Five ages of a founder

You’ve no doubt heard of the various ‘Ages of Man’**, well if you apply that concept to the life of a founder, our business growth model visualises five main transitions on their continuous journey from foundation through to exit.

What are these five (st)ages?

  • Artisan; you and your co-founders do everything in the business.
  • Hero; you have now brought in others to help as the business is expanding but you have many of the answers they require to do their jobs so they often turn to you for help; you are their hero.
  • Meddler; the people you brought in are now fully capable of doing their jobs having learnt from you but they are also applying their own ideas to getting the job done. You probably haven’t fully developed your next role so you turn to what you know which is helping your people but as they now know the job you may end up meddling. Test yourself; do you find yourself saying; ‘we don’t do it that way’, or ‘we tried that and it didn’t work’ or worst of all ‘in my day ….’ Ouch!
  • Manager; this is the logical step for you from Hero. You trust your people, there is mutual respect and you know that in some cases they will have better ideas than you. Rather than measuring their activities at minute level you set them objectives and use a few KPIs to monitor progress. If your KPIs are well designed they will warn you of impending problems so you can step in to see if help is needed and if it is provide that help with laser-like focus on the problem and then step back again. This enables you to multiply your influence many times over as you are helping others to do their jobs rather than you doing the work for them; when required you are a hero coaching your people to perform better.One key thing the company will need from you, while wearing your manager hat is for you to be a rainmaker. Using your contact base and depth of knowledge of your company to create new opportunities that your team can pursue and turn into new customers. This will help you to deliver the hero role while avoiding becoming a meddler.
  • Leader; here the role is mainly about setting the strategy and ensuring the whole company is focused on pursuing it. You are confident that your managers and their people are doing their jobs driven by the strategy and the principles you have set for the way the company conducts its business. You have your own KPIs for monitoring the business and if you spot a problem coming down the line you speak to the relevant manager to see what they have planned to deal with the issue. If necessary you can coach your managers if they are struggling with a particular issue.

So, what are you? Are you doing what you think you should be doing and is it the most effective way for you to develop the business?

Developing through the stages

Many businesses feel they have no choice but to start as artisans and while that is true for many there is no reason why the journey has then to step mechanistically through the other four stages or indeed become mired at stage one.

Our formula for developing a healthy growing business can be summarised as:

  • If you are able then start the business wearing the leader hat and no other. I accept that for most this will not be possible.
  • Even if you start as an artisan think leader; prepare for the day when the business will have grown to the point that it needs a leader. By preparing in this way you will be speeding the process to when that day comes and you will be ready. Businesses that think this way invariably grow faster and go further.
  • As the business grows and you start to employ people, or get work done through suppliers or contractors, think and behave as the manager. You will need to wear the hero hat but you will do it always thinking manager, never meddler, looking to coach your people to solve their own problems rather than telling them to do it your way. In this way you will also begin to identify those candidates for succession planning and building your own confidence that the roles are in safe hands.
  • If you have followed the previous two steps you will quickly find yourself spending time leading; it will just happen naturally as a progression because you have always thought leader you will naturally become one.
  • If you are comfortable with the words used for the five stages then as you employ people and take them through the on-boarding process you can share the model with them as a way of marking where you are on the journey. Give them permission; no, make it a requirement, to pick you up when you are meddling as this will help to lock the whole team together around a common idea while helping you to stick to your plan.

The key messages here are; start with the end in mind, behave like a leader even when you are an artisan and do all you can to skip the meddler stage.

Happy hunting and enjoy the journey.

** 3 from Sphinx, 4 from Ovid, 5 from Hesiod, 7 from Shakespeare

The Rainmaker Approach to Business Growth

As a founder of a business you are often the best early sales force for that business, but if succession planning isn’t enacted, then there will come a time when other aspects of the growing business will demand attention and sales could suffer.

It is natural, if you feel you own the relationships with your customers, to be concerned that the relationships might be damaged if you are not involved, or that they only keep coming back because they are dealing with you as one of the principals. If this is the case, then it is time to consider succession planning; how else will you ever grow your business or get a true holiday?

So, as the business grows the founders need to make decisions about where they focus their time and for many this becomes a choice between; business development, creating new offerings, delivery or wider business matters such as; finance, supply, HR or recruitment. Making such choices can be challenging, especially if the founders have been the primary means of generating business as the change may portend a drop in revenue if poorly executed.

A business that having grown well starts to stagnate, with revenue staying stubbornly at a particular level, is a likely candidate for a rainmaker approach.

The issues and concerns outlined above are perfectly reasonable and none is insurmountable. The hardest part, when confronted with multiple horses, is deciding which one should be your main ride. Are you going to be sales, delivery, or a back office person? In making this decision there are a number of key factors to be taken into account:

  • Which area of the business plays to your main strengths? This may not be what you have been doing to date.
  • Which area of the business is the most crucial for on-going success? There will almost certainly be several areas in which case it is important to ensure each is the top focus for someone in the business.
  • Which area of the business is most interesting for you? This needs to be a consideration but should not be the ultimate driver in deciding where your focus your energies going forward.

If the decision is to move away from front line business development but you have the concerns, outlined above, about the impact on customers then you should consider the rainmaker approach. This enables a smooth transition from a total dependence upon you to the eventual position where you will have a dedicated self-contained business development function that is not dependent upon you for its success. Even if the decision is to focus your efforts on business development, the rainmaker approach will enable you to scale your efforts to keep the business growing.

raindanceA rainmaker uses their skills to create the environment for opportunities to germinate and grow into fully productive new customers or to facilitate existing customers giving you additional work.

Here are a few tips on becoming a rainmaker:

  • You need to learn to sell your organisation not yourself
  • When you meet new prospects or first time contacts at, for example, a networking event, conference or a trade show, make sure you use the word “we” instead of “I”. In answer to the question; what do you do? you say “we” or “our company” does … rather than “I” do …
  • You position yourself as the Head of Business Development or the Commercial Director and refer to your sales people or account managers by name
  • You explain your commercial engagement process again reinforcing you as its head but making it clear the prospect will be dealing mainly or entirely with others
  • You explain how you will remain involved in the overall strategy of the solution thus giving the other party the confidence that they will be getting a part of you.

This approach enables you to leverage your strength and the power of your position as the founder/owner without requiring you to perform the minutia of the selling role. This will increase significantly the number of prospects that you can have influence over thus multiplying the effect that you can have on winning new business for the company.

Considering this move naturally creates concern but it is a common commercial model; you don’t expect to meet Mr. Marks when you go into M&S, or Mr. Lewis when you go into John Lewis, so why should you be expected to stand at front of house all the time?

Try it; we are sure you will like it.

Business Planning Tool Box – tools and techniques to plan for a different sort of year

Old thinking won’t work or as Einstein put it “We cannot solve our problems with the same level of thinking that created them”.

Here we will look at a Business Planning Tool Box; four tools/techniques that will enable a different and fresh approach to the way you look at your business.

The first is Zero-based budgeting. Rather than the historical approach to budgeting which involves small adjustments to expenditure on existing activities, Zero-based budgeting starts from the point that there is no budget for anything. It is rather limiting to view this as just a budgeting approach; it is a very useful business planning discipline. You can read more later…

Then we take a look from a different slant at the 80:20 rule. While in some areas of the business it is quite acceptable that 80% comes from 20% in other areas it is a criminal waste of valuable finite resources. It is not uncommon that 80% of revenue will come from 20% of the customer base; it carries its risks but those risks can be managed and minimised. However, if 80% of your marketing effort produces nothing or 80% of your hard fought for new businesses opportunities are lost due to poor selling technique it could kill the business. You can read more.

The Ansoff Matrix is an interesting tool for looking at your existing and potentially new propositions and how they might map to your current and potential new markets. As 2014 is going to provide many new opportunities it is a good time to consider whether you have become too narrowly focused on your existing markets and whether your existing propositions are just too safe. We look at a controlled approach to evaluating new propositions and markets for your business. More …

Finally the Boston Matrix. The Boston matrix focuses exclusively on your products and propositions and considers them in terms of the return they are making or could make to the business. It visualises a cycle tracing products from the early stage called “Troubled Child” where they are effectively at the level of R&D through the stages of Star, Cash Cow and eventually Dog when little or no profit is being made. Understanding the cycle and how to position your current propositions within it is a very useful planning tool. More …

Zero-based budgeting

Zero-based budgeting effectively asks the question “should we be doing that at all?”.  So, for the moment, ignoring the fact that it will eventually help to produce your budget its real value comes when creating your business plan as it forces you to reconsider every activity measuring it against its value to the business. This is especially valuable at times, such as now, when we expect the plan period to be very different to recent previous periods.

The approach helps to free up thinking which allows new and disruptive ideas to be considered. For example let’s say the marketing manager needs £10,000 for a completely new activity. The typical response will be; what can we cut elsewhere to free up the funds? The problem with this is that the things we rob may be delivering good value but the reduction of funding may have a disproportionately negative impact on what they deliver. It would not be uncommon that the new investment, plus those robbed of funds to pay for it, all suffer and deliver less value to the business. When the focus of budgeting becomes “how little can we spend?” rather than “what value will we gain?” the result is rarely good for the business other than in the very short-term.

Each area of expenditure must be evaluated in terms of the return it will deliver for the business and this must then be measured against the potential cost. The first pass budget can now be created bringing all the areas of cost together matched against the expected income to be generated by the activities. If the figures do not produce the desired outcomes each area of expenditure must be re-considered in terms of the return it was expected to deliver as there is clearly something wrong in the assumptions made. The eventual outcome will be a balanced budget that will consist of funding for the most valuable activities in terms of what they will deliver for the business.

A useful technique to prevent functional protectionism is to have small groups, from mixed disciplines across the business, working on key budget areas. In this way it is more likely that things will be evaluated in terms of true value rather than the prestige they might deliver to the functional manager.

The 80:20 rule

Let’s cut right to the chase; if 80% of your marketing isn’t delivering, stop doing it. If the sales people are losing 80% of the potential deals they work on, look very hard at the deals and the sales people.

In the case of marketing I have heard it said “we know that XX% is working but not which XX%”.  While this may have been acceptable 20 years ago when a significant portion of marketing spend was on advertising it does not wash today. Most marketing people that I know can tell you what return you can expect from a particular investment and they now have plenty of tools to help them monitor and measure the outcomes. One proviso; if the marketing person asks for £10,000 for a particular initiative and you decide to give them only £7,000, don’t expect to get 70% of the promised return; you might but you probably won’t.

Now to those under-performing sales people; this needs some detailed exploration to establish where the real problem can be found. It could be; a weak sales person, a difficult sales territory, excessive competition in a particular area or product line, overpriced products compared to competition, weak lead generation producing poorly qualified leads, inadequate induction and training or poor management and leadership.

There is no question that the problem needs to be solved but not before the root causes have been thoroughly investigated and the real problems identified. I have seen too many good sales people fail due to poor recruitment practise, inadequate induction and training and poor coaching and support in the field. If there are sales people who are really under-performing, action must be taken but a failure to identify the real issues may lead to good people leaving only to be replaced by another set of people who suffer the same fate. What a waste!

Combining the 80:20 rule with Zero based budgeting will provide a strong and reliable result.

The Ansoff Matrix

An Ansoff matrix provides a disciplined foundation for the process of thinking required to explore options.ansoff

A business can be positioned anywhere on the matrix and may well be in several quadrants at the same time but there are effectively four main strategies, each with its own level of risk. As is typical in life, higher levels of risk align with higher levels of potential reward. Consider the four strategies in the context of risk and reward:

Market penetration using your established offerings into your established markets. On the face of it this is the most predictable and lowest risk strategy. However, doing nothing different brings its own risks such as; growth slowing due to market saturation, commoditisation leading to downward pressure on margins, and the risk from new agile competitors.

Surveys typically show this strategy being the major source of revenue for most companies with the average across all industries and types and sizes of businesses being some 88% of total revenue coming from this source. This percentage typically gets higher during times of economic strife.

If this is where you plan to focus, a rational review and analysis of your current position can be facilitated through the Boston Matrix described later.

Product expansion with a new offering to established markets. This has the obvious benefit that the market is known and the established customers within that market will to some extent be sympathetic towards an established and valued supplier. Hence approaching established markets and customers with a new offering is the least risky option for trying something new. Established customers will be easier to sell to than new prospects and will probably be more forgiving if there are issues with the new offering but may well extract special terms as they are functioning as guinea pigs.

Market expansion; taking your established offering to new markets. As this is your well known offering there is little risk from this side of the equation as you know the current strengths and weaknesses and have plenty of experience of selling and delivering it to your established markets. So, the main risk comes from a potential lack of understanding of the workings of the new market so initial assumptions, goals and targets will need to be reviewed regularly whilst learning the new market and how your offering now fits.

Diversification with a new offering to new markets. The new offering could be the result of you developing something new or by taking on an agency or re-seller arrangement for a new solution. If it is something you have developed then although new in terms of a proposition to market you have the knowledge and experience gained from developing it. If the new offering is something you have taken on then your knowledge of the offering is at its weakest compared to all the other scenarios.

The Boston Matrix

bostonThe top right quadrant is the home for your new and probably troublesome ideas; new products, services and solutions. If you are thinking of using off-shore delivery for the first time, this would be a good candidate for the “Troubled Child” category.

The top left quadrant is, as its name implies, where the really good ideas have evolved into valuable offerings; high value, high margin, little completion and customers just love it. Milk it as long as it lasts because in most cases changing market sentiment and increasing competition will eventually drive your Stars into the Cash Cow quadrant. This is no issue as you should by now have got back all the start-up investment, made a very good surplus return and you now have a robust low maintenance offering that “sells itself”.

The thing to beware of is the move to the final quadrant “Dog”.   The term (no offence intended to dog-lovers) in US business speak, implies the things in this quadrant are no longer of any real value to the business, are producing low returns, may be becoming troublesome to maintain as relevant skills are in short supply and may start to damage your brand reputation.  Time to withdraw the product, or perhaps sell off the division.

The two quadrants that are really of interest are Star and Cash Cow. Troubled Child is the feeder to them and Dog is the exit door so focus your energies on the other two.

Using Ansoff you might find a different market where a Dog or Cash Cow will have a better time. Using the 80:20 rule will help you to expose those products and propositions that might have moved to a different quadrant without you noticing.

Taken together these four tools support a very robust business planning approach which is especially necessary in times of great opportunity such as now.

Business growth

Business Growth

Are you an owner manager or business leader, looking to take the next step?

As your business grows, so too the C level team may need to evolve; focusing more on strategy and less on operations, or delegating specific functions. Sometimes, trying to achieve this on your own can be frustrating and risky, requiring a steep learning curve.

In such times of change it can be more cost effective to use external resources to provide the particular skills to successfully design and implement the changes as they are likely to be significantly different to the skills required to maintain the new environment.  An interim appointment is often ideal for these circumstances.

We can work with you and your top team to develop strategic and tactical (sales) plans for:

Growth: providing support, advice and guidance for directors and owners who are dealing with the many problems arising from growing a company in today’s tough business environment.

“Performative has helped us to refocus on our current products and also to look at new markets and we are working as a board far more efficiently.” Director, International Mailing company.

“The work done by Performative created a great foundation for what is now a very successful business.” MD, IT Solutions company.

Succession: If business success has been heavily reliant on your involvement, it is natural to be apprehensive when handing the reins to others so you can devote more energy to the future of the business and coaching your successors, or to freeing you for your next business. We identify the profile of your ideal recruit and shortlist appropriate candidates for your final decision.

“In early 2010 we decided to recruit a Commercial Director to take over the management of the sales and marketing function from me and Performative designed and ran the entire recruitment project. The service provided was excellent as it allowed me to spend more of my time on business, both operationally and strategically, while Performative ran the recruitment project.” MD, IT Parts company.

“Having Performative involved in recruitment of crucial sales appointments gave me peace of mind to leave the UK and build our US operation.” CEO, On-line Education Support company.

Structural Change: drawing on a wealth of practical experience to support you in the preparation and execution of strategy for; new market penetration, acquisitions, mergers, outsourcing, floatation or post-acquisition/merger harmonisation.

“Following the successful completion of a Sales Performance Transformation programme, Performative continued to work with us in support of a plan to effect a management buy-out by existing senior executives. Their wealth of business experience and specific knowledge of the M&A market enabled Performative to provide me with real practical help in finding my way through the minefield of the MBO. In particular it helped me to understand what to expect from the accountants, lawyers and banks, and thus prepare for their processes in funding an MBO. Performative also provided invaluable assistance to the members of the MBO team. Without the support of Performative this would have been a much more difficult exercise peppered with pitfalls.” CEO, Communications company.

Exit: providing expert assistance in preparing your company to make it an attractive proposition for trade sale, divestment or MBI/MBO, enabling you to focus on business as usual and retain business value.

“Performative drove the process throughout, without which support either the business would have suffered or the deal would never have completed. Since completion Performative have continued to support us through the early stages of integration. I am extremely happy with the result they have obtained for us.” MD, Media Agency.

Feel free to contact us for a confidential discussion on achieving your growth plans.

Customer engagement for win-win deals

Customer Engagement

If your customers are slow to make decisions and your pipeline forecast is forever moving, we can help you.

If your sales force are submitting bids with a low uptake so you feel you are just providing free consultancy, we can help you.

Markets are changing and customers have more opportunities for research before they buy, consequently the sales force has different challenges in order to engage with customers. Gaining insight into your Customer’s world and thereby understanding how you can deliver greater value than your competitors can be key to how you approach your target market.

We have helped companies in various sectors re-focus their propositions and markets for greater customer engagement, leading to more new and extension business. This also assisted the sales management to obtain more reliable forecasts.

“Working with Performative greatly improved the quality of engagement with potential customers and our ability to forecast outcomes from those.” MD, Mobile Technology company.

Feel free to call us for a confidential discussion.

Global Mailing

The Outcome:

Performative’s work assisted Global Mailing to define and articulate its market proposition and refine its selling operation to exploit its unique position.

“It has helped us to refocus on our current products and also to look at new markets and we are working as a board far more efficiently.”  Director, Global Mailing

The Challenge

“Global Mailing is a company with an approachable human face that passionately believes in the creation of close working partnerships between customers and suppliers. By maintaining professional and straightforward communication, we continually address customers’ specific requirements, and are able to respond quickly and effectively should any unexpected demands present themselves.”

Global Mailing has a well-established international mailing business, but was promoting low price as its key differentiator.  The company wanted to grow and asked Performative to assist in analysing and addressing the issues that were preventing this from happening.

The Performative Solution

A series of structured steps enabled Performative to help Global Mailing achieve its objectives:

  • A Sales Maturity Assessment (SMA) provided an initial view of sales capability.
  • A Win-Loss review exercise proved a valuable method to uncover Global Mailing’s true differentiation as viewed through the eyes of its customers.
  • A Market Focus Review (MFR) built on the findings of the Win-Loss review which was used to develop the market proposition.
  • Work with the Executive team included business planning around the new proposition and creating a robust forecasting mechanism to enable annual revenue targets to be set.  The work with the Executive team also served to improve the effectiveness of the board and to support the creation of a three year strategy and business plan.
  • The new business plan was mapped into a sales action plan that included:
    • Creation of clearly defined and equally valued territories with an associated re-structuring of the sales team to reduce tension over prospect allocation.
    • Focus on key customer types to build knowledge of customer business to improve service and loyalty.
    • Development and implementation of a Sales Handbook covering all relevant and important sales steps and processes, in particular:
      • Pipeline creation and management.
      • Introduction of the CAPO ratio – Calls : Appointments : Proposals : Orders –  to refine forecasting accuracy and aid sales activity planning.
    • Assistance with sales recruitment to supplement the team.
Fibre Technologies, sales performance improvement, MBO