Building your business into an asset of value may include expanding through franchise opportunities. This week, onThe Money Show with Bruce Whitfield, we examined the key elements of what you should consider when assessing franchise opportunities:
Growing business value - Aurik Business Accelerator
By Pavlo Phitidis
The recent downgrade of South Africa’s credit rating to Junk Status will have a dramatic effect on our economy changing our socio-economic environment and introducing new challenges to business survival. This week, on The Money Show with Arabile Gumede we considered what this downgrade means for growing businesses, and looked at ways you can adapt to not just survive these circumstances, but thrive beyond it:
Aurik CEO and co-founder Pavlo Phitidis was the keynote speaker at the Innovation Bridge event in Midrand recently. With his constant exposure to the changing face of business, Pavlo shared some of his insights on how businesses around the world are adapting their thinking and finding new ways to use technology to reap the rewards of their vision. How can South Africans benefit in a similar way?
By Pavlo Phitidis
Very often, the bigger your company, the longer it takes for you to innovate. Agile small businesses can, propel their growth by adopting workable technologies, that lead them towards solving customer problems accurately, efficiently and cost-effectively. This leads towards freeing up time, money and effort within the business and ultimately, enables growth. Freed from the shackles of bureaucracy and slow systems, you can digitize elements of your business to accelerate growth and value.
South Africa is lagging behind when it comes to innovation, according to a recent World Bank report. But why is innovation so necessary for business?We need to empower more people to participate in the economy, and innovation is necessary to create opportunities and stimulate growth. There is also a close correlation between levels of innovation and new venture start-ups. The more a country supports new venture creation and small business the greater the rate of diffusion of innovations in that country. Innovation can also be leveraged to improve business processes to save on costs or increase the value that's being provided to clients, and innovation can also be applied to augment client user experiences or even to better manage business risks.
What’s the problem?
First of all on a human or psychological level, South African business confidence levels are at it lowest levels in over 30 years.The rate of innovation in South African businesses are being curtailed for a number of reasons.Innovation can take years to develop and comes at a tremendous cost and risk. In a depressed economy we have an environment where people are reticent because they are uncertain about the medium- to long-term prospects and this stalls the process. What follows is low investment levels, where people favour deals with established businesses with proven track records who are already earning a revenue. Then there is also a crisis in education in South Africa that’s resulting in a dearth of skills, which was evidenced in a 2016 World Economic Forum survey measuring maths and science education that placed South Africa last.
But it’s not all bad news. Our current environment is actually good for business innovation although our economy is in a bad state, there are problems in big business and government and different kinds of social pressures. All these issues create a fertile environment that encourages people to innovate so they can do things better and create opportunities. And there are also environmental issues like the drought in Cape Town being played out all over the world, driving the need to find alternative water and energy solutions.
What can be done?
You can’t innovate on your own. Walter Isaacson, author ofThe Innovators, described how the Internet was developed from a military instrument to become the platform it is today. This couldn’t have been done without collaboration between big business and small business, government, academic institutions and social activists. [If you are a business owner, finding the right people to collaborate with is crucial].
Taking an idea to the next level
- If you have an innovative idea and would like to develop it, start by identifying who you want your ultimate customer to be.
- Then find two or three businesses or people who will typically represent that customer, involve them in the development process and ask how they will work with you.
- What attracts funding is a gap in the market. [Think about how you will commercialise your product and] Come with an investment mindset from day one.
- Once you get your prototype built, you need to think about how you are going to manufacture and distribute it widely. The plan around how you commercialise something is important. [If you don’t have capital yourself]
- You will need to find suppliers and manufacturing people and investors to come on board so you can continue the development process. They will all be asking how it will translate into a return for them and will want to see how the product will be commercialised so they know how they will get their returns.
Finding the right partner to grow your idea is crucial. Aurik Business Accelerator partners growing businesses with insights into collaboration, investment and commercialising to take your idea into the market and turn your business into an Asset of Value.
By Pavlo Phitidis
Ultimately, the way you look at the world is the way that the world will turn out to be for you. Just as perspective drives experience, how you define your customer will drive the growth of your business. It’s an incredibly difficult, but highly critical, task that many business owners get wrong – they focus on their product and service, rather than solving their customers’ problems. Defining your customer correctly is critical, if you want to build a scalable business. On this week’s The Money Show with Bruce Whitfield, we outlined the five things you must get right:
By Pavlo Phitidis
Time stretched, on-the-go and always doing too many things at once can make us forget why we, as business owners do what we do. Here is a series of podcasts that will remind us that we should all, definitively, single-mindedly be building our businesses into an Asset of Value. What is it, how do we measure it, how do we build a business into an Asset of Value and more is consolidated into a series of 8 episodes.
Episode two: if you can't measure it, you can manage it. The three levers that you can build to measure and maximise your Asset of Value?
How are you building your business? Why do you do what you do? Build it into an Asset of Value and start today. Should you need some help, direction or certainty, Aurik will help you get it done in 24 months.
People sell their businesses for many reasons. Fatigue from too many years in the game is one of the most common. They might also choose to sell their business when they reach retirement age or fall ill and cannot work in it any more. Sometimes, increased competition drives them out of the market. Some business owners start their businesses with a planned sale in mind. Whatever your reasons, nothing can prepare you for the setback when you find that you can’t actually sell your business. That’s why it’s important to understand the factors that prevent your business from attracting buyers and how to bounce back and grow your business into an Asset of Value.
Factors that stall a sale
Buyers usually hesitate to close deals because they don’t see the value in the business they’re being offered. Many factors contribute to this, but the main ones are:
- The business is too dependent on the owner – If a business relies on its owner to operate at its best, it’s not an attractive purchase for buyers because they cannot buy the owner with the business. The same can be said if the business is too dependent on one employee, client or supplier.
- Buyers can’t identify any growth opportunities – Buyers are attracted to the future potential of the business and not just what the business can achieve now. In this case, value is shown by presenting convincing growth opportunities. These could be new locations for the business, other companies the business can buy out or new markets that the business can unlock. Anything which proves that the growth of the business won’t slow down or stop.
- The business is too similar to its competitors – Businesses that aren’t differentiated enough can only compete on price. The lower the price, the less cash is left over to grow the business.
- There isn’t enough free cash – Free cash is what’s left behind after working capital is spent. It’s a good measure of a business’s performance because it shows stakeholders and potential buyers how much money the business can dedicate towards growth.
- Legal issues – If you or your business are tied up in any legal disputes that could affect the business financially, there’s a slim chance of selling the business before all the legal issues are resolved.
Aurik nurtures your business for a sale
We work hand-in-hand with you to grow your business into an Asset of Value through careful analysis, focused goal-setting and sound business systems. A partnership with Aurik ensures that your business has a firm foundation from which to grow and expand.
We will collaborate with you and identify who your ideal customer is and how best to position your business so you can serve them optimally. This is supported by targeted and persistent marketing strategies and airtight business systems.
Aurik works with you to establish long-term value in your business. We want your business’s true value to show clearly in its processes, structures and operations – not in who owns it.
Would you like to have your pick of buyers when you’re ready to sell? Aurik can assist. Let us work with you to build your business into an Asset of Value and devise an effective exit strategy.
Technology is both a driver and frustration for every person and business. Every business no matter what business you are in is now a technology business. On a lighter scale, it's about emails and software programs that support your team.
In a competitive environment you need to use tech to give you an advantage and set yourself apart. You cannot avoid the use of technology. Regardless of the type of business environment you work in you must embrace and engage with technology correctly.
Play to your strengths – how the epic Mayweather-McGregor fight can take your business to the next level
Undefeated welterweight world champion Floyd Mayweather Jnr met mixed martial arts world champion Conor McGregor in Las Vegas for the bout titled “The Money Fight”. The fight surpassed the all-time pay-per-view record with 6 500 000 buys. Mayweather reportedly earned more than R4 billion from the fight and McGregor took home R1.3 billion. The winner stuck to his game while McGregor went into an area where his investment in time, training and practice were only 30% relevant.
Aurik’s CEO, Pavlo Phitidis says the fight between Floyd Mayweather and Conor McGregor has a number of lessons for small business owners. Let’s take a look at this exciting showdown and what we as entrepreneurs can take away from this.
We have seen a common theme emerging in our recent meetings with various entrepreneurs. As a business owner, you might be wondering how best to position yourself for the future amid South Africa’s junk status and unpredictable economy. You might be thinking about how to make the best of your business in this context, but also how you put yourself in the best position. You need your business to be a success without having to tire yourself out and being involved in the day-to-day operations. To be profitable, you must increase sales without spending more or allocating more resources. But isn’t there an easier or more efficient way of doing this than killing yourself by trying to be on top of every aspect of your business?
Welcome to the Asset of Value Series. As part of the Nedbank Business Accelerator Campaign with 702 this year, our CEO Pavlo Phitidis, had the opportunity of producing a podcast series to help successful, established entrepreneurs get to the next level. We do this by giving business owners like yourself the opportunity to share your stories and insights, and in turn, we work with you as the business owner to drive key changes necessary to accelerate your business. In the Asset of value series, we explore your journey to building your business into an Asset of Value.
Thinking and building big right from the start with an Asset of Value framework, enabled Atomic Oil to achieve a R60m valuation in only its 6th year of doing business. Being a new player in a traditional and well established industry, Atomic Oil were enabled through its agility to be able to take a different approach and establish for itself a beachhead in the market. It made use of cutting edge technology to build and establish itself and this subsequently led to the collapse of some of the traditional players business models. With the ability to out-compete the dominant players by providing a faster, more consistent, reliable service at a fraction of the competitors cost, Atomic Oil has cannibalized its competitors business, dominating the oil analysis market today in 2017.