, more infrastructure, more everything. Are you truly prepared to handle it? We weren’t, and it cost us dearly.”

In any growth phase, dig deep to ensure that the growth is sustainable and you can actually keep it up. Otherwise, you’re not scaling at all – you’re just getting bigger and less efficient.

2. Lack of focus and alignment

When your company is gaining more traction, the decisions you need to make grow even more complex. This pressure can cause you to make poor decisions that can hurt your potential for success and even set you back.

More companies die for the excess of opportunity than for lack of it. To prevent overwhelm, (excessive) stress, and disorganized movement in all directions, it’s essential to know exactly what your focus is.

This means you’re deliberately choosing what to do, but also – and equally important – deliberately choosing what not to do.

Don’t go crazy trying to add new features or related products once you’ve achieved product-market-fit and started scaling up. It’s important that you can do one thing better than anyone else before you start building new stuff.

A great tool that you can use in your organization to gain more clarity on what your focus should be at any point in time, is the One-Page Strategic Plan or OPSP. This is a very concise plan that’s easy to communicate with your entire team. This one-page document will literally get your employees on one page and achieve team alignment.

You need to have the right goals and metrics in place and these need to be clear and transparent for everyone on your team. Because without alignment, focus, and commitment, fast growth isn’t sustainable.

Everyone makes mistakes but the key is being aware of them. This is the only way can discover what works and what doesn’t. It’s how we distinguish smart, well-informed decisions in your business from the opposite. What you don’t track and measure, you cannot improve.

The daily huddle is also an effective tool that helps you and your team(s) to remain flexible without losing alignment or focus. This is a 5-15 minute meeting to discuss tactical issues and provide updates. It’s part of a proven meeting rhythm that many of the most successful entrepreneurs in the world implemented in their organization to enable their major, rapid growth. You can read more about effective meetings in my article “How Weekly Meetings Can Accelerate Your Firm’s Growth, Keep Everyone Motivated, And Achieve Your #1 Priority”.

3. Hiring prematurely

Another common mistake startups tend to make in their first period of significant growth is to hire too fast. Jeremy Ong, the owner of HUSTLR and a chain of blogs and eCommerce stores, learned this the hard way: “One of the biggest mistakes I’ve made when my company was experiencing rapid growth was to hire people prematurely because we were just desperate for extra manpower just to cope with the demand.”

“As a result, I have hired employees that do not fit into the company culture at all, which hurt company morale in ways I didn’t imagine. Employees started sharing bad habits with each other and the productivity per employee dropped because of the distractions and the poor performance of other employees. We ended up being less productive as a company, even with more people.”

Jeremy was hoping things would improve over time but eventually had to dismiss the bad apples after a series of poor performances spanning over a year and a half. The company had to undergo a culture rehabilitation exercise to get the best employees back on track.“I now believe that it is better to push our best employees harder and treat them better, instead of using a duct-tape solution by hiring employees just because we’re in need of more manpower.”

Matthew Ross, Co-owner and COO of The Slumber Yard had a similar experience due to hiring too quickly without the proper interviews and screening: “After a couple of weeks, it was apparent that we had hired the wrong candidates. Whether they didn’t possess the skills necessary to succeed in the position or didn’t fit into the company’s culture from a personality standpoint, these hires actually hindered the company’s growth.”

His advice: “Take your time and really train up each new employee. If you’re constantly trying to rush, you may find yourself getting out over your skis.”

It’s also important to remember that you need to stay lean. Don’t hire too many people (middle managers or specialists) as this takes away from your core competencies and leave you prone to trying to scale other areas too quickly. A small, motivated, and highly productive team is better than a sluggish team with poor morale.

But don’t postpone hiring new employees too long either as failure to deliver is at the core of many business closures. Just make sure to hire efficient resources that believe in your vision. And don’t forget that especially amidst rapid growth, outsourcing can be a great solution for non-core tasks too.

4. Mistaking leadership for management

When your company is still in its initial startup phase you may be able to handle all of the functional roles, but it’s a fatal mistake to believe you can continue to do so.

To stay on the path toward achieving your BHAG (Big, Hairy, Audacious Goal), stick with leading, don’t start managing. Shyam Krishna Iyer, the founder of SKI Charities, experienced the consequences of getting too managerial as a business leader. He said: “While an entrepreneur may drive early success, I have found successful entrepreneurship to be far more “bottom-up” as local level ownership and buy-in will determine the success of any project or enterprise.”

When Shyam started out, he decided that a high level of oversight and control would be necessary but he soon learned this was not scalable: “I quickly became stretched too thin and lost the connection with my staff on the ground. The entire enterprise began to lose focus and flounder.” He found that autonomy and control must devolve from the entrepreneur to the field in order to scale successfully.

Business leaders inspire others, have the vision, make connections, and secure funding for their companies’ continued growth. They’re idea machines. These are not necessarily the same qualities found in a good manager. It’s important to leave the execution to those who are great at that.

5. Not setting long-term goals

Goals give you direction and keep you on track during the day-to-day operations. By making sure your goals are SMART, you can identify where you want to go and outline the specific action steps needed to get there. This is something most business leaders understand and do well.

But although most startups and scale-ups do set short-term goals (monthly, quarterly, yearly, and perhaps also 2- to 5-year goals) to measure their progress, they often fail to define long-term ones too. If the long-term is not clearly defined, your short-term goals might end up being the wrong ones.

Long-term goals are often overlooked in startups for reasons (or excuses) of agility but if you want to move fast, you need to know where you are going. You have to be able to make quick but smart decisions. And this requires a clear sense of direction.

Coming up with a Big, Hairy, Audacious Goal (BHAG) that you’re striving towards the next 10 to 20 years can help you with that.

6. Saying yes to every customer request (“over-customizing”)

Another mistake that fast-growing companies often make when they start to scale-up, is that they say yes to every (feature) request made by their customers. In this case, you’re running the risk of over-promising and under-delivering.

This is also what the Co-founder of GreenPal (a company described as “Uber for lawn care”), Gene Caballero, experienced: “One mistake we made when trying to scale, was to give our customer too much power when it came to dictating their schedule. We allowed homeowners the chance to add one-at-a-time appointments whenever they wanted and didn’t give them the ability to easily schedule either weekly or biweekly appointments. This is a logistical nightmare for the lawn care pros that used our platform.”

They decided to implement a change that forced homeowners to opt for a regular routine. This ultimately provided them with better service from the vendors, who in their place were more engaged since, knowing that the homeowners they obtained via GreenPal were in it for the long haul. “This has helped us grow at over 100% YoY. Our projected revenue for 2019 is $20m,” said Caballero. The saying they have at their company is one that could be useful for many to remember in the scale-up phase: “We let the thousands decide what the millions will do.”

7. Focusing on marketing too little or too late

One of the biggest, most persistent mistakes startup founders make is assuming they don’t need to market and that their customers will find them. Many believe that marketing is a function they can do without for the longest time and they almost always use it as a last resort to gain traction. But thinking you can create a major, sustainable growth organically is very naïve. And word-of-mouth referrals and direct marketing do not scale.

Obviously, the best type of marketing for you depends on your business and your target audience. But whether it’s traditional advertising, online marketing or content marketing, you’ll need something to scale, and that something has to be a strategic choice with clear KPIs and ROIs that are well measured.

Too little strategic focus on marketing can also result in becoming dependent on one marketing channel only. And like Abi Lokesh from Fracture experienced, this is inadvisable too: “One mistake we made at Fracture while scaling was putting all of our growth eggs in one basket. We rode the wave of what helped us achieve scale, somewhat naively hoping that it would never end, without taking advantage of that opportunity to diversify our marketing efforts.”

Lokesh learned that “you’ve always got to have multiple irons in the fire”: “Sooner or later, a marketing channel will peak and begin to lose efficiency. Don’t wait until that happens, because by then it’s too late. Recognize that every scaling tactic has an expiration date and keep working to find the next growth hack.”

8. Postponing the next-round funding too long

Running out of money should be avoided at this stage, so have your action plan in place early on and get ready to impress investors earlier than you may have intended.

Venture Capital firms that invest in later-stage funding are more risk-averse than your early-stage or pre-revenue investors. It usually takes much longer to attract them and seal the deal. But you need fast cash to grow your facilities.

Hunting down funding almost becomes a CEOs full-time job if it’s not approached strategically and you don’t partner with investors for the long run. This is what Kim Saxton, MBA, PhD, and Clinical Professor of Marketing, found and described in the book she co-authored, The Titanic Effect: Successfully Navigating the Uncertainties that Sink Most Startups: “To grow means having enough cash on hand to make investments in sales, marketing, and people to support customers. Often early on, startups are interested in any source of funds. They don’t vet their investors. They need to partner with investors who can fund successive rounds of investment. Instead, they end up having to hunt down new sources of funds. That takes time and the process is slow. So, it’s hard to match up funding time with needs for cash to grow.”

Apart from the difficulties that business leaders may experience in their quest to impress investors, it also becomes more difficult to estimate your expenditure correctly in the scale-up phase. William Taylor, currently CDO (Career Development Officer) at MintResume, had this experience while running a previous company of his: “Initially, we thought that we wouldn’t be needing additional staff as we already had a well-trained team that was good at multitasking. But, we soon realized that we needed more people as our team was already overworked and struggling with time management issues. So, we hired a new team. To accommodate this cost, we compromised on the office renovation and our higher management had to pool in a few resources to meet our expenses.”

You never miss the water until the well runs dry, but if you wait until the last minute to seek funding this can lead to extremely tight and stressful situations that could threaten your company’s very existence.

9. Lacking a scalable infrastructure

As your company grows, nothing scales automatically, unless it is systematically set up for scale. You need to have the right infrastructure in place – systems, procedures, and physical space – in order to keep the pace and make optimal use of your company’s momentum.

To expect communication naturally evolves with growth, for instance, is a false assumption many startup founders make. It’s obviously a lot easier to communicate changes and progress to a few other people, versus 10, 50 or even 1000 other people.

Fracture founder Lokesh also learned that you shouldn’t take good communication at scale for granted; you’re going to have to work at it: “During rapid growth, it’s much easier for messaging to get misinterpreted, key points to get lost, and dangerous assumptions to be made. You have to invest in your company’s communication infrastructure to make sure everyone gets and stays on the same page.”

Your IT infrastructure has to be set up properly too. This does not only mean having the right systems in place for communication and execution; it also means investing in redundancy. As Deni Ivanov, CEO and CMO of Royal Services could illustrate from his experience. He admitted they didn’t invest heavily enough in their company’s online infrastructure “We didn’t think about the fact that you should make backups for almost everything you work on. Redundancy is of huge importance as we try to keep all of our information online and all of our communications are done in one form or another over the internet. You need to have backups for whenever a system crashes or an email gets deleted by accident – we learned the hard way.”

10. Not being agile

Strategic action plans are important to achieve your vision but they can’t be written in stone either. Unforeseen situations occur, market trends change and aggressive competitors can pop up out of nowhere. Consequently, you may need to change course quickly at one point or another.

Change is the only constant, especially in startups and scale-ups. Don’t to pivot for the sake of pivoting but if you become stubborn or paralyzed, you will stall out.

A strong IT infrastructure and communication system can help you iterate. Making small, daily, incremental changes that are aligned with your company’s long-term vision or BHAG and that contribute to your most important KPIs, is the best way to ensure agility.

If you’re experiencing hiccups on your road to major business success, know that you’re not the only one in battle (regardless of the type of product or service you provide or the industry you’re in).

Always remember that for every problem you encounter, another company has already faced something similar, and you can implement the tools and strategies that have proven to work.

Article by: www.growthinstitute.com

Article by www.entrepreneur.com

As an entrepreneur or business owner you know the truth of the old saying that sometimes you have to spend money to make money. But, you also have to save money to have money! And saving more money consistently ranks as a top financial resolution people make each New Year.

We all need to do it — whether to build a robust emergency fund, secure our retirement, or create the equity we need to build a business and lifelong wealth. But, how many people actually succeed?

According to some reports, up to 80 percent of people who make New Year’s resolutions fail to keep them. Yet we know that people who make resolutions are 10 times more likely to attain their goals than people who don’t.

For many people, the start of a new year is the trigger they need to change their behavior patterns to set themselves on a lifelong journey toward financial security and self-sufficiency.

What does it take to be one of the successful few? What can you do this time around to increase your likelihood of remaining on track when next New Year’s Day rolls around?

1. Understand that real, permanent change comes from within, rather than from outside pressure.

In their groundbreaking book, Changing for Good, three psychologists looked at 130 different techniques that people used to try to give up smoking. They discovered it is not a lack of potent and effective quitting techniques that defeats so many smokers. Rather, it is the internal thought processes that prevent (or enable) permanent, life-enhancing change.

Their discovery captured the attention of leading academics, clinical psychologists, life coaches and authors looking into why certain people are able to set a life-changing goal, meet it and keep themselves from relapsing.

The good news: Researchers have discovered that we all have it within us to modify our behavior and cross the “Resolution Finish Line,” regardless of how ingrained our habits are. When you consider how mindset affects everything in our lives, it’s no surprise that it’s the key to achieving our financial goals.

2. Enlist allies to help you stay on track.

Many people require outside support when they decide to get serious about holding themselves accountable for their financial resolutions.

M. Kathryn Seifert, Ph.D., a Maryland psychologist who operates three mental health clinics, says a coach — whether a professional for hire, a friend or a religious leader — can help people reinforce their commitments.

Dr. Seifert’s clinics see about 2,000 distressed individuals a year, many of them struggling with financial crises. For most people, the right motivation coupled with persistence and the aid of a coach provides what they need to achieve their goals, she says.

3. Set incentives and consequences for sticking to or breaking your commitments.

Consider using websites such as www.stickk.com that allow you to give yourself incentives for sticking to your commitments, and set up penalties for breaking them.

This carrot and stick approach relies on three factors: a goal, stakes, and a referee, according to an article a few years go on commitment contracts.

When you make a commitment binding in this way, it will make you think twice before backsliding. Even better, the rewards that come with sticking to your commitments establish a feel-good pattern of positive reinforcement. And that will make staying on track easier as you move forward.

4. Skip the pity party when you fall short.

Don’t wallow in self-blame when you fail. Instead, pick yourself back up, learn from your mistakes, and go right back to work toward your goal.

Steve Siebold, author of How Rich People Think, says one of the key differences between those who are defeated by financial roadblocks and those who knock down barriers along their path, is how they respond to disappointment.

Siebold estimates that 40 percent to 60 percent of today’s most successful investors, entrepreneurs and executives have failed multiple times. Those who rebound the fastest and most successfully set aside emotional thinking and put their minds to the task of plotting a logical pathway forward.

5. Don’t set yourself up for failure by insisting on an all-or-nothing change.

Judith A. Belmont, a psychotherapist and author of the “The Swiss Cheese Theory of Life,” has described New Year’s resolutions as “a setup for failure” because they embrace an all-or-nothing attitude toward change.

Belmont cautions against perfectionism and advises patience and persistence instead.

“It doesn’t matter where you are on the journey, what matters is the direction you are going,” she says. “Learn from the past, accept shortcomings, realize where you made errors and build on them like stepping stones.”

One final piece of advice: Give yourself reminders to keep your focus on where you are going and your long-term goals. One of my favorite ways to do this, especially when it comes to holiday shopping, is to wrap my charge cards in my goals. Every time I take a card out, I see a picture or some words that remind me of why I am saving. This is a trick to make yourself pause a moment and consider whether what you are purchasing is more important than your goal.

Remember, when it comes to keeping your financial resolutions, you are the key. You make decisions every day, every week and every month throughout the year that all add up when it comes to building savings and wealth. Only when you set your mind and heart to the task can you successfully create long-term change in your fiscal direction.

Article by www.entrepreneur.com

Article by www.businesstech.co.za

The collision between “business as usual” and technology is imminent, and the fallout will be nasty, especially for millennials, says recruitment specialist, Adzuna.

According to the online job aggregator, automation and Artificial Intelligence is one of the most disruptive forces the ‘modern’ workplace has encountered thus far, and if the predictions from across the world are correct, up to 37% of millennials are at risk of losing their jobs to automation.

Since the baby boomer generation is now generally employed in leadership or managerial roles, and jobs that require more complex problem solving, they’re not in such grave danger as their younger counterparts. This is according to Scott Dobroski from Glassdoor.

The millennials are the ones that will be replaced sooner since they don’t have as many job skills and generally, they hold positions that are simple enough for AI to take over.

“The jobs that AI and automation will take over aren’t just the ones that come to mind first, like drivers. They’re across all sectors because every company in the world relies on some sort of tech at the moment,” said Jesse Green, country manager for Adzuna South Africa.

“Every company on earth has an online presence or an app, and that puts everyone at risk.”

Jobs that require critical thinking, strategy, and data science are less likely to be replaced than repetitive, white-collar jobs like accounting roles. This means that professionals like software engineers, data scientists, doctors, nurses, and financial planners are relatively safe, for now.

Although automation might not take over those roles, they will most definitely affect them, said Green.

The role of AI and automation on the jobs that are “safe” will be to make them more effective and efficient. “We’re still a couple of decades away from seeing robots analyse someone’s back injury and fixing it on the spot.”

Citing an article from the Harvard Business Review, Green said that AI will reshape the organisational structures we are used to today. Ravin Jesuthasan and John Boudreau, the authors of the article, said that the human aspect present in the workforce after the Fourth Industrial Revolution hits us won’t be sourced through employment.

Jobs within organisations will become a thing of the past and will instead be outsourced by measure of units.

Kai Fu Lee, an AI expert and venture capitalist recently spoke to CBS News in an interview, revealing that it’s possible for up to 40% of all jobs across the globe being replaced by robots or computers. Big names, like Elon Musk, have been warning about the power of AI for quite some time, hammering on how it has the ability to disproportionately affect low-income workers.

But the sad reality is that AI is on the rise, and there is no stopping it or the impact it is bound to have on society. Artificial intelligence can be seen in the same light as the steam engine and electricity. Before those systems worked, people laughed at the struggling inventors, but only until their dreams became a reality across the world.

Humans will always be affected by change, but somehow, we always get over it. The only problem with AI is that it will hit us much sooner (and harder) than those innovations did.

Article by www.businesstech.co.za