Extracted from a dialogue with Erich Viedge
Considering some aspects of business:
- Invoicing
- Selling
- Structure
- Strategy vs. Structure
- Ideal Clients
- Homework
Invoicing.
‘You are not in the business of doing whatever it is you think you are doing, you are in the business of getting paid.’ Erich strongly advises acquiring the services of an accountant. Sort out the required registrations, e.g.
VAT, UIF,RSL ?etc.
Selling.
You are not selling whatever you think you are selling, you are selling your clients either savings or profits for their business.
Structure.
In SA you can be a sole proprietor, a closed corporation, or a Pty. Ltd. The Pty option although initially more expensive, offers more protection as well as the shareholding system for profit allocation, while communicating more professional ‘gravity’ via the implied accountability etc.
Strategy vs. Structure.
There is a relationship between Strategy and Structure. Strategy can follow Structure and or Structure can follow Strategy. I’m not sure which way it goes, either in large established businesses structure follows strategy while in new/small businesses strategy tends to follow structure, or the other way round. (I’ve put it this way round, reasoning that larger co.s acquire other businesses, manipulate their structure, based on marketing strategy)
Ideal Clients
Considering the intrinsic value your product or service will offer, in the marketing and distribution context. Who are your ideal clients?
How does your business help them make more profit?
EG. “warming up their brands”, “augmenting brand recognition”
Homework
List 10 – 15 ‘ideal clients’ and investigate their characteristics, typical annual turnover, who are their clients, suppliers, distribution channels etc.?
EG. Owner managed, > R50 M… Pharmaceutical suppliers… “warming up their brands”, “augmenting brand recognition”… size and frequency of invoices.
Describe your ideal week in your ideal business in ten years time.
“What is our business? Who is our customer? What does our customer consider valuable?”
“Results are obtained by exploiting opportunities, not solving problems.”
Management Visionary Peter Drucker Dies
“Results are obtained by exploiting opportunities, not solving problems.” sounds very much like Salutogenisis, and corelates to what Edgar Allan Poe had to say about in “the Philosophy of Composition” about his design process ‘following’ an ‘end’, the end being a kind of intentional ‘effect’.
Designing business around an intentional effect, like the ‘DNA’ code aproach mentioned in Presence’s discusion of VISA International’s formation seems to make a lot of sense.
Small businesses put structure first: me, my wife and my cousin. And oh ja — i need to put the airplane through the business. OK. that’s the structure we’ve got. What business are we in again?
Big businesses put strategy first: “we’re in the business of making companies more successful. What structure do we need to achieve that goal?”
Bear in mind that 80% of businesses fail in the first 2 years. Your first goals should be a two-year goals — You need a financial goal but also a client mix goal and value proposition goal. So your 2-year goal might be: by December 2007, the average value of my invoices for the period june to November 2007 should be R10,000 per invoice. I should be turning over a minimum of R80,000 per month for the period August to November 2007 with a net profit of prime plus 6% for both calendar years 2006 and 2007 — after salaries, overheads, interest and tax.
20% of my business should come from existing clients.
If you set yourself an aggressive 2 year goal, you’ll know you’ll succeed. The trick is to measure, measure, measure.
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Measure, measure, measure. Half way through composing a list of 15 ideal clients, while trying to focus on earning related goals, my attention was diverted to the question of what my perennial business goals are. In other words do I have clarity on the governing criteria that I will form the connection between me here now, and e.g. my goals be it two years or twenty years into the future? This has bearing in the context of working towards an end, and recognising that measurement is a critical mechanism by which to navigate towards objectives, ends, outcomes, results etc.
There are hard and soft dimensions of measurement, on the hard side is turn-over, overheads, profitability, liquidity, etc. on the soft side are the more abstract matters of, for example, individual, corporate and social gratification, responsibility and well-being.
I don’t think empirical measurement is the only important aspect of measurement, for example there is the degree of satisfaction of my business ideals. Not neccesarily empirically measurable, but like ‘a business goes either forwards or backwards, criteria can be either satisfied or not. Good old boolean logic has its values :- )
Hardware and software.
Back to the hardware, I have a few invoices to sort out.
PS I love the communicative logic of PEPPER PRESS
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