Taking your business to the next level

The Nedbank Business Accelerator with 702 helps successful, established entrepreneurs take their businesses to the next level by giving them a platform to share their stories and insights on air. With a little help from business growth specialist Pavlo Phitidis, we’ll give you key insights on how to insulate your business from external forces.

Listen to the Nedbank Business Accelerator Feedback Week here

What we learned at GrowCo 2018

Podcasts

Episode 1: Building your business into an Asset of Value
Episode 1: Building your business into an Asset of Value
702 | Apr 21, 2017 11:43 AM
Every business owner invests time, money and effort into building their business. Whilst passion is important in achieving this, it’s not enough. The purpose behind this investment should be clearly stated and that is to build your business into an Asset of Value. What is an Asset of Value, why is this important, how do you do it and what will you gain from it!
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Episode 2: Measuring your Asset of Value
Episode 2: Measuring your Asset of Value
702 | Apr 21, 2017 11:42 AM
When you build your business into an Asset of Value, understanding how to measure your progress towards this goal is important. To do this, you need to understand how your business would be valued by a buyer. This could be a private buyer or corporate buyer, an investor or, if passing it onto the next generation, family or staff through a management buy-out. Understanding how valuation works, gives you control over the future value of your business.
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Episode 3: Creating a customer centric business
Episode 3: Creating a customer centric business
702 | Jun 9, 2017 8:17 AM
The first lever of valuation, how far into the future will my business generate revenues, is answered by defining who the customer you serve is! How do you find these customers and more importantly, once you find them, how do figure out how to get them to buy and stay with you?
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Episode 4: Building a systems-driven business
Episode 4: Building a systems-driven business
702 | Jun 20, 2017 9:09 PM
Are you building a business asset or have you simply built your business into a job for yourself? It’s easy to test. If your business cannot function without you being there, that’s a job. If it can function without you for 3 or 4 weeks, it’s likely an asset. The difference between them are business systems. The activities that enable your business to generate customers’ enquiries, win over customers and serve them in a manner that they stay are examples of systems.
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Episode 5: Developing a risk managed business
Episode 5: Developing a risk managed business
702 | Jun 20, 2017 9:09 PM
Putting all your eggs into one basket is not a wise business strategy. The environment of business today is so unpredictable, one stumble and you trip and fall – all your eggs broken. A risk managed business is one that has multiple customers, that enjoy being served by your business and are found in different sectors. Should one sector struggle, the customers in the other sectors keep you going.
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Episode 6: Employing the right people in your business
Episode 6: Employing the right people in your business
702 | Sep 1, 2017 8:59 AM
Once you have a clear sense of who your customers are, how to service them and a System of Delivery in place, you are ready to employ responsibly and effectively. Think about it, we mostly employ people to do a job. What is that job, what are the activities that that job should perform, can they be measured, what’s a fair salary for that job?
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Episode 7: Driving your business to the next level
Episode 7: Driving your business to the next level
702 | Oct 9, 2017 11:41 AM
We hear this expression “the next level” often. What does it mean and how do you get there is often left unanswered?
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Episode 8: Succession planning in your business
Episode 8: Succession planning in your business
702 | Nov 6, 2017 5:28 PM
Wealth is cumulative and time based for most of us. We often start our businesses with very little and it takes time to grow them into valuable assets. Often, to grow them into significant assets, it can take a second generation. This could be family or staff that we pass the baton onto to get the business to its next level. How do you do this and what approach can be adopted that makes the founder and successors ensure that the business gets the best from them both,
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The X-Factor

Building, preparing, organising your business for a sale.

All businesses only have one of two destinations; sale or closure! Globally, 94,6% of all businesses started never get sold. Very few ever do get sold and this matters because for us as entrepreneurs, the sale of our businesses is our pension, retirement, legacy and reward. The vast majority close down or, even worse, are disingenuously passed onto the ‘next generation'. This could be management or family and the motivation is mostly due to the founder needing some kind of annuity payment to sustain and survive their lifestyle. The traumas that mostly ensue are vast and include disappointment by the ‘new' team on how poorly considered the business is, how weak the performance is and their sense of being sold down the river creates animosity.

This X-Factor is focused on the notion that forewarned is forearmed and that, as entrepreneurs, it's our responsibility to ensure that we guard our future by the actions we perform today. Three distinct pieces – Legal, Financial, Trade – with experts in all areas, will hopefully deliver the key issues that we should consider today for the sale tomorrow. After all, building our success is our job and nobody else's!

Let me be clear on my position since sensitivities are often high when the idea of build to sell is promoted. If there are only two destinations for every businesses in the world, build to sell has to be your strategy. As to when you want to sell and when is the right time to sell, that's the debate of a separate topic in its own right.


The Legal Overview

What are the biggest legal considerations that we need to consider in preparing our businesses for sale. There are many but a framework that allows you to start thinking about what you need to do is what I was looking for. I found that answer in Bartlett Hewu from Hewu Inc. Attorneys.

I believe there is value in writing up a "what's in it for you, the buyer" plan when preparing to sell your business. In that plan, talk to what makes your business special.

That plan will also have a forecast on your numbers and include the assumptions you make in support of those numbers. Preparing a due diligence file, containing all the evidence you need to demonstrate and support your plan leaves the buyer with a sense of confidence.


The Financial Overview

For many entrepreneurs, the early stages of start-up saw us using our personal finance and credit facilities in our names to get the business off the ground. Very few entrepreneurs allow for a transition across from personal to business to happen cleanly and neatly.

Many live, in part, in their businesses. Yet, you cannot have your cake and eat it. When it comes to a sale, your historical numbers, those reflected in your audited financial statements suggest the rue performance of the business.

Clean books mean clean, maximised performance. Lived in the business books, suggest for the same business, poorer performance. Finding the best approach is what I asked Shane Prinsloo, co-founder and director of BPAG…

It's all in the number and the numbers, if properly generated don't lie. If this is the case, build your bookkeeping and accounting capability, preferably through a service provider who does this as a speciality, properly. Clean numbers, properly prepared make for clean sales. Uncertainty in numbers actually reduces the price, leads to tougher negotiations and lower valuations. When you intend selling, set a time line and make sure that you have a long enough period to clean up your books.


The Trade Overview

Where do you begin in getting your business sold? I'm of the view that a business built into an Asset of Value™ is not sold, its bought. The power of that transaction favours you, the seller and not the buyer. This makes you a price maker and that is rare. Mostly, businesses are put up for sale. How you do this and get it right is the question I put to Brynn Janeke from Aldes Business Brokers.

I believe in using third parties to negotiate a sale of your business. As a founder and builder of your business you are so close to it.

You see potential in so many ways and plays that new blood could bring to life. It's a very emotional process and in that, you will find yourself being very easily offended during a negotiation on price. If you are ready to sell and you have built your business well, let an objective third party facilitate that sale. It's what they do day in and day out. It's their profession! You sell once, maybe wice and simply don't have the objective experience to get it done nearly as cleanly.