Without execution, 'vision' is just another word for hallucination. Mark Hurd

Working longer hours in not a practical solution for most of us. Here are four sustainable ways to improve your execution skills. ​ Be clear and methodical Avoid the temptation to jump into activities and get started before you get organized, create a plan, or make sure what you are doing is aligned with the company strategy Instead organize people, assemble your resources, then generate a plan. The plan should be one that people can commit to, without there will be poor or no execution Make it clear who is doing what. When people are collectively responsible no one is responsible Understand how your plan aligns with company’s strategy Set goals and deadlines Goals help a team achieve their objectives and encourages engagements – milestones help to measure progress and celebrate wins. Pair goals with deadlines – our behavior changes when faced with deadlines. Goals and objectives give you a head start on meeting our objectives Ask what it would take to complete this project two weeks earlier. But too not push too hard – this can erode trust Provide feedback – especially positive feedback Positive feedback provides motivation and motivation improves execution. Become skilled at giving feedback Concentrate on the behavior not the person – describe the behavior, how you feel about it and what you want to have happen Use the sandwich approach – comment on positives, before the negatives and end with a positive Be specific – use examples to illustrate your point Be realistic – focus on what can be changed Own the feedback – use I rather than they or one. Feedback is your opinion Be timely. Be prepared Offer support Give recognition Resolve conflict and build team unity Identify and resolve conflicts within the team Problems arise from differences of opinion. Eliminate where possible conflicting objectives, if these cannot be eliminated then ensure they are recognized. Encourage positive conflict not destructive and personal conflict More ways to improve execution: Focus on what is most important. When it comes to execution complexity kills Clearly state the priorities – Avoid vague terms such as best in the industry. Avoid buzz words – sustainable, agile etc. Describe the steppingstones to success Identify your critical vulnerable – elements that must be implemented to achieve success yet are the most likely to fail If I was a competitor, how would I attack my company? Tie the project to a vision of the futures 3 to 5 years from now.

I may walk slowly but I never walk backwards Abraham Lincoln

As the old saying goes – when the going gets tough, the tough get going. There will be times when executing your business plans seems an insurmountable challenge. It’s not but it can seem that way sometimes. Remember setbacks are inevitable, defeat is not.

You need to be proactive, keep the mood positive, calm your team when needed, remained poised to do not panic. Easier to say than to do when your dream is at stake. But by setting the right tone you can improve your chances of success. Let’s consider some ideas for success. Stay focused – execute the plan. Focus on moving forward. Do not allow noise or distractions to disrupt the cadence of execution Remain flexible in the face of change or unforeseen circumstances Allow team members to focus on what they love to do. When they execute with passion, they will have the endurance to overcome setbacks. Make accountability a culture Top performers and support players are equally important Make the accountable to themselves and each other. The expectations of peers is a powerful motivator Ensure they know their roles and responsibilities Ensure the work is fairly distributed. Team members who feel they are taking on too much of the burden can become isolated. Show that the team is greater than the individual players Develop trust – like a family An atmosphere where teams trust and value the contributions of each other. They have each other’s backs. Form strong bonds Identify and eliminate hidden agendas Encourage a sense of humility -this in not all about the top performers. Encourage diversity of thought Diversity of thought is underestimated in the development of teams. Diversity of thought broadens perspectives – deepens the pool of knowledge. Identifies new opportunities, expands creativity, improves dialogue and problem solving Align the team’s expectations Know what to expect from each other Align to people’s strengths, correcting continually Do not become complacent. Find ways to improve and sharpen the ability to execute The leader’s role Live the culture and identity of what you want the team to believe in and how they should behave. Your values and vision. 100% focused on the team (The servant leader)

Your team will take their cues from you. And this is much more about the way you act rather than the words you say. Avoid the “do as I say not what I do “syndrome. By staying calm and aligning the team to their strengths, making responsibilities clear you will improve your team execution. ​

Play to your strengths – they are your greatest asset

Nothing happens without people and unless you are a solo practitioner you will be working with others as you launch your business. Your partners, employees, backers are not perfect, and it is your role as the leader of your business to keep the team together and provide an environment where they can perform at their best.

Now, let’s be honest: employees can’t completely avoid their weaknesses. That just isn’t possible in the real world. But instead of having people waste too much time trying to improve in areas where they’re unlikely to succeed, managers can form strategic partnerships and thoughtful processes that help them work around their weaknesses. Data suggest that focusing energy on improving in areas that come most naturally to people reaps high returns, as employees and organizations that incorporate strengths as a strategy tend to realize significantly positive business results.

Episode 35 Entrepreneurs often overlook key parts of their financial plan. What’s missing from your plan?

Some elements of a financial plan should be obvious to every entrepreneur. Sales, Costs of production, Gross Margin, Overheads etc. But some cash intensive demands are often overlooked, especially by first time entrepreneurs who do not have a finance background. The objectives of your financial plan are many but one that is important to you is you are seeking funding is get an estimate of what your business will be worth. What is its valuation? ​ Working Capital – the money you need to run your business. A necessary evil. For this discussion I will define working capital as Inventory and Accounts Receivable which can thought of a the negative aspect of Working Capital. Accounts Payable – the positive side of working capital, as this is in effect money being lent to you by your suppliers. And finally, the cash balances your must maintain to ensure you can pay your bills as they come due. One of the most important of which is your employee’s salaries. Investors will look at your ability to manage working capital as a measure of how efficiently your business is being run. Good control of working capital shows that you are focused on what is important – that is cash. Common measures of working capital: For Accounts Receivable – Days Sales Outstanding DSO. If your customers are slow to pay your DSO will increase. For Accounts Payable – Days Payable Outstanding DPO. This reflects how quickly you pay your suppliers. The longer you delay payment the higher your DPO. Just paying late is not the most effective way to manage DPO. Inventory – Days on Hand (DOH) – the more money have tied up in inventory the higher your DOH. AR and Inventory are negative to cash, so you want DSO and DOH to be as low as possible. AP is positive to cash. so you want DPO to be as high as possible. Startup expenses – even before you open your doors you will be incurring expenses: Incorporation costs, business licenses, logo design, website creation, company secretarial fees Essential equipment – computers, phones, printers, desks, chairs, staff amenities Taxes Taxes on profits are obvious – but check out new business incentives. In early years tax losses may be incurred, this can usually be offset against future income. Sales taxes, VAT and GST. These become payable based on invoice date, not when your customer pays you. Understand the regulations in your country and estimate how much of this tax burden your may have to finance out of your funds. Depreciation Although it is a non-cash item it is on your P&L as a deduction from profits The rate of depreciation varies on the type of asset. Computers are often depreciated over 3 years, buildings over 40 years. Land is typically not depreciated. Valuation Many entrepreneurs would like to dispense with a financial forecast if it wasn’t that banks and other investors require a plan. The good news is that having prepared a financial plan you have a basis for valuing your business It’s not uncommon for businesses to be seeking funding before they launch. Your financial forecast is all you have as a basis of negotiation with your investors. How much of your company do you need to give up for X dollars of funding? Document and be able to justify your assumptions. The more reliable third party facts, figures, reports the better. Discounted Cash Flow (DCF) is a common method of determining a businesses value. After all the value of a company is its future cash flow. At this early stage you have no track record of your ability to forecast your business’s results so expect investors to challenge or discount your assumptions. Discounted cash flow requires a discount rate. This is often tied to the cost of borrowing.

Episode 34 Does your financial plan make sense? How to use KPIs to be sure

Key performance indicators of KPIs are an excellent tool for assessing your financial plan and for tracking your business’s performance. Some KPIs are common to most businesses, some will be more focused on your industry and some maybe specific to your business.

These are the crucial metrics for your business. Potential investors will be interested to understand how you will measure progress. KPIs also help your employees know what is critical for your business. ​ KPIs fall into two types – Leading KPIs that will tell what is going to happen and lagging KPIs that tell you what has happened. Both have there uses. Sales per salesperson is a lagging KPI. It can only be calculated after a sale has taken place. Initial customer contacts per salesperson is a leading KPI. More contacts now will, hopefully, lead to more sales in the future Investors will expect to see at least the most common KPIs. Revenue growth rate Gross Margin Profit – Earnings, EBIT, EBITDA Cash flow – burn rate per month, Runway remaining etc. Consider what is important for your business. Failure to track and understand the performance indicators can lead to business closure LayerVault provided a version control service to developers. It was very popular with its users but failed to gain enough traction to attract future investors and ran out of funds. CEO Kelly Sutton said “I think one of our biggest mistakes as not checking our KPIs regularly enough. They would have greatly helped us identify problem points in our business. Although KPIs will be different for each business some can really help you understand your business value proposition. Customer conversion rate. The number of customers who sign up or buy your product divided by the number of customers who have expressed an interest. If this number is low, potential customers are not seeing the value in your product or service versus the cost. Re-evaluate your pricing model or your offering design. Customer Retention Rate or Churn Rate. These are opposite sides of the same coin. Customer retention rate is the percentage of customers who remain with you. It is often looked at over a year or more. How many customers who bought from you last year are still buying from you this year? Churn rate is the number of customers lost in a given period. Which is appropriate for you depends on your industry. If you are a B2B business retention rate may be more the most useful. Churn rate is maybe more relevant to B2C or SaaS companies. High retention or low churn rate indicates that your current customers are happy and believe you are solving their problems and are delivering value. Low retention or high churn could mean that your pricing is too high for the value offered, or there is something missing from your product offering that your customers need. Length of your sales cycle. This is the time taken from initial contact with a potential customer to making that first sale. This KPI can help in several ways. If you measure it by sales person you can identify who closes the deal most rapidly. This is a learning opportunity to teach others on what to do and what not to do. If you track the sales cycle through its stages you can learn where the roadblocks are in your selling process If the sales cycle is increasing overtime it could mean you have exhausted the customers who are early adopters and your ideal fit and are now having to attract less enthusiastic customers. Your Customer Acquisition Cost (CAC) may be increasing. There are many other KPIs that could be relevant to your start up. If number of users is important to your business, you will need to consider Daily Active Users or Monthly Active Users as a metric. Identify the KPIs that are most important to you. Use them to confirm your financial plan makes sense.

Episode 33 Developing your financial plan – the heart of your pitch deck. ​ Some experts suggest that potential investors will spend over 30% of their time evaluating the financial page of your pitch deck. As a typical pitch deck is 15 to 20 pages long, you will understand that the numbers get a disproportionate amount of attention. It’s probably only secondary in importance to your executive summary. If your executive summary has not caught their attention then they will not read further and never get to the financial page. Of course, your executive summary should include some high-level financials.

If you have been following me during this season you are well on your way developing a financial plan that can be summarized in your pitch deck. A financial plan that will stand the scrutiny of seasoned investors. In earlier episodes I have discussed: Demand Validation – you have confirmed that there is a demand for your product, people will buy what you are selling Assessing your competitions strengths and weaknesses and how you will outcompete them. As part of this assessment you understand what resources are needed to win the battle in the marketplace. You have estimated what it is going to cost you to produce your offering, and looked at ways to keep those costs to a minimum. Your pricing strategy has been reviewed and you have a good understanding on what you are going to charge for your goods or services. You have even considered an early customer loyalty program. A hiring plan has been developed, you understand who you will need to hire, when you need to hire them and what they are going to cost. The operating costs needed to start up and maintain your business have been evaluated. You have considered trading off lower initial profits against maintaining your cash flow. You know your burn rate and have estimated the cash you need to get started. You know the market size and have confirmed that a reasonable market share will deliver the sales needed to sustain your business. Its been hard work but now you can start to bring it all together and be sure that your business makes financial success. Avoid massaging the numbers to get to the answer you want. If the numbers are not adding up, go back to your assumptions to double check them. Maybe you missed something, is there a product feature you can eliminate that will save costs, do you really need a full time CMO, CFO, CHRO in the first years of operation – can you make do with part time? Can employees work from home rather than renting an office. The fundamentals of a financial plan. Often referred a three statement financial plan Profit and Loss Balance Sheet Cash flow All three are inter-related and all three show a different picture of your business. All three are needed for a complete picture of the financial status of your business. Established companies tend to focus on the P&L and the most easily managed aspects of the balance sheet which are the elements of working capital. Business management usually pay scant regard to the balance sheet As I start up I recommend you make your cash flow statement your highest priority with the P&L a close second. The balance sheet should be reviewed occasionally but as time will be at a premium this need not be your focus. Your cash flow will cover the important element of the balance sheet – your working capital. This can be an issue if you are outsourcing your accounting. Most services focus on P&L and Balance Sheet. Not your number 1 priority Speed is of the essence – financial statements produced 3 to 6 weeks after a month has closed are not very helpful. I have digressed slightly to emphasize the importance of cash flow but today we are talking about preparing a financial plan not your reporting mechanisms. I am not going to go into the mechanics of producing a three statement cash flow. There are many free templates available to help you prepare your P&L, Balance Sheet and Cash flow.

Many folks in business today have never had to deal with inflation. In the US and Europe, the last time high inflation was rampant was back in the 1970s. The world today is very different from 1970s and no one is predicting we will see the same levels of inflation we saw back then, but prices will be rising faster than we have been used. The most recent inflation prints have done little to reduce concerns about inflation. The U.S. consumer price index jumped 6.2% in October from a years ago, official figures revealed on Wednesday, the sharpest annual rise for 30 years and vastly outstripping the U.S. Federal Reserve’s target. ​ Chinese producer price index inflation surged 13.5% annually in October, while U.S. PPI grew at 8.6% annually, equaling an all-time record.

That we are seeing inflation is no surprise. Shortages of labor and materials, partially triggered by Covid 19 are pushing up prices. Freight rates have skyrocketed, and oil is trading at near recent highs. Governments have been printing money for fund covid relief initiatives and combined with quantitative easing measures there is a lot of money in the world economies. I have been predicting that inflation was bound to be a consequence of these actions, I am only surprised it has taken this long.

As a SME you may be less able to pass on price increases to your customers, if the major players in your market are only passing on a fraction of the true cost increases you may have to accept lower margins for a time. Some belt tightening may be required.

To maintain profitability all parts of your company need to be ready to respond. Responding to inflation is a change in business practices and like any change initiative it is important to bring your staff along with you. Explain the situation. Instill a cost-conscious culture. Do not create panic – this is not a burning platform. Reinvigorate or set up your sustaining engineering activities. Use sustaining engineering to reduce the cost of the products to improve profitability, match competitors pricings or drive volume. Do further research to identify lower cost sources or alternative materials which are less expensive. Look at all costs – an alternative form of packaging could deliver savings. Look at value engineering – is there an element of your product that is little used that can be eliminated? Reduce portion sizes but be careful look what happened to Nestle when they removed the walnut from their Walnut Whip Never really been a walnut girl but I feel removing them from the walnut whip truly is the beginning of the end for society as we know it But its procurement who have to step up their game in dealing with suppliers Contract Management Procurement organizations must be aware of the risks in their agreements and make plans to mitigate those risks. on in itself. Contract design can be adapted to mitigate the impact of inflation. All contractual levers should be assessed, including duration/term, indexing, periodic limits to price escalations and frequency of price adjustments. Risk potential during inflationary times should be evaluated and contract terms adjusted. It is important to also work closely with the finance, sales and marketing functions to ensure that, where possible, indexes in supplier contracts are symmetrical with those used in commercial contracts. This allows cost inflation to be passed on effectively. Contract negotiations will be needed to enact changes and should be managed carefully. Prioritize negotiation targets by supplier as well as by commodity. For each negotiation, define a customized strategy, objectives and level of aggressiveness. Consider the unique context and leverage position for each negotiation — if there are no alternative suppliers with lower rates, it will impact the approach. Set clear rules, roles and responsibilities for the team ahead of negotiations and ensure compliance.

Apple's market share is bigger than BMW's or Mercedes's or Porsche's in the automotive market. What's wrong with being BMW or Mercedes?

Steve Jobs

If you’re looking to start or expand your business, you need to have a firm understanding of how to enter and grow within your chosen market. This requires you to take what you’ve learned during your market analysis to develop a market penetration strategy for your business. For your business is the key word. Many online articles talk about achieving market dominance, cite examples like Apple or Coca Cola. Certainly, dreaming big is often thought of an important attribute that leads to success. Dream big and plan with realism.

The fundamental 4 Ps of marketing: ​ Product – Keep it simple. Avoid the next shiny feature trap Understand the impact of every new added capability Kill off new ideas before they kill your product. Price – often thought of as the most important of the 4Ps. At the start of your business, you will not be able to be a price leader. The market will dictate what you can charge but: If you plan to be a premium product do not undercut the market If your funds are limited – a higher price that gives a better margin in exchange for slower growth maybe right for you. But do not get too much above market. Give something in return – more attractive packaging etc. Too low a price can make people suspicious. Particularly if you are selling online – test price points. Use pricing to control demand. Promotion. Covers all the activities you use to market your product or service to your target customers Often very expensive so consider how you can track your ROI Manage you’re the cost of customer acquisition versus the lifetime value. (Margin $ not Sales $) Know where your customers go for information. This does vary by generation Do not dismiss influencers. Consider Micro or Nano influencers. Social media – Pinterest, Instagram, Tiktok Place – chose your distribution channels carefully. Make it easy for your customers to buy But ensure the channel is aligned with your objectives Multiple channels are fine – just do not get drawn too thin Online – consider your own site if niche – use a platform if more generic. SEO People – the fifth P refers to your customers and your staff Understand your customers needs, aspirations, desires. Are there gaps you can bridge Ensure your staff are motivated, well trained and focused on customer satisfaction. Does your marketing strategy reflect your values and mission? Beyond the 5Ps – create a barrier to entry. What do you do better than your competition? Identify your core competence? What can make it difficult for your competitors to match you? Company culture can be a very effective barrier to entry. Connect market penetration to your overall business strategy Keep in mind that market penetration should not be conducted in a bubble. Any strategies you develop or steps you take should connect to your broader business strategy and help you reach specific milestones. One way to keep this top of mind is to incorporate a review of your market penetration rate and any ongoing strategies into your monthly plan review.

This will encourage you to look at financial forecasts, milestones, and current tactics all at once. If you find that a current penetration strategy doesn’t support your larger goals, it may be wise to back off or reallocate resources until it becomes relevant. Or it may present an opportunity to adjust your business plan to fit the opportunity you’ve found. But without reviewing it alongside your plan and financials, you’d never know for sure.

Tags: How to start a business, achieve start up success, Ansoff matrix, business growth, market penetration, the successful entrepreneur, business common mistakes small business start-up; avoid these common mistakes of business, mistakes in business, IBGR.network, Jeremy Gray, Practical Solutions to Difficult Problems

We are not willing to compromise our values in order to increase our market share. Pavel Durov Is your target market large enough to support your ambitions for your company? This is an important metric that you, and your potential investors, need to understand to be able to assess your chances of success. I have read articles that say the market size needs to be in the billions. Yes, if you want to be the next unicorn with a $1 Billion valuation. But if being a unicorn is not your goal, the market still needs to large enough to support your business plan, and not by assuming you will achieve market dominance. At least not yet. How much you can sell is directly impacted by the size of the market you can sell to. Markets are finite, there is only so much demand for your product. As a start up targeting more than 5% share is unlikely to be believed by potential investors. Some important definitions. Total available market (TAM). Let’s assume you are launching a new electric toothbrush in the UK that sells for 10 pounds. What is your total available market? Population of the UK – 60 million, assume on average each person buys 1.5 toothbrushes per year. Total number of toothbrushes sold = 90 million at 10 pounds each – TAM 900 million pounds. But not everyone uses an electric toothbrush. In the UK about two-thirds of people use an electric toothbrush. So now your TAM is down to 600 million pounds. Maybe you are only going to sell your toothbrushes via dentists, dental clinics and online. Maybe this represents 15% of the electric toothbrush market. So, your potential or serviceable market will be 90 million pounds. Taking our guideline that 5% market share is the maximum a startup can expect – your top line sales will be 4.5 million pounds. Clearly if this is not sufficient to justify your investment you would consider broadening your distribution channels. Toothbrush market size is pretty easy to estimate market sizes. Nearly everyone uses them and there is a lot of market data out there available free for you to use. If it is hard to get hard data on the size of your target market, what steps can you take to estimate TAM and Potential Markets. Define you subsegment of the market Conduct top-down marketing. Follow this with a bottom-up analysis Where you will sell your products How many locations will stock your products? Estimate sales by location Be realistic, map out the ranges, focus on the lower end of your projections Consider the market dynamics – is the marketing growing? Is it static? Is it declining? Some other questions to ask: How well does your product fit the market needs? How much market share can we reasonably take? If you are already in the market what has made you successful What are my potential customers buying habits and how can I make it easy for them to buy from me? Tags: How to start a business, achieve start up success, Ansoff matrix, business growth, market penetration, the successful entrepreneur, business common mistakes small business start-up; avoid these common mistakes of business, mistakes in business, IBGR.network, Jeremy Gray, Practical Solutions to Difficult Problems

‘Now, here, you see, it takes all the running you can do, to keep in the same place. If you want to get somewhere else, you must run at least twice as fast as that!’

The Red Queen – Alice in Wonderland – Lewis Carroll Published 1865 Every entrepreneur starting out has visions of her/his baby growing into a successful business. They may not be dreaming of becoming a unicorn, maybe $1 Million turnover is their goal. But at some point, in the business lifecycle they will need to reinvigorate their business. Like any project business expansion is a balance of risk versus reward. Let’s examine a couple of tools that may help you decide how to expand your business.

The Ansoff Matrix was developed by Igor Ansoff and published in the HBR in 1957 under the title Strategies for Diversification. Ansoff argues there are only four strategies for growth: Market penetration – Increasing sales of existing products into an existing market Product Development – Introducing new products to an existing market Market Development – focuses on entering a new market using existing products Diversification – Entering a new market with the introduction of new products. Ansoff also evaluated the risk associated with the four strategies and plotted this on a 2X2 Matrix. The lowest risk was assigned to Market Penetration The highest risk was assessed to be Diversification. How can a matrix developed nearly 65 years ago be relevant to entrepreneurs today? If you are pitching to investors, you can almost 100% someone is going to ask you “How are you going to scale?” It’s true that Ansoff research was focused on later stage businesses, but he did focus on growth. And growth is what startups are all about, so Ansoff remains relevant. The relationship between markets and products provides a framework for how your company can grow. Markets are not necessarily based on your customers characteristics, such as geography but more based on their objectives. People do not buy drill bits, people buy holes – the concept of jobs to be done. – Clayton Christensen Use the matrix and “jobs to be done” concept to map out your scale up. The lowest risk path to growth is market penetration. Selling more of your products into the existing market. If you have a multi-generational product strategy that will keep you ahead of your competition and allow increased market shar this may be all you need, for now. But without innovation your company will eventually stagnate. Existing customers are the easiest to sell to. Identify “jobs” that need to be done that are not done well or not being done at all. What work arounds have your customers invented? What tasks do people want to avoid? What surprising uses have customers invented for existing products. This can lead to entering new markets. Diversification is probably not applicable at this stage of your company’s development. It has the highest risk Backers will question your business concept. Why are you launching with one idea and planning to move into another business concept? The Ansoff matrix is easy to understand. Plot your expansion plans on the matrix to help investors grasp your scale up concept. I recommend the article Know Your Customers’ Jobs to be Done published by HBR. Link below:

https://hbr.org/2016/09/know-your-customers-jobs-to-be-done

Tags: How to start a business, achieve start up success, Ansoff matrix, business growth, market penetration, the successful entrepreneur, business common mistakes small business start-up; avoid these common mistakes of business, mistakes in business, IBGR.network, Jeremy Gray, Practical Solutions to Difficult Problems