Sheer grit and determination can get you quite far down the track as an entrepreneur, while building up to a small R5 million business is an achievement in itself. But how do you move your enterprise into a completely different league – to a mid-size global business?
Moneyweb went to the 7th annual Innovation Summit in Cape Town and tapped into the experience of a few people who’ve either taken their ventures to a new level, or have helped companies move up.
There may be a gap in the market, but is there a market in the gap?
You need to ask yourself the question: ‘Are you better or distinctly different?’ If the answer needs too much thought, start again,’ says Jason Harrison, MD of ad agency, M & C Saatchi Abel, which has grown from R0 to R100 million in gross profit, with 190 staff, since it opened four years ago. Harrison suggests that from a marketing point of view, it’s sometimes easier to create demand rather than tap into demand. This forces you to create new rules and get ahead of the competition by default.
Investors are looking for a business with a good team, an element of uniqueness which can scale, and in an industry where there is some ‘white noise’ – an industry that’s buzzing, says Keet van Zyl of Knife Capital, a Southern African growth equity fund manager and advisor focusing on innovation-driven ventures.
You need support structures and advisors. You need networks and partnerships to scale. Consider strongly whether you have an emerging market footprint so that you scale up your business.
Choose the people you work with carefully
“Without doubt, the reason for our success is finding the right, like-minded people we know, like and trust,” says Harrison. Put more senior people in the business than you think you need. It broadens the load and ensures cohesion around that vision and purpose, he adds.
Find people who share your vision and purpose. Address issues frankly and honestly. Be clear about what you expect people to do. Reward people for doing well.
For other companies on the rise, outsourcing has worked well, as many consultants and freelancers are hungry for work and will go out of their way to do an excellent job for you. However you structure it, look for the very best people to work with.
Cashflow is king. It allows you to focus on the right things
So many businesses fail because they are consumed with worry about how they will pay rent and salaries. It’s hard to build your business if you are being tossed by the waves of doubt. With trading terms stretching to 90 or 120 days now, it’s becoming even more difficult, says Harrison. Find the right financial partner that buys into your vision, not into the returns they want in year one. It will free you up from debilitating worry.
Ask for money and advice
A lot of entrepreneurs raise funding by simply asking. Venture capitalists are more open than you would think, says Van Zyl.
Be open to advice from people you can trust. Van Zyl says he specifically looks for coachability in an entrepreneur. Entrepreneurs can often be dogged about their ideas and think they can go it alone but you need to be open to wise counsel.
Create a hype about your business
From the Industrial Development Corporation (IDC) to venture capitalists and business leaders, the message was clear. There’s tremendous creativity and inventions coming out of South Africa, great technologies and excellent technical teams. But we’re simply not marketing ourselves enough and not selling the technologies widely enough.
“South Africans have that shy arrogance. We like other people to talk about us. But we are not shouting loud enough,” says Van Zyl.
South African entrepreneurs also tend to limit themselves to within the borders of the country, when many of them could be going global, says Irfaan Khota, Venture Capital Investor at the IDC.
Put money into marketing and sales rather than all or most of your money into IP and patent protection, adds Khota.
Crystallise your value propositions. Package the opportunities and expand your networks, suggests Van Zyl. To scale up, you need an awesome product or service and a large market, who can buy in large numbers.
Find your enemy
Many new companies or brands define their enemy as their direct competition, eg for Nike it could be Adidas or Puma. But in order to compete and remain relevant you need a broader definition of your enemy, suggests Harrison. So in Nike’s case its enemy is apathy. Everything it does pushes against that, by encouraging you to ‘just do it’.
Execution is the only strategy the consumer sees
Sometimes you have to jump in, make the decisions to the best of your knowledge and get on with it. Be clear on the destination but open to the path as the context changes. Too much planning can be a bad thing.
A reason and a season
It’s important to accept and recognise when you’ve done well and realise that you are on the right path, says Harrison. Celebrate those successes and brush off those big things that weren’t part of the plan.