I started my first business when I was nineteen whilst I was still at University, in the sexy industry of Carpet Cleaning. My partner (who was to become my first husband) and I started it because his dad had lost his job and all he knew how to do was to sell carpet cleaning.
Over the next ten years we built it into a nationwide business, with joint-venture partners in some regions and licensees in others. We imported exclusive chemical and equipment and established a training school to increase the standards of the industry.
We did all this on instinct rather than experience and it was all possible because the carpet cleaning industry of New Zealand was immature and unsophisticated…so any improvement was a step-change.
The old tools in the old toolbox just won’t cut it anymore
But the world doesn’t turn the same way any more. The conditions for success have shifted considerably. Thirty years on, building a business is much more brutal and complex. This is amplified by five global mega-trends that are shaping the new world we live in:
- Globalisation – the majority of industries are now owned or controlled by global goliaths that narrow the options for businesses to grow within
- 4th Industrial Revolution— in 2015, we headed into the 4th Industrial Revolution and like those before it will reshape industry and our lives.
- China & India—these two emerging nations that hold two thirds of the world population are modernizing and increasing their standards of living
- Sustainability—the world is running out of resources and the earth is starting to bulge under the weight of the human population
- Pandemics—the new normal is to operate under the conditions a continually evolving virus threat
None of this existed 30 years ago, so why do we think that the way that we build businesses in the last thirty years, will be the same as we build them in the next thirty years?
The business coaching and training worlds are still proponing very old models for growth that are often borne from theoretical, sometimes academic sources and often generated to support large corporations not small businesses.
|State of doing business in 1990||Reality of doing business in 2020|
|Competition was…localised, direct & well known with small and emerging players||Competition is…globalised, indirect with large and well funded players|
|Customers had…limited choice with narrow media and point of sale options||Customer have…an abundance of choice with a complex array of media, and e-commerce disrupting many industries|
|Businesses had…simple sales & marketing techniques where organic growth is the norm. They were slow and methodical and reinvested their profits.||Businesses have…complex sales & marketing techniques where venture growth journeys are becoming mainstream. They are fast and iterative with significant pools of capital.|
We are proud to say that we are different. We may be an advisory firm but all our work has come with being in the trenches, working with real companies and real business owners to realise their businesses potential.
A new way to think about business ownership
I’ve worked with thousands of privately held businesses over the past ten years and I consistently see the same patterns determining which founders make lotto-sized money from their businesses and which don’t.
The key is to know:
- When to get in— is there a clear white space in the market for your business idea
- How fast to go—how much fuel must you put in the tank to go at the right speed to compete in the mar- ket
- When to get out—identifying how you will realise value from your asset. When will you create a liquidity event and secure the outcomes you deserve for your efforts.
Sure, some just get lucky but the majority of them are very purposeful about the growth journey their business is going on. You need to think about your business like any other investment asset. Like when buying a house, although you buy a house you like because of its bathroom, kitchen or indoor-outdoor flow you also consider the investment implications. Are you paying to much for it, how much should you invest in it and when you sell it, what capital gain can you expect.
You are the first investor in your business, so act like it.
Unlike the nineties when you could write a 10 year business plan because the market dynamics were predictable, these days business owners must be much more purposeful and expedient in investing their hard earned time and money to realise value from their business assets.
I often see founders “miss the boat” because the market has moved faster than them. One of my clients was in the email marketing industry and at one point had over 50 staff. The owners had bought flash cars and boats and were raking in the profits then all of sudden email marketing started to implode and social media took hold. As rapidly as the business had expanded, the business declined. When I met them they were down to 5 staff and struggling to survive.
Big ups to them though, they picked themselves up, realigned their offer to the market and set about becoming the largest Content Marketing agency in town. Under 5 years later they had not only rebuilt it to over 50 staff but they had also managed to secure a lucrative exit with an Australian equivalent.
The big money is made when you invest and when you exit your business. Don’t make the same expensive mistakes as others, always ensure that you are aware of the how well you are building your asset and when might be the best time to sell it to realise its full value.
This means moving away from traditional business planning and focusing on investment management…we call this Growth Navigation.