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Growing Your Stake

by fatweb

pigs-four

By Bridget Gourlay

You want to grow your small business, but where do you start? Do you invest in your staff? What about new equipment or software? Marketing? R&D? Although there’s no set formula, there are some rules that apply to all businesses looking to grow.

Business Mentors NZ CEO Ray Scholfield says firstly he recommends using his own not for profit organisation. Completely free, businesses can get an experienced mentor to cast their fresh pair of eyes on your accounts, direction and ideas.

“People get married to a business, and with working long hours they can’t see the woods for the trees. The old corny saying ‘they’re working in it, not on it’ applies.

“Often someone independent can come in and be totally objective. Their only agenda is to help a business do better.”

In terms of growth, BMNZ has plenty of experience in that. Schofield himself was a voluntary mentor for years before becoming CEO and says a mentor often sees areas for growth the owner doesn’t.

“Sometimes people’s perceptions of what they need can be absolutely accurate, less than accurate, or nothing like what the real need is. People think ‘I could be doing better; I just need some sales and marketing assistance to lift the business up and perform better.’

“But often in those circumstances, while they could benefit from a more focused sales and marketing approach, it may well be their financial management and performance needs major work as well.

“There’s no point trying to develop strategies and planning if in fact the performance of the business is not appropriate. Then you look to address planning and sales and marketing.”

Stick to your strengths

Scholfield advises business owners stick to their strengths when trying to grow.

“Someone could start off as an apprentice panel beater. And over time they could prove to have real skill in that area and decide they want to own their own business. They may be a very good panel beater, but suddenly they’re trying to be a general manager. As they start to grow their business and employ staff they are doing something they don’t have any skills in — and managing people can be quite challenging!

“Managing clients can be challenging. Collecting money owed to you is not easy. All those things take people outside of their key skillset.”

That’s where you invest. If, for example, doing accounts is challenging and boring for you, Scholfield says to hire someone else to do them. “It’s better to concentrate in the areas you are strong in. When people try to do things they’re not very good at, they don’t do them very well the whole thing gets in a mess and the things they are good at also get neglected.”

Do your research

“Typically, New Zealand businesses do not do adequate research,” Scholfield says.

“Where are customers coming from, where are they spending, what are the opportunities? Where is your competition? Some people wouldn’t have a clue. You do need to think about it. There’s some good tools out there.” These tools don’t involve spending a lot of money on expensive surveys and research. Often it’s free.

“If you were a panel beater and you were thinking about buying a panel beating business in Matamata — you can use Statistics NZ and determine how many cars there are in the Matamata area, how many accidents there were in a given time, how many panel beating competitors you’ve got. That can help you plan if you’re going to expand your business or buy one down the road and merge the two.”

BMNZ has access to the University of Waikato’s benchmarking information for free, which is also commercially available.

With that information, the panel beating business could see the analysis of panel beating in New Zealand. It gives the lower, median and upper quartiles and it gives every single cost centre associated with that type of business and that sector.

“You can benchmark your business against industry average,” Schofield enthuses. “So if your rent is typically ten percent end of turnover and the median is seven, you’ve got a problem!”

Do…

●    Your research — use Statistics NZ

●    Have a business mentor for a fresh look and good advice

●    Stick to your strengths — hire people to do jobs you do not like or are bad at

Don’t…

●    Work in your business. Instead, work on it

●    Be afraid to ask for help or advice

●    Try to do everything yourself

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