The zeal in an entrepreneur’s eyes shows how exciting business can be when you’re chasing a clear goal and breaking new ground. But for a range of reasons, companies get bogged down.
For some entrepreneurs, it can be the sheer volume of work that causes them to lose sight of the bigger picture and waste their scarce resources on the periphery. For mature companies, the problem might be competing management goals that mean the focus is on consolidating existing successes rather than taking the risk of seeking out new prospects.
The subdued economic climate is also keeping a wet blanket on some business operations, with both consumers and lenders averse to risk.
But it’s time to shrug off that negativity. We’ve spoken to leading entrepreneurs in Australia and abroad for a few nuggets of wisdom to get you thinking about how to renew your business in the new financial year. It’s time to step outside the box, inject a fresh attitude into your business and set in motion a chain of initiatives that can put growth back at the top of your agenda.
Yellow Brick Road founder Mark Bouris laments the “ridiculous” amount of time and money he and his staff wasted seeking new funding sources for mortgages in 2012. In the end the money came to him from a place where he wasn’t looking – Macquarie Bank. The silver donut bought a stake in November last year and signed up to a mortgage funding and distribution arrangement.
“The amount of time and money we wasted chasing that maze was ridiculous,” Bouris says. “I should have focused on having more branches and building the brand.”
Bouris says it’s hard not to get caught up in the daily “mud wrestle” but it’s important to regularly step back and assess the main game. It can save a lot of time and hassle.
“You have to be an observer and not a participant all the time,” he says. “It’s like you’re watching yourself in the maze.”
Every business person should sit down and write down their strengths and weaknesses, he says. “I’m a strategy guy, I’m good at doing deals, not at that detail stuff,” he says.
So he outsources to people that are better at that kind of thing – credit approval processes, arrears and delinquency processes, compliance environments. But not before learning enough about what he’s outsourcing to know what’s going on.
Mark de Ambrosis, investment director at Mark Carnegie’s venture capital firm MH Carnegie & Co, says the leader of a business has the capacity to focus on three or four priorities associated with a core vision.
“Everything else is noise and has to be delegated,” he says.
He says businesses are often not aggressive enough in how much capital they ask for when pitching to a venture capital firm like his. The new financial year is a good time to think big.
“One of the roles we play is helping businesses think bigger, accelerate some of their growth plans, and help them focus on the fact there is often a strategic or competitive imperative to get larger faster. There is always someone in the rear view mirror.”
It’s not quite the same thing as the US Navy SEALs or MI5, but businesses large and small are increasingly deploying units outside their daily operations to keep them on the forefront of innovation. And it’s not just behemoths like Google – with its Google X facility down the road from the California HQ – that are doing this.
Three-year-old online clothing retailer brandsExclusive, which topped BRW’s Fast Starters list this year, is also running a similar concept. Called Bex Labs, it’s a unit located about half a kilometre down the road from the company’s Darlinghurst premises that gathers customer feedback and tests new business ideas. They’re treated like ventures, and can fail without affecting the main business. They’re folded in if they work.
“It’s like a SWAT team,” brandsExclusive co-founder Daniel Jarosch says. “When you’ve been doing something for years, you don’t have the fresh eyes or brain to think outside the box. Having Bex Labs . . . we build minimum viable products, test them, scale them and take a data-driven approach. You treat them more like a start-up, more like a venture.”
The pace of business is speeding up as new disruptors face lower barriers to entry, consumer habits change in a flash and the sheer abundance of noise dilutes brand loyalty. Businesses that don’t make evolution part of their DNA are sure to be short-lived.
Australian-born entrepreneur Ryan Junee, now based in Silicon Valley, says executives in large companies are incentivised to focus on growing what is already working – which can stifle innovation.
“Disruptive new technologies often look like toys at first,” Junee says. “By the time they have grown into something large enough to be interesting to large companies, it’s often too late to compete because the start-up has too much of a head start.
“What’s the solution? Give a small team of top employees in your company free rein to work on something new, unencumbered by the existing corporate policies and bureaucracy. Put them in a separate office, give them a budget, and let them work on whatever they can dream up.
“With any luck, these employees will come up with your next line of business, and instead of your company being disrupted by a start-up, it will be disrupted by itself.”
Innovation isn’t just coming up with new business ventures. It’s also about coming up with ways to keep down your costs – a crucial process in Australia’s high-cost business environment. Businesses that do this will break away from the pack.
Rather than imposing dictums from above, Boost Juice founder Janine Allis asked her staff to come up with ways to do things more cheaply. The best suggestion won the employee an extra week of annual leave.
“It was everything from photocopying black-and-white double-sided to negotiating new prices on freighting,” Allis says. “It got the whole business looking at ways of cutting costs. They’re the ones that will know – they know what they’re doing every day and they’re closer to the pulse.”
Keeping costs down is one factor in the survival and ongoing health of Boost Juice. It grew while dozens of competitors folded after the mid-noughties juice bar fad lost its sheen. Allis has leveraged the group’s growing buying power and says its cost of goods has fallen three percentage points in the past 13 years.
Ruslan Kogan, one of the founders of Milan Direct and the chief executive of Kogan Technologies, says there is no better time than the end of a financial year to take a hard look at the balance sheet, with the help of fresh numbers from stock counts and audits. Are there more efficient ways to manufacture products or to distribute them? Could the business reduce its rent by reducing or consolidating shopfronts? Maybe it’s not cutting, but rather diverting money to where it is better used.
“One thing we’re constantly doing at Kogan is expanding our workforce,” Kogan says. “You never, ever cut costs at the expense of performance. You should only be cutting the fat. Customer service is crucial to us so we will never cut costs in terms of staffing.”
It’s worth taking a hard look at costs even if you’re already lean and successful, he says. In fact, it’s the best time. “The ones that survive are the ones that are innovating,” he says.
Kogan insists he doesn’t say things for the sake of being controversial, although not everyone will believe that assertion. Kogan is a master of the media bombshell. His online electronics retailer Kogan.com made global headlines in June last year when he announced it would tax customers a 6.8 per cent penalty if they used “antique” browser Internet Explorer to buy his products. The year prior he was in the headlines for challenging JB Hi-Fi boss Terry Smart to a $1 million bet that Apple products would soon disappear from his stores.
“All of these things we’ve done to rock the boat, you could call them a publicity stunt . . . but a lot of truth is said in jest,” Kogan says.
Controversy is one way to draw attention to your brand, but it’s not the only way.
Seasoned venture capitalist Tristen Langley, of Southern Cross Venture Partners, says every business should have a video. “It’s the new flyer,” Langley says. “You can embed it in your marketing materials, your emails, your website and Pinterest pages. It’s a much more shareable medium.”
Making them is relatively easy these days, and if they’re entertaining, they spread. Notable examples include Dollar Shave Club chief executive Michael Dubin’s cocky endorsement of his new brand, and feminine hygiene products maker Bodyform’s brutally honest tampon marketing video, both of which went viral last year.
The process of creating one helps a business become clearer about its purpose in the process of explaining itself, Langley says. And it’s a way to add some personality to your business by showing the people behind it, which helps you to stand out.
“So much communication is faceless,” Langley says. “After couponing [sites like Groupon], people have a very transactional view of dealing with you. Now it’s about how do they feel about the personality of your business because they never got to know you.”
Blogs are another way to reach out. You could try getting a bit political, says angel investor and biotech entrepreneur Chris Behrenbruch. “Watch taxation and be a part of the debate,” he says. “SMEs are a major slice of the Australian payroll and executives need to be more vocal about tax-effective equity incentives for employees.”
A challenging financial climate has strained the budget sheets of a lot of companies, and employees are often expected to forgo training and development until things get better. They’re getting impatient, says Behrenbruch, and it’s time for employers to take steps to stop them packing their bags.
“While the economic outlook for the next 12 months is a little murky for Australia, the truth is that the workforce has been somewhat desensitised and ‘job security’ may no longer be enough of a motivator to stick around after a period of flat wage increases and limited employee development,” Behrenbruch says. “The first that are willing to invest to retain their talent are going to do the best in the next 12 months.”
There is a range of ways to empower your staff. Entrepreneur and Catcha Group founder Patrick Grove recommends giving top performers shares in your business “so that you’re one big family as you enter 2014”.
Real estate groups including Ray White Group and LJ Hooker have invested in programs to develop their youngest professionals and lay out a career path before them. This includes networking nights, conferences and courses.
Other ideas include providing a yearly budget to your staff to attend conferences or courses, or if finances don’t permit offering this to everyone, providing it as an award to a select few.
Merav Bloch, an associate with Australian venture capital fund Square Peg Ventures, says companies should get away from relying on annual performance reviews to communicate feedback to employees.
“This is a mistake,” Bloch says. “Employees, like athletes, need regular coaching to improve. Feedback should be like voting: given early and often, ideally after every major piece of work.”
She has come across creative initiatives to encourage constructive feedback. One company gives each employee a number of “points” (say, 10) to divide up among other employees in the company however they like. A variation of this is allowing employees to determine how bonuses should be allocated, by giving them an amount to allocate however they think appropriate.
Consider greater transparency, she says. A great transparency initiative is Google’s TGIF, which is a weekly all-hands meeting where any employee can ask anything of anyone else in the company, including the chief executive.
“The idea of a weekly, company-wide Q&A. . . has since been adopted by many other Silicon Valley companies,” Bloch says. “It reflects two powerful principles: that great ideas can come from anywhere, and that everything should be up for discussion and debate.”
Catcha Group founder Patrick Grove says looking overseas is the best way to refine your business ideas. “There is always someone out there doing what you want to do, but better,” he says.
If you’re a workaholic like Freelancer founder Matt Barrie, justify a holiday by attending a business course at Stanford or Harvard. If you can afford the $10,000 to $60,000 price tag (depending on whether you’re going for a few days or six weeks), Barrie says it’s well worth the spend.
“You come back energised,” Barrie says. “They’re a good way to get out of your environment, meet leaders in different areas and go back to school.” Another advantage is you leave winter behind, he says.
The White family of Ray White Group attend Harvard Business School every January and have just returned from Monte Carlo to attend the Ernst & Young World Entrepreneur of the Year Award. They invite key staff and franchise owners to attend the Inman Conference – a twice annual real estate and technology conference in New York and San Francisco. Ideas are put into action on a Pledge Wall, where conference attendees publicly commit themselves to three things they will adopt to improve and change over the coming year.
Phil Morle, co-founder of business incubator Pollenizer, says a great way to broaden your thinking is to broaden your regular reading by seeking out new blogs. Aside from global entrepreneur blogs like Techcrunch, he reads Asian tech start-up blogs like E27 and SGE Insights. And get a mentor from a different industry, he says. “Meet each month for breakfast to inspire and challenge each other.”
If your logo, business cards and premises are looking dated, an overhaul could change the way your customers perceive the business, not to mention how you or your employees feel yourselves. A design contest on 99Designs or DesignCrowd or Freelancer will give you potentially hundreds of new logos to choose from. The same can be done with your business card. Renew the stationary cupboard while you’re at it.
If you want to tap the masses for a brand video, offer a video competition through Brand Honee.
Outsource something you hate on Airtasker or Freelancer. It could be anything. Maybe it’s someone to fix the spelling errors on your website, or a virtual assistant to handle your customer enquiries. Is it someone to put that pile of business cards in alphabetical order on a spreadsheet? Or someone to put new soles on your business shoes because you don’t have the time to take them to a repairer during business hours?
Freelancer’s Barrie says even his mum is embracing outsourcing. She sells art and craft online. For $350 a month, a lady in Sri Lanka works full time responding to customer enquiries, emailing newsletters and specials, and updating product descriptions, prices and photos.
“Everything you don’t want to do that’s boring or mundane or repetitive or low value add, just task it online,” Barrie says.
If you are cash poor and have unused space in the office, try to make some extra money by listing it as office or storage space on a site like SpaceOut. Same for unused car parks.
Need money for a creative venture of some kind? Launch a Kickstarter campaign.
Southern Cross Venture Partners’ Langley is on the board of beauty “glam bag” distributor Ipsy, and says a Facebook flash sale yielded impressive results, not only in immediate sales but in building and leveraging a social media community. Just like the radio promotion, they announced that they would post a picture on their Facebook page at a certain time, and those who were present to get a sales code from it would get a discount.
“They sold 1200 goods in 90 seconds,” Langley says.
Mobile advertising is worth considering, she says. (Jarosch at brandsExclusive says 50 per cent of sales come from mobile devices now.) Langley recommends UberConference or LoopUp, which add a visual dimension to audio conferencing, sales closing software close.io for customer relationship management, and Bislr for managing business-to-business marketing.
It’s a bit of a retro suggestion, but Langley suggests online businesses might consider an event aimed at meeting their customers, like holding a forum or networking function. Treat it as a way to reward your best customers, but you might glean some ways to improve the business that electronic customer engagement mechanisms fail to achieve.
“There is so much form-filling going on,” Langley says. “There are so many ways to do it electronically, but there are very few forums to engage physically any more. By inviting them to events, I think customers will be responsive to that because they’re not used to it any more.”
Janine Allis keeps the phone lines open, and each Boost Juice store has a sign telling customers to get in touch if they have a bad experience. Responses come within 24 hours.
“When you hear of a bad experience, there are probably 10 people who haven’t talked to you,” Allis says. “You’ve got to get onto your problems quickly.”
The White family of Ray White Group sponsors the Museum of Contemporary Art in Sydney. In return, its business owners and staff get access to a year-long schedule of privileged, behind-the-scenes art-based events at the MCA and other art venues, including private viewings and artist studio visits.
“The sponsorship of the MCA has been terrific,” says Ray White Group chairman Brian White. “It’s encouraged a broadening of experiences for our people, particularly our younger ones.
“I overhead a couple [of workers] saying with some pride that we support this program with the MCA. I think it has an impact on the zeal they have towards the culture of the company they belong to.”
The Whites also go reef surfing off Sumatra with key executives every year.
Kogan’s offices have table tennis tables and an indoor racetrack for scooters. There is also a staff basketball team and indoor soccer team, and staff are given gym memberships.
“We’re a big bunch of computer geeks who spend the better part of eight hours a day at a computer,” Kogan says. “Having a healthy workforce is very important. We encourage all our staff to be physically active.”
The infectious passion of an entrepreneur can’t be underestimated. It sells products, boosts the business reputation and assures investors the founder has what it takes to run the start-up marathon. So it’s important to keep your batteries charged, says Springboard Enterprises Australia chairman Wendy Simpson.
“You’ve got to turn up every day with a new reason, a new passion for why you’re in business,” Simpson says. “It’s got to be infectious. If you’re not well, you can survive for a while digging out of reserves, but you do need to keep your energy levels up, particularly your mental health.”
People do this in different ways. Simpson likes reading the Book of Proverbs in the Bible. She also gets together with an informal group of business people every fortnight for mutual encouragement.
“If we think business is all about us and the products we make and don’t have a higher purpose, when you get to tough times, you think why press through?”
Sarina Russo of the Sarina Russo Group, which employs more than 1100 staff globally, emphasises “energy” as a crucial ingredient for successful business. Regular all-staff gatherings always involve music and dance. It’s typically a couple of minutes before a one-hour meeting, with employees doing a kind of cycling motion to tunes like What is Love by Haddaway and Celebration by Kool & The Gang.
“I think the days are gone where being formal is the norm,” Russo says. “Some executives who are new think I’m crazy. I say you had better participate or you’re out.”