Tag: Head Sanlam Business Market

Your business is your economy

Posted on by Sanlam
By Jannie Rossouw

Head: Sanlam Business Market

When I looked at the typical “hassle map” of a business owner, it dawned on me that we tend to focus on the things that we cannot control or have little control over.

Here is a list of things we do have control over:

  • My attitude: Do I see the proverbial glass as half full or half empty? This is a purposeful choice I can make.
  • To keep my promises: delivering on my value proposition.
  • My business expenses: Do I have a 12-18 month cash flow forecast which will highlight times of sales abundance or shortfall?
  • Contracting with my suppliers (credit terms) and clients (payment terms if credit is granted).
  • Do I actively manage my creditworthiness and that of my business? A sterling credit record comes into play when the going gets tough, as will happen from time to time.
  • I appoint people to fulfil a specific role in my business. Are their responsibilities clearly defined and contracted? People sometimes do what you ask them to do – but they mostly do what you pay them to do.
  • Marketing of my business: I can decide which marketing mix works best for my business and how much I want to spend on promoting my business and product/service offer.
  • The sales process is 100% under my control. I can decide to whom I want to sell something and how much I am willing to spend on my sales capacity. I can calculate how many sales I need per year, month and day to meet my sales objectives.
  • Asking for referrals from satisfied clients.
  • Service delivery (pre- and post-sales) and meeting of client expectations.
  • My own and my staff’s professional conduct.

Here are a couple of things we have limited or no control over:

  • Government policies, legislation and requirements: It is best to comply with these.
  • Tax: Pay what is due and continue with your life!
  • Exchange rates: Take note and adjust your finances, costing and pricing as required.
  • Competitors: Keep close tabs on your competitors’s activities (use their website, advertising, PR and mystery shopping as sources of information).
  • Interest rate: Ensure the best possible credit rating for negotiating leverage with financiers.

In the end we should all “mind our business”, single-mindedly focus on our business targets and apply daily deliberate actions that will deliver results.

To support business owners with the important task of business planning, Sanlam gives you free access to the book Your Annual Business Game Plan for Success, which provides an easy and straightforward framework needed to draft a well-crafted game plan that will create the positive change and growth necessary for business success. Go to www.sanlam.co.za/gameplan to download your free copy

Is your business continuity protected to survive a crisis?

Posted on by Sanlam
By Jannie Rossouw

Head: Sanlam Business Market

www.businessdirectory.co.za defines a crisis as: “A critical event or point of decision that, if not handled in an appropriate manner (or if not handled at all) may turn into a disaster or catastrophe.

Financial challenges in a business may come in many guises.  For instance:

  • A big contract is suddenly cancelled.
  • A debtors’ book is not being managed well and bad debt skyrockets.
  • A piece of equipment that is crucial to your production process breaks.
  • A natural disaster damages or destroys your business premises.
  • A business partner dies or becomes disabled.

This article will focus on the impact of your death, or the death of a business partner (if applicable), on your business and your personal estate.

There are 3 key financial planning risks that every business person should address:

  1. Taking out life insurance to cover business debt that you signed surety for in your personal capacity.
  2. Making sure that the business is able to pay out your debit loan account (that is, your capital and time invested in the business) in the event of your death/disability.
  3. Protecting your shareholding in the business in the event of the death/disability of one or more shareholders, by means of a buy-and-sell agreement en accompanying life insurance.

If these 3 elements are not properly addressed, the impact will be as follows:

Allegiance Risk Type Classification

Risk Subject of the risk Risk relevant to the applicable owner/person Remaining owners Business Solution
ARTCTM 1 Exposure to 3rd Party Creditors Suretyship that the owner signed for the business. The creditor may call up the suretyship, exposing the estate of the owner. If surety is called up against the estate of the deceased, it will result in a claim against the business, ultimately affecting the funding structure of the business. Long-term and short-term funding structure may be exposed. Third-party creditors may withdraw finance or may increase cost of finance. This risk can be addressed with a contingent liability solution.
ARTCTM 2 Unrecovered Capital The capital, time and expertise spent on the business are the subject of the risk. The loan account may never be recovered. The risk of having to raise a large amount of capital to repay the loan account. Capital structure of the business is exposed. Risk of not being able to replace the capital. Business may be sued for the loan account. The risk can be addressed with a loan account solution.
Risk Subject of the risk Risk relevant to the applicable owner/person Remaining owners Business Solution
ARTCTM 3 Unrealised Capital (Wealth) The equity in the business is the subject of the risk. The risk that the equity in the business may never be sold. Risk of having to seek funding to purchase shares or face “foreign” partners. Risk of foreign partners that may adversely affect the future management of the business. This risk can be addressed with a buy and sell solution.

My advice: Obtain the advice of an accredited financial adviser if you are unsure of whether these financial planning risks have been properly addressed in your business.

You work hard to make a success of your business. Make it a priority to protect this asset and your work.

To support business owners with the important task of business planning, Sanlam gives you free access to the book Your Annual Business Game Plan for Success, which provides an easy and straightforward framework needed to draft a well-crafted game plan that will create the positive change and growth necessary for business success. Go to www.sanlam.co.za/gameplan to download your free copy.

Why financials are important even to non-financially savvy business owners

Posted on by Sanlam
By Jannie Rossouw

Head: Sanlam Business Market

Many business owners manage the finances of their businesses by means of their bank account. This is a risky practice as the bank account does not provide a true reflection of the real cash flow status of the business.

Here are four actions you can consider applying in your business:

1. Control your cash flow by reviewing the management accounts for the last 12 months

Look for trends where your cash flow was under pressure. Try to determine what the reasons for the cash flow “pinch” were. Are these events likely to repeat themselves in the next 12 months? What can you do to pro-actively plan the cash flow bridging of these events.

2. Do a cash flow forecast

Ask your bookkeeper or accountant if you do not already have a cash flow forecast (12 to 18 month period) for your business. A cash flow forecast can help you to make more informed decisions about taking on more staff, changing your prices, tendering for a big contract, moving premises or changing suppliers. It also helps you to identify the suppliers who are instrumental in floating your cash flow. Once you know who they are, you can work on cementing the relationship with them, bringing about more business surety. It can also help you to pro-actively identify cash flow challenges, making it possible to plan actions to bridge the cash flow gap by acquiring finance, or planning on how to create increased cash flow over the impacted period. Understanding the consequences of just some of the main problems which may occur, can significantly reduce the impact they will have on your business – forewarned is forearmed!

3. Become leaner

The cash flow forecast can help you to identify areas in your business where expenses can be trimmed down. With costs you can decide to “keep it, reduce it or eliminate it”. A rand saved is a rand towards a positive cash flow.

4. Get more cash in by considering the following options

  • Offer cash discounts to customers instead of payment terms – get the money into your bank account a.s.a.p.
  • Sell off excess stock – carry the optimal stock levels.
  • Have a sale and focus on cash sales.
  • Sell redundant assets – maybe a machine which has already been replaced, or reached the end of its productive life cycle.
  • Reduce your debtors’ book – debtors discounting can be a consideration to release cash in your debtors’ book.
  • Make sure your staff compliment is aligned to the workload requirements – nobody wants to lay people off, but in the larger scheme of things it might be the saving grace for the business.

When it comes to money, ignorance is NOT bliss. What you don’t know CAN hurt you.
Sandra S. Simmons (Author)

To support business owners with the important task of business planning, Sanlam gives you free access to the book Your Annual Business Game Plan for Success, which provides an easy and straightforward framework needed to draft a well-crafted game plan that will create the positive change and growth necessary for business success. Go to www.sanlam.co.za/gameplan to download your free copy.

Business evaluation can lead to business optimisation

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There is something to be said for making the time to investigate, evaluate and think about some critical elements impacting on the success of our businesses.

In this article I will look into (1) Service Experience, (2) Business Premises, (3) Our People and (4) The Image of my Business.

1. Service Experience

This subject matter remains a bugbear of mine; maybe because the general sentiment among consumers in South Africa is that this is an area which is lacking in most businesses.

Here are a couple of pointers to use in benchmarking the service experience of our businesses:

  • Obtain an external point of view
    This can inter alia be done by appointing the services of a mystery shopper to evaluate the level of service and support provided by your staff.

    A point of sale customer feedback facility could also be considered. Compile a short questionnaire (3 or 4 questions), make copies and place these at your service points. Ask your counter assistants to ask every customer they serve to complete the form and to place the completed form in a sealed container. Another possibility is to obtain telephonic feedback similar to the above from customers that make purchases above a certain amount and whose contact information you have.

    There is something to be said about tracking your main competitors – use information in the public domain (website, brochures, events, sales people, articles in the press). Learn from them and also prepare to counter their value proposition in the market place.The last pointer is simple to do, but difficult for some business owners to implement – engage directly with your customers on your business premises, or telephonically, to receive their feedback on and experience of the service levels in your business.

  • What is the minimum expectations you have for:
    • the number of times the phones ring before it is answered?
    • greeting your customers (in person and telephonically)?
    • the dress code of your staff?
    • the discretion allowed for decision making at the point of sale (to compensate for an inferior customer experience, for example)?
    • service output w.r.t. contracting the service levels with staff, rewarding them accordingly and also addressing sub-standard service levels?
  • How do you ensure that the service standards and SLAs are metr.t. all the contact points of the business (phone, website, fax, e-mail and social media)?

Use the valuable insights from your customers to improve the overall customer experience of your business.

Take a hard look at your business premises

What is the current ownership statusr.t. your business premises? Weigh up the sensibility of owning the premises versus a rental arrangement.

Is the locality of the business supporting the requirement for consumer traffic (“feet at the door”)?

Also look at the possible need to revamp your business premises, reconsider the lay-out of the business, consider if you have sufficient room to expand the business, as well as the state of the business signage. Staff feedback can be used as gauge and also as a morale booster if you can accommodate their proposed changes

Our People

Consider evaluating the following elements:

  • Is my payment practices aligned to market trends? Am I paying my staff what they are really worth?
  • Do I have the right people appointed for each job (management and operational staff) I have in the business? Are they fully skilled?
  • Do I have written appointment and SL contracts with all staff in place?
  • What is my staff turnover? If it is not aligned to industry trends, I need to find out why and address it accordingly.
  • Are there “bad apples” in my business and how do I address this in an efficient and a fair way?

The Image of my Business

There are certain “hygiene” elements in our businesses which sometimes speak louder that our physical presence. Make sure these elements are in place and maintained very well.

  • What is the “look and “feel” of our businesses exterior w.r.t. the paint, the neatness of our parking lot, the cleanliness of our premises, the lighting of the building and surrounds, how well the entrance is marked and how welcoming the reception area is to guests and customers?
  • If I have vehicles, how neat and clear is the signwriting on the vehicles and how clean are the
    vehicles?
  • Do I have branded stationary and is it up to date and in pace with current trends?

 

Excellent firms don’t believe in excellence – only in constant improvement and constant change.

Tom Peters

To support business owners with the important task of business planning, Sanlam gives you free access to the book Your Annual Business Game Plan for Success, which provides an easy and straightforward framework needed to draft a well-crafted game plan that will create the positive change and growth necessary for business success. Go to www.sanlam.co.za/gameplan to download your free copy.

Article written by Jannie Rossouw, Head: Sanlam Business Market

Where is my business heading?

Posted on by Sanlam

As business owners we are often so busy working in the business that we fail to work on the business. We are chasing the next transaction, dealing with a dissatisfied client, negotiating terms with a provider, or having problems trying to balance the cash flow.

Over the years I have learnt that one should put aside enough time to consider the business’ current results and where it is heading.

Benjamin Franklin was one of the founding fathers of the United States. Franklin, a renowned polymath and also a leading author, printer, political theorist, politician, postmaster, scientist, inventor, civic activist, statesman and diplomat once said that, if you “fail to plan, you plan to fail”.

In the modern idiom – we need the GPS coordinates to indicate the direction of future action.

There are three elements that need attention:

1. The Vision of my business – one productive method I use to help with this, is to ask:

“Within the next five years (the name of your business) will ………………………………… (articulate what you wish to achieve).”

Here is an example of a vision using these principles: “Within the next five years ABC Solar will be the leading provider of eco-friendly energy solutions for households in South Africa.”

Remember to measure your ‘new’ vision against the existing one.

2. The Mission of my business – a mission should answer the following questions:

  • Who are we?
  • What do we do?
  • How do we do it?
  • Whom do we do it for?
  • Does the mission fit in with the vision of my business?

Here is an example that links up with the ‘vision’ example above: “At ABC Solar we install eco-friendly energy solutions that keep track with the individually assessed energy requirements of our residential clients and that meet the generally accepted ISO standards.”

3. The goals of my business – For me, goals are the building blocks of success.

It may sound complicated, but it is simple to formulate goals if you apply the SMART principles:

  • Specific – right to the point
  • Measurable – nothing audacious
  • Appropriate – needs to “speak” to the specific role
  • Result or process goal – a “result-related” goal points to an end goal and a “process” goal to a continuous event – see the examples below
  • Time framed – has an end date by which the achievement should be reached
  • Start with a verb – action orientated

Examples of goals:

  • Realise a profit of R2,5 million by 28/02/2016 (result goal)
  • Develop 2 new product lines by 31/12/2016 (result goal)
  • Establish a new distribution channel by 30/09/2016 (result goal)
  • Identify 1 new way of marketing and selling my value proposition every month (process goal)
  • Do a monthly client service evaluation (process goal)
  • Identify 2 new clients by 31/10/2015 (result goal)

Note: Ensure that goals are created for all business areas.

I can’t change the direction of the wind, but I can adjust my sails to always reach my destination. (Jimmy Dean – USA businessman)

To support business owners with the important task of business planning, Sanlam gives you free access to the book Your Annual Business Game Plan for Success, which provides an easy and straightforward framework needed to draft a well-crafted game plan that will create the positive change and growth necessary for business success. Go to www.sanlam.co.za/gameplan to download your free copy.

Article written by Jannie Rossouw, Head: Sanlam Business Market

Technology can be a business enabler

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Article written by Jannie Rossouw, Head: Sanlam Business Market

The first rule of any technology used in a business is that automation applied to an efficient operation will magnify the efficiency. The second is that automation applied to an inefficient operation will magnify the inefficiency.
Bill Gates

Whenever I think about the application of technology (hardware and software) I follow a specific thinking process – something which might also be of value to other business owners.

1. Assess your needs

It is a good practice to start with the end in mind. This means that you need to understand what business outcome you want to achieve. You can then proceed to evaluate which technology application will support you in achieving the business imperative.

For example:

  • You want to record client information: MS Excel might just do the job for now, but a more robust CRM system might be the ultimate solution.
  • You have shrinkage of stock in your business: Electronic stock control will give you a handle on stock levels and movement of stock into and out of your business.
  • You want to publish a weekly article/newsletter: Depending on the volumes involved and the graphical presentation of the article or newsletter, you can use MS Word, or MS Publisher, or customise the information in HTML (requires programming skills).

2. Take stock of what you have

Do you have a gauge on the hardware and software applications used in your business? I have seen equipment standing around in businesses having no productive use. It is even worse with software applications. Different versions of standardised software applications are used in the same business. Knowing if technology is functional and compatible goes a far way to avoid challenges leading to inefficiencies.

Do you know what the use of each piece of technology in your business is? (E.g. lead management, financial reporting and sign-off, HR admin, safekeeping of information)

3. What is available?

There are infinite solutions available for technology enablement and advancement. If you are not tech-savvy, I propose that you identify someone who is. Pay them a consultation fee, if necessary. It is important to note that you are still the person responsible for verbalising the business outcome

you want to achieve with the application of technology. It is not wise to delegate this responsibility to someone else.

4. The cost of ownership

Sometimes you do not need outright ownership of software or even hardware components. A licencing right, leasing agreement, or “pay as you go” utilisation might be the right option for you. In this way you only pay for usage and always have access to the latest version or development.

If the application is business critical or very unique, it makes sense to consider developing it in-house, or have outright ownership thereof. Bear in mind that the redundancy cycles of technology is short. Most technology applications and equipment have no or little second hand value.

Let me conclude with another statement by the ubiquitous Bill Gates: “Information technology and business are becoming inextricably interwoven. I don’t think anybody can talk meaningfully about one without the talking about the other.”

To support business owners with the important task of business planning, Sanlam gives you free access to the book Your Annual Business Game Plan for Success, which provides an easy and straightforward framework needed to draft a well-crafted game plan that will create the positive change and growth necessary for business success. Go to www.sanlam.co.za/gameplan to download your free copy.

How to meet the expectations of your target market

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Article written by Jannie Rossouw, Head: Sanlam Business Market

“Exceed your customer’s expectations. If you do, they’ll come back over and over. Give them what they want – and a little more.” – Sam Walton. (Sam Walton was an American businessman and entrepreneur best known for founding the retailers Walmart and Sam’s Club.)

I am stating the obvious when I say that before we can meet and exceed the expectations of our clients, we first have to determine and re-examine what their real needs are. Once we have a crystal clear and factually-based perspective on this, we can determine if our products and services are meeting the identified needs and wants of our target market.

Client needs and wants are ambiguous, the competitor landscape changes all the time and innovations can make our solutions redundant overnight. For this reason we need to stay on top of our game. Target market, client and competitor insights are core to our future survival and ability to compete for a share of client wallet.

This calls for a market review where current clients are assessed to improve our understanding w.r.t. the following elements (these are only a couple of examples):

  • Their demographics (age, gender, marital status, income etc.)
  • Their purchase motives (price, quality, location, guarantees and warrantees etc.)
  • When they buy
  • The previous purchases from our business which inform their past buying patterns

Once we have an informed understanding of our clients, we can conduct a product/service review. Here are a couple of elements to evaluate:

  • Which products and/or services are our “champion sellers”?
  • Why are these products or services so successful?
  • Can they be improved?
  • Which products sell best and have the highest profit margins?
  • Can you optimise your operations around these products and services (service delivery, upsell opportunities, special deals)?
  • Do you need to change or improve your product pricing, packaging, marketing and service delivery to meet the changing needs of clients?

With this information in hand, we need to match our current product and service offering to client needs and expectations. This might also impact our quality control mechanisms and pricing conventions.

Another crucial element to address, is knowing what your competition is doing. See what they say about themselves (sales material, advertisements, press releases, websites). Your sales staff, customers, www.hellopeter.co.za, newspapers and market research companies can also be good sources of information regarding your competitors.

It is said that “knowledge is power”. This is also true in business where we want to meet and exceed client expectations. Knowledge will enable us to create insights that can assist us in improving our product and service offering to attract more clients and also outperform our competition.

To support business owners with the important task of business planning, Sanlam gives you free access to the book Your Annual Business Game Plan for Success, which provides an easy and straightforward framework needed to draft a well-crafted game plan that will create the positive change and growth necessary for business success. Go to www.sanlam.co.za/gameplan to download your free copy.

The value of reflection to improve business results

Posted on by Sanlam

Article written by Jannie Rossouw, Head: Sanlam Business Market

“Without reflection, we go blindly on our way, creating more unintended consequences, and failing to achieve anything useful.” (Margaret J. Wheatley – American writer and management consultant who studies organisational behaviour)

These are very sobering words and make us realise that we might be chasing the next deal without giving sufficient thought to the ability of our business and infrastructure to meet and exceed client expectations.

We continuously need to sharpen the proverbial saw. Here is a value chain perspective to consider when reflecting about your business endeavours:

Target market performance

Is there a match between our defined target market, their needs and our product/service as a solution to their needs and requirements?

Suitability of value proposition

Do we know how well our product/service is addressing the target market needs and requirements?

Marketing Mix

Do we have the most optimal marketing mix available to market and promote our product/service to the selected target market?

Sales and distribution

Is our sales and distribution team fully equipped to sell our products/services?

Service delivery

How do clients experience our service delivery and after sales service?

Cash flow management

Do we have an up to date cash flow forecast to plan for to ensure that we can fund operations?

Human resources

Do I have a skills development plan per employee?

Information Technology

Are there technological advances which can support me to operate more effectively and efficient?

Procurement

Am I getting the best possible deals when procuring products and services to operate my business?

Another building block in our endeavours to plan for the future of our businesses is to remember the successes and disappointments in our business over a specific period of time (say the last 12 months). What are your learning experiences from these lists and how can you apply what you have learnt?

To support business owners with the important task of business planning, Sanlam gives you free access to the book Your Annual Business Game Plan for Success, which provides an easy and straightforward framework needed to draft a well-crafted game plan that will create the positive change and growth necessary for business success. Go to www.sanlam.co.za/gameplan to download your free copy.

To receive similar articles from Sanlam on a regular basis please click here to subscribe

Do you know where to allocate business resources?

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Article written by Jannie Rossouw, Head: Sanlam Business Market

It is said that something well planned is 50% done. If this holds true, then I wonder why so many of us do not make an effort to plan our business activities in advance. To my mind there are numerous reasons why continuous business planning is advisable or even non-negotiable.

  • It gives you a snapshot of the future state of the business. It creates an image of future possibilities in your mind’s eye.
  • It helps you to develop targets/goals which, if managed to completion, will enable the anticipated future state of the business.
  • When targets/goals are set you can optimally allocate business resources by answering the following questions:
    • What needs to be done?
    • How should it be done?
    • Who should take responsibility to get the task done?
    • When should the task be finished (deadline)?
    • How much funding is required to get the task done?
  • When targets/goals are set, continuous monitoring of progress and the reaching of milestones are very helpful to make adjustments along the way. Priorities and resource allocation can be adjusted to ensure delivery on the target or achievement of the goal. Client feedback and market insights can also serve as elements to inform the optimal implementation of the plan of action.
  • A written plan of action serves as a mechanism to align management and employee actions towards the common target/goal. “Everybody is on the same page.”
  • It also helps you to decide which business alliances or strategic partnerships need to be vested to achieve the anticipated outcomes.

In the 2014 National Small Business Chamber (NSBC) Survey members were requested to indicate the areas in which they require training and development. Seventy-three per cent of the respondents highlighted the need for business and strategic planning.

To support business owners with this important task, Sanlam gives you free access to the book Your Annual Business Game Plan for Success, which provides an easy and straightforward framework needed to draft a well-crafted game plan that will create the positive change and growth necessary for business success. Go to www.sanlam.co.za/gameplan to download your free copy.

May the following words of author Alan Lakein hold true for you: “Planning is bringing the future into the present so that you can do something about it now.”

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How your product/service guarantee can differentiate your business

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Article written by Jannie Rossouw, Head: Sanlam Business Market

A guarantee is a formal assurance (typically written) that certain conditions will be met; specifically that a product will be reinstated or replaced if it does not live up to the specified quality, or that a service will be reviewed if it does not deliver the expected result.

When you consider a product/service guarantee it should be in line with the “best promise that you can deliver on”.

Such a guarantee should:

  • Eliminate any discerned risk for a client
  • Demonstrate full trust in your product
  • Be specific – include all claim particulars and conditions
  • Be measurable

The following guidelines can be considered when you frame guarantees:

  • Learn from your competitors (what do they do?).
  • Focus on what you do excellently (what you do better than your competition).
  • Guarantee results (the outcome that your client can expect).
  • Pay more than 100% of the product/service value when a guarantee is called up and guarantee conditions are met (pay an extra % for a client’s time and trouble).

Tell the world about your guarantees. Include them in your business marketing material, quotations and website information, i.e. feature them in all your marketing elements.

The following are a few examples of phrases that you can consider:

  • “100% on the spot guarantee”
  • “Absolutely no risk for you”
  • “My 110% – I must be crazy” guarantee
  • “Unconditional money back guarantee”

A good guarantee says that you have faith in your product/service. It gives clients that do not know you yet, peace of mind.

Henry Ford once said, “Quality means doing it right when nobody is looking.” If quality is part of the DNA of how we must do business, the honouring of guarantees will be no challenge, because the calling up of a guarantee will then be the exception and not the rule.
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