Along with principles like agile, lean, and just-in-time production, the principle of MVP—minimum viable product—is a popular buzzword in business. Especially among start-ups and small businesses with tight budgets. (Well, big businesses also have tight budgets, but in a small business, it’s much more personal.)

Except it looks to me as if many entrepreneurs might be missing the essence of MVP. I see it in businesses that waste time and money, ugly and buggy products, and services that fail to satisfy customers’ needs.

MVP too often turns out to be too much M and too little V.

MVP can be a powerful antidote to the perfectionist’s trap of failing to launch until the product is perfect, but pushing crap out the door swings the pendulum too far. Both scenarios lead to failure: customers either have nothing to buy, or there’s no demand for an inferior product.

The key to any successful MVP design is to intimately understand the customer’s needs. But how do we know whether our design will earn customer happiness points? How can we tell if our MVP is too minimal or truly viable?

Customer surveys, prototypes and opinion polls can cheaply give us some useful early indicators of demand. But they’re only indicators.

The only reliable way to validate our design is this: “Has a stranger bought it?”

Your real customers are not friends or family giving sympathy votes, or beta testers who get free access. Validation through actually selling the product is the only test for viability—the crux of MVP—does it give value to the customer?

Also key is that the M of MVP doesn’t mean incomplete, but simple. The point of M is to invest the least effort and cost to test what works. But an incomplete product probably won’t satisfy the customer’s need. This holds true for every stage of your MVP development path.

For example, early versions of Google Docs had only about 3% of MS Word’s functionality, yet it was a complete product—all functions worked—and it satisfied users' needs for simplicity and collaboration. (A Smart Bear)

Google Docs now has much more complexity than its early versions, yet the development path involved a series of complete products, albeit simpler versions of the final result.

This aligns with principle #1 of the Agile Manifesto’s 12 principles: “Our highest priority is to satisfy the customer through early and continuous delivery of valuable software.” (2001)

Contrast this with the waterfall lifecycle, which many newbies conflate with agile and MVP principles. For example, developing a software system might involve building the database, then the front-end user interface, then the functionality. Although this is an incremental development approach that seems consistent with agile principles, none of the product iterations has value to the customer until the last release.

In other words, it's unlikely you'll get to sell the final, complete version of your product if your development path doesn’t deliver products that customers value at every single stage.

Failure demand is a false demand from customers for your services. It’s the opposite of value demand. But if value demand is when customers demand a service they’re willing to pay for, does that make failure demand something customers “want” but would rather not pay for?

In a sense, yes. But it’s much more than this.

Failure demand is, “The demand caused by a failure to do something…right for a customer”. (Medium, 10 Sep 2020) It was introduced by John Seddon in 1992 to highlight the distinction between systems that satisfied customer needs versus command and control-oriented management.

Value demand looks like quote requests, purchase orders, or the sound of the cash register’s ka-ching. It’s what happens before your customer writes an appreciative testimonial. These are the activities in your business that are driven by customers wanting what you’re selling.

On the other hand, failure demand is a buggy product to be repaired, a billing query to be answered, an unfathomable user guide that needs explaining, or making another call to the dispatcher to re-schedule the service consultant who didn’t show up. Again.

It’s the vague, generic job ad that garners 100s of CVs, each earning an impersonal template rejection email or, worse, the insulting last line in the job ad, “If you don’t hear from us, your application was unsuccessful.”

Both types of demand use up your business’s capacity. The one satisfies customers and earns revenue, but the other eats profits straight off your bottom line. Naturally, we’d want to reduce failure demand to free up more capacity for value demand.

But while it’s easy spotting failure demand activities in your business, it’s much harder doing something about them. The more you focus on them, the more you’ll get. Especially as you scale your business.

Failure demand thrives with management controls like activity-based costing, growing customer support call centres, standardised job descriptions, or rigid processes that remove decision making power from customer service. This is especially problematic in service-oriented businesses, where the one-size-fits-all service is almost guaranteed to fit no one.

This is the trap of failure demand, when management attention is mis-directed at inward efficiencies instead of systemic effectiveness in satisfying the customer’s need the first time around.

Failure demand is not fixed by addressing failure demand.

Don’t set targets to control the turn-around time or cost to fix errors. Don’t build admin and reporting software to monitor fault resolution. This just entrenches failure demand.

The only sustainable solution is to focus on the system that gave rise to failure demand.

So how do you know where your system is broken and where it needs fixing?

It starts with tuning in to your customer. Ideally, if every customer is satisfied and there are no come-backs, then you’ve eliminated failure demand.

The gains are typically much better than marginal. Many service-based businesses waste over 50% of all customer service activities on fixing errors. (Vanguard Consulting) The problem with failure demand is not the demand from failures, it’s your systems that aren’t meeting customer expectations.

Eliminate failure demand and you’ll probably discover all the capacity you need to build loyal fans and grow your business.

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References:

1. “Failure demand vs Value Demand”, Medium, 10 Sep 2020.
2. “Failure Demand”, Vanguard Consulting, sourced 08 Oct 2021.

Image credit: Business News Daily

Amazon and Costco sell the same things with the same variety of products. Yet while Amazon squeezes other retail chains out the market, Costo is not only relevant, but is expanding globally.

How?

To set the context, Costco operates a membership business model with profits achieved through high volume sales and rapid stock turnover (versus raising prices for higher margins).

Although membership is not a loyalty scheme—it costs $60 or $120 a year—customer churn is phenomenally low at only 9% (Future Work Technologies, 2019). How Costco drives 91% of customers to renew their membership each year is that it consistently impresses them with high quality products at exceptionally low prices.

With a massive inventory range and high-volume turnover, one could imagine Costco’s outlets taking up acres of space. Indeed, while each store is really just a warehouse, space is optimised by stocking only 1 or 2 of the best brands for each product line. By comparison, while Walmart Superstores carry 140,000 SKUs, a Costco warehouse might hold as few as only about 4,000 SKUs.

So instead of a bewildering choice of a dozen different brands of coffee bean, you might find only the 1 brand that Costco deems the best quality that still assures a low price. As another comparison, while US supermarkets have a 30% mark-up on average, Costco’s average mark-up is a mere 11% (PolyMatter, 2019).

The combination of bulk buying, lowest price, and high quality criteria means most suppliers are clamouring to win those 1 or 2 spots on Costco’s shelves. This competition plays directly into Costco’s quality-price promise to customers.

The key difference between Costco and the failing retailer chains is that, unlike retailers who sell indiscriminately, Costco’s approach is to stock only the best quality brands at the lowest price in each product line.

But that sounds a lot like most retailers’ tag lines. It’s not what really sets Costco apart.

Costco’s key success factor is its ruthless buying policy: if the quality-price criteria can’t be satisfied, it simply won’t stock a product line at all.

Could this principle work in your business? For Costco, losing a few brand snobs is evidently well worth the loyal customers who keep coming back.

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References:

1. “HOW COSTCO WORKS BUSINESS & REVENUE MODEL”, Future Work Technologies, 2019.

2. “Why Costco is Cheaper than Amazon”, PolyMatter, 25 Oct. 2019.

Image credit: Eat This, Not That!

When describing your business to a stranger – a customer, a supplier or potential business partner – how do you help your listener to truly get it?

The challenge, like with sales calls or business networking introductions, is that it’s easy to launch into explanations that bore the listener with details. That’s far from the ideal conversation where speaking and listening are shared, not one-way traffic, and where both sides feel understood.

It takes time and skill to craft an opening sentence or two that gets your listener engaged. So what’s the best way to figure out what information matters?

The enterprise context model (ECM) can be a time-saving technique to literally draw a picture of who and what matters to your business. At its core, the ECM is a simple black box of your business that shows the key stakeholders that interact with it.

It’s a tool every good business analyst (BA) will know. And because every good entrepreneur is also at least conversant with key BA techniques, this should be a standard tool in every business owner’s toolbox.

So why don’t more entrepreneurs use it? Anecdotally, I think most people just don’t know about it. It’s not something I’ve seen in management textbooks or online literature for entrepreneurs. Also, it’s a simple-looking model, so maybe its apparent lack of sophistication is a turn-off?

The thing is, the ECM has immense power in its simplicity and its variety of applications. You can use it to design a new venture or product, review your business strategy, rapidly onboard new hires, or identify the best angle to open a sales call.

Here’s how it works in a nutshell:

The easiest way to start is to think of a simple linear process model of inputs, throughputs and outputs. Your business is the “throughputs” part, which we show as a “black box”.

On the left, we show key sources of inputs and on the right are the targets of our outputs. This picture already tells us a lot. For starters, it directly illlustrates where your business fits in its industry value chain.

Add to this your collaboration and accountability stakeholders below and above the enterprise box. Collaborators are vital in supporting or even outsourcing key processes, while accountability stakeholders are people we need to satisfy for governance, social or economic drivers.

If you start with my template illustrated above, you’d obviously replace each yellow stakeholder box with names of specific players, like suppliers or distribution channels, or at least aggregate each type of stakeholder. You may also want to label each arrow with the specific things that flow into and out of the business.

And that’s it. Plain and simple.

Actually, I lie.

The purpose of the ECM is not merely the output of having a picture. I’ve found time and again that the greatest feature of the diagram is not the diagram, but the conversation in developing it. The process is both conflict-rich and unifying in getting your team on the same page – literally!

And we’re only scratching the surface of the ECM’s applications. You can integrate it with other business models, like the value chain, process models, capability maps, or the business model canvas. You can use it to strategically surface interaction weaknesses to overcome departmental silos or business-versus-technology barriers.

But even with its most basic use, you’ll have a plethora of angles and stories about your business.

Most importantly, the enterprise context model will help you clarify who your key stakeholders are so you can tell each stakeholder just the right story about your business – the story that matters to them.

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Why does Hollywood keep churning out atrocious sequels?

Money.

A simple answer, but explaining why it works can be edifying.

Between 1996 and 2016, 532 of the roughly 13,000 movies produced have sequels. (Vox, 2016) Of those 532 sequels, only about 25 earned a critic rating better than their original.

That means 95% of all sequels over that 20-year review rated worse—sometimes much worse—than their original. Professional and amateur critics alike lambasted them. Whatever your favourite genre, from Blair Witch to Rambo, Bridget Jones, or the Ocean’s Eleven franchise, the sequels were often formulaic: the same characters solving the same problems. Wash. Rinse. Repeat.

Yet on average, sequels earned 8 times their original movie’s revenue.

A paradox, it seems. How can a sequel be bad yet still make so much more than its original?

If there’s a movie franchise of sequels that you love, you might notice that overall production quality is neither excellent nor really bad. Usually, it’s good enough.

While it seems villains, story lines and scripts roll off a factory conveyor belt, so do the cast and crew, including the extended “business”, like the marketing and distribution teams, finance and IT. Compared to the first time around the block, re-assembling the team and business systems is quick and easy, i.e. low budget, when you can simply copy the template.

But that speaks to only the cost side of the equation. No one made money by making something cheaper. You only make money by actually selling what you make.

As a producer, it helps enormously that you’ve validated your business idea in round one when the original movie has earned millions. Add to this solid customer feedback: your fans are literally telling you what they want more of.

And that’s exactly what that amorphous movie industry we call Hollywood does: it gives the fans what they want. (Usually!)

Sequels are made for the fans, not the critics.

In fact, in any business, you want to have some critics. Your product should not be for everyone, only your tribe of loyal fans.

Here’s a rule of thumb: the harder it is for your non-fans to identify themselves out of your target audience, the weaker your product and marketing design.

Movie sequels might not push creative or technical boundaries. Some might not even be “art”. But if there’s proven demand and you’ve built a business system to satisfy it profitably, then you’re surely onto a winning formula.

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Image credit: Decider

Boredom is a virtue. Its absence directly limits entrepreneurial growth and success.

When last did you embrace feeling bored for an extended period, say, at least 10 minutes?

Chances are, you haven’t felt bored recently and, when you did, you most likely killed it by grabbing your cell phone. These anti-boredom devices are ubiquitous, whether we’re in a shop queue, traffic, or even the toilet.

Almost everyone has experienced boredom as a negative state, even distressing and tiring. Workplace outcomes are often negative: anger, absenteeism, errors, risk-taking.

Avoiding boredom is reinforced by social conditioning: the devil makes work for idle hands. Militaries love to make “busy work” to keep soldiers from vandalism and sabotage.

In moments of low stimulation and underwhelm, most people would rather fill slow time with an activity, even an unpleasant one. Researchers wrote in ScienceMag (2014): “[We] found that participants typically did not enjoy spending 6 to 15 minutes in a room by themselves with nothing to do but think…many preferred to administer electric shocks to themselves instead of being left alone with their thoughts.”

But boredom has a bad rap that’s just not merited.

As with all emotions, boredom has a message and drives specific behaviour in response. Occasionally, boredom is a coping response to information overload or complexity that “goes over our head”. But most commonly, boredom tells us that we lack presence, that our current options are not meaningful or novel enough. This is different from “having nothing to do” or feeling ennui—it’s rare for anyone to literally have no options to do anything. Boredom is when the available options are not compelling.

Hence, boredom drives us to change our activity, to increase stimulation or meaning. But if we can’t change our task, we’ll find stimulation in our thoughts.

Sometimes we’ll get stuck in negative thought patterns, like ruminating on our shortcomings or fixating on unsolved problems. Conversely, people “with high working memory capacity are more likely to engage in prospective mind-wandering, and…autobiographical planning.” (Consciousness and Cognition, 2011) In other words, we’ll plan and anticipate future goals.

When our thoughts turn to shortcomings, problems or goals, we’ll probably want to do something about them. In this way, boredom can enhance creativity and problem-solving.

Some research shows that an acute sense of aimlessness when bored could prompt us to ponder existential questions, meaning-of-life stuff, down to our very identity and who we want to be.

But if we’re always preoccupied with day-to-day trivia, we’ll rarely lift our heads to ponder the bigger picture and a meaningful life. (A surge in recent years of depression and anxiety disorders correlates with increased access to anti-boredom devices.)

For entrepreneurs, this can profoundly affect our relationship with our business and its raison d’etre.

Paradoxically, if boredom is an emotional trigger to daydream a healthier life and better business, then the act of envisioning the future instantly stops boredom. And implementing the plans to achieve that vision further reduces the opportunities for boredom.

So how do we exploit boredom, especially as a business owner? After all, entrepreneurs can’t ever be bored when there’s always more on the to-do list than time available to do it.

I’m obviously not suggesting boredom as the goal; rather, make time for uninterrupted thinking. Carve out small chunks in your day to meditate. Anything from 5 to 15 minutes once or twice daily can help us re-connect with our purpose. Longer chunks done weekly or monthly are good for designed reflection or a thinking framework to revise strategies and tactics.

This is the essence of strategic tasks: where the sense of pressure or urgency is low, but meaning and impact are high. It may look like we’re doing nothing, but just thinking is probably the most important activity an entrepreneur can do.

When last did you think? I mean, when last did you really stop doing to just think?

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References:

1. “Just think: The challenges of the disengaged mind”, ScienceMag, 4 Jul 2014.

2. “Back to the future: Autobiographical planning and the functionality of mind-wandering”, Consciousness and Cognition, Dec 2011.

Image credit: Wallpaper Flair

The Competition Commission vetoed the sale of Burger King to a foreign buyer based on, for the first time, BEE and not competition. (Lexology)

Is this another short-sighted bureaucratic bugger up?

Yes.

On 1 June, 2021, when the commission blocked the deal, it cited concerns over black ownership dropping from 68% to 0%. This was despite the buyer committing to 4 other significant BEE-related goals worth hundreds of millions, possibly billions, and directly benefitting over 1,250 black workers and plans for future black ownership.

Although ownership is an important BEE factor, the commission is obviously misinterpreting BEE and competition legislation. In its view, ownership apparently trumps all other factors that might support BEE, including denying present black owners from realising the value of their investment.

This runs against the intentions of BEE and the commission’s mandate. The decision directly prejudices blacks from participating in the economy by (a) blocking black owners from growing their business and cashing out and, (b) blocking or slowing benefits to thousands of black workers and suppliers.

The decision also sets a precedent that disadvantages everyone in the economy, especially black entrepreneurs. To the cynical, it’s another notch in the woke list of “white privilege” factors: reducing black ownership is irrelevant to a white-owned business.

What the commission is actually saying to black entrepreneurs is, “If you’re black, you can sell to only other black entrepreneurs.”

That restricts buyers to only South African investors (because non-South Africans can’t be “black” in BEE terms) and only those who are blacker than you.

It seems the commission is missing the point of entrepreneurship being to grow your business in order to enjoy the profits, whether as dividends or exit capital. Especially that last bit about exiting. When you sell out and you’re limited to a tiny pool of buyers, it devalues the realisable value of your business. It’s a clear disincentive against black entrepreneurs to grow beyond a small business.

It’s ironic that, instead of assuring healthy competition, the commission is stifling it. It also reinforces the concentration of black wealth amongst only those few who can afford major buy-outs and a key failing of B-BBEE not actually being broad-based.

What to do?

Fortunately, as statistics indicate, most businesses are not big enough that their sale triggers an eyeballing by the Competition Commission. So don’t fret about it. Just keep building your business.

In fact, building a business big enough to merit the commission’s attention would be a badge of honour—would you prefer an insignificant business or one that gets the Competition Commission’s panties in a knot?

Image credit: Wallpaper Flare.

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Popular business literature typically focuses on either big companies or start-ups, seldom the guys in the mid-sized sector. Yet mid-sized companies—let’s say, those with revenues of at least R100m per year—are usually much more resilient than their smaller cousins.

Illuminating data from US companies during the 2008 financial crisis show that 82% of the mid-sized players survived, while only 57% of small businesses lasted. Medium businesses also added an average of 20 jobs each while big companies down-sized. (Harvard Business Review, 2016)

We see similar results in South Africa during the lockdown crisis, where small ventures are most at risk, while medium and large companies have deeper reserves to ride out the storm.

But the challenge with inferring a company’s resilience based on its revenue, or even its net profits, can be grossly misleading.

In our M&A work, we regularly review client and acquisition target businesses. What we often find is that, although the financials might flatteringly put a business in the “M” category of SME, the underlying fundamentals are much closer to the “S”.

In other words, the business has grown, but its capabilities have not scaled. Growth is where inputs and revenue grow at the same rate, whereas scaling leads to revenue increasing exponentially faster than costs.

In scaling, the business “machine” that generates those revenues is more intelligent, efficient and reliable than a business with a more-of-the-same approach to growth.

It’s like seeing a business with R100m in revenue trapped by its systems designed for only R10m. It’s not sustainable.

If you want to scale your business sustainably—versus purely grow the financials—here are 3 areas to focus on:

1. Define your strategy by your market position and brand identity. Vision, mission, KPIs and financial projections are important, but they’re stand-ins for real strategy.

Customers won’t care about you if they can’t distinguish your brand from your competitors. No business has a strategy unless it’s driven by how customers see it and experience it.

2. Don’t replicate; build capabilities to scale. You may have found a niche and grown rapidly, so there’s nothing wrong with a “rinse and repeat” growth approach to exploit this.

But riding the crest means you risk crashing when the wave breaks. Fundamental growth means continually asking what your business must look like in order to capitalise on the next wave.

Planning for future scenarios means pre-emptively designing your talent, processes and technology to be ready for the next scenario and not playing catch up after the world has changed.

3. Systemise. I’ve noticed many of our clients baulk at the word, as if I’ve just sworn like a sailor at them. But in fact, innovation and growth are impossible without an underlying platform of stability, which can only be achieved through governance and SOPs.

Start by mapping your key value-chain capabilities, then prioritise which ones will yield the greatest value from raising their maturity. Stabilising how things are done not only increases quality and efficiency, but it literally liberates attention to focus on strategy and innovation instead of the minutiae of operational work.

Whether you’re building a lifestyle business or an asset to fund your financial freedom, use these techniques to level up your business.

(Image credit: Fintel Connect Technologies Inc.)

The balanced scorecard is misleading. Perhaps it’s even a misnomer.  Developed by Robert Kaplan and David Norton, it was popularised by management consultants (including me!) in the 1990s. The philosophy helps to balance executives’ attention on a spread of KPIs (key performance indicators) instead of fixating on, say, only a financial indicator or a growth target.

The model’s generic areas of focus are financial, customers, internal processes, and innovation and learning.  A good consultant would facilitate clarifying your vision, then devolving this into an objective for each area, which then cascade into KPIs and key results for each objective.

For big companies, Balanced Scorecard came like a panacea to corporate silos and their myriads of often conflicting targets and metrics.  The model helped simplify complicated plans and focused execution on what mattered most.

All fine and well for big business, but this is invariably the completely wrong approach in a small business.  Executing a strategy—or even tactical plans—with attention on so many areas and KPIs is precisely what blocks many entrepreneurs from success.

The concept of “scarce resources” is not merely a concept in small business, but a lived, daily reality.  As owner-managers in small businesses, every decision we make should be to move the needle on just one strategy or key objective.  There’s no luxury of a corporate head office staffed with MBA graduates fussing over exotic models.  We cannot afford to distract ourselves from a singular focus.

If you’re familiar with Balanced Scorecard and you’re keen to apply it in small business, there is a hack solution.  Instead of balancing the 4 perspectives with equal priority, arrange them hierarchically where the lower levels support and enable the higher levels.

Starting with financial objectives at the top (e.g. revenue, EBIT), identify the customer targets that will achieve this (e.g. NPS, CSAT), then the internal processes that enable these (e.g. cash cycle, conversion rates, quality), and lastly the underlying innovation KPIs that can improve all the higher-level metrics (e.g. suggestions per employee, time-to-market).

If you’re questioning why finance is the highest priority, then the more important question should be, why are you in business?  With this adapted structure of finance as the priority, there’s plenty of room to serve the community and “make the world a better place”.  If finance were not the top priority, you can’t achieve anything else.  Even not-for-profit companies know this truth about the money.

If you want entrepreneurial success, prioritise one thing at a time.

Why do we hire people? As an entrepreneur, it should fundamentally be to increase profit. If a job’s output is less than its input, then that job is eating your profits.

This is the fundamental tenet of sustainability. Anything that needs more energy than it puts out will eventually die.

As a business owner, profit should be a critical metric on your dashboard. (Otherwise why are you in business?) It’s obviously a financial measure, but we could also supplement it with other dashboard indicators, like customer retention, quality, social impact etc. But ultimately these all lead to profits.

Whatever your preferred metric, do you know how each person you’ve hired adds value versus deducts from your profits?

It might be easier to answer this in a small businesses. It’s more likely that one or two dozen people will know what everyone is doing and share accountability than in a company of 20,000 people.

That being said, though, I’ve yet to meet a small business owner who can readily answer how each job in the business affects profits.

The inability to model a role’s value to the organisation’s strategic imperatives is, I believe, a fundamental reason why managers make marginal hiring decisions and why businesses ultimately fail.

It’s most noticeable in big organisations. Think government! The bigger the business, the easier it is for mediocrity to shelter in the shadows, sucking value from the system.

Of course, it’s easy to see how a sales job adds to revenue, or how a quality controller saves costs. But think beyond the individual: if teams succeed due to synergy, do you know how to attribute profits to that team’s effectiveness?

On what basis do you make hiring decisions? If you can’t model how a job—or a team or department—increases revenue or reduces costs, how do you know that job adds more value than it takes?

If you’re a small business owner planning on growth, now is the time to get clear on how each job influences profits. Do it before indifference calcifies. Model it. Quantify it. Talk about it. Make it part of the culture and everyday conversation.

If your people can’t clearly describe how their role adds to profits, don’t expect to stay in business for too long.

Is bad grammar costing you? Yes and no—it depends.

Whether you spell it correctly as lay-by, or lay-buy, laybuy, or even lay bye (!), I suspect the audience likely to buy with lay-bys probably won’t notice the difference. (American: “layaway”. A lay-by sale is where the seller lays the product by, or away, until the buyer has paid all instalments.)

This is more than merely a grammar Nazi’s concern with language rules, though. If your sales copy is riddled with errors, what does it say about your lack of care for the actual product or service you’re trying to sell me? Or worse, is it an indictment of your lack of care for me, your customer?

In the management consulting work we do, I review countless business websites, contracts, presentations, financial reports and policies and procedures. While I expect an occasional typo or convoluted line editing, severe errors jolt the flow of reading. When I can’t resolve the writer’s intention by the context of the sentence, bad language leads to ambiguity and uncertainty.

Typos happen to us all, especially in quick-fire replies on text apps and tiny screens. I’ve often hit “Send” before proofreading, so I try to not be too judgy—people in glass houses and all that.

In fact, some auto-corrects are quite endearing, or they make for serendipitous metaphors. (Some are hilarious: google the “DYAC” memes for a little dopamine distraction.)

And some rules should be broken. A micro message or Zoom chat is more personal with slang or text speak than the starched tone if we spelt words in full, like “tmrw”, “pls”, or “BRB”.

Regardless of the medium, though, error tolerance is easier when there’s a strong relationship between reader and writer. But without this relationship, first impressions count. In a prospective customer’s first contact with your brand—your website or a social media post—there’s only that first message to judge you by. Errors can literally cost you money.

For example, a UK-based stocking retailer, then named Tights Please, improved sales conversions by 80% after correcting a misspelling of “Tihgts” to “Tights” on their catalogue page. (CXL, 2020).

Even copy that you did not author can affect your business’ credibility. When I’m searching online for accommodation or a pricey gadget, I rely heavily on other customers’ reviews. I’m usually much more likely to trust a well-written review than reviews filled with unqualified hyperboles (“amazing”, “best ever”) or with language errors.

A 2017 study reported by Indiana University supports this, where the researchers note how 2 types of errors affect a reviewer’s credibility. Misspellings, like “lite”, “radicle” or “definately”, are more easily forgivable as “errors of knowledge”, a typical challenge for non-English speakers or artsy creative types.

Conversely, typographical errors, like “wsa” (“was”) and “regualr” (“regular”) are seen as “errors of carelessness”, which more easily erode our confidence in the writer’s authority.

Beyond first impressions, ongoing impressions count, too. A Harvard Business Review article (2013) reported a study where professional success was correlated with language proficiency. For example, “Professionals with fewer grammar errors in their profiles achieved higher positions,” and, “Fewer grammar errors correlate with more promotions.” Further, “Grammar skills may indicate several valuable traits, such as . . . accuracy in their work . . . critical thinking . . . intellectual aptitude.”

Whatever you publish—your website, content marketing, or internal company reports and emails—you want your reader to not just like, but want to, engage with your writing. You want to strengthen trust and credibility.

Ultimately, you want each message to achieve its purpose, like educating a customer and influencing their buying decision.

So does bad grammar cost you? For each error, the context suggests “it depends”. But given enough errors over time, the answer is surely “yes”.

If your copywriting is fraught with errors, how much credibility, influence, or revenue are you losing?

Holding out for better days is not a viable business recovery strategy. The recent re-tightening of lockdown rules should prove that this external locus of control – expecting factors outside our business to fix our business – is really no control at all.

If you’re a business owner struggling to keep your head above water, you’ve surely taken some steps to stay afloat. But maybe it’s time to get unreasonable, time to adopt extreme measures.

“Extreme” doesn’t mean cutting costs to the bone, though that might be needed, or taking reckless risks. I mean trying new combinations, or trying entirely new things.

“Extreme” includes trying on thoughts and emotions that you’ve been afraid of, until now. Here are some thoughts that might be scary, but life-saving for your business...

1. Get help

The combination of economic uncertainty, social distancing (physical isolation) and a bleak vista of the middle-distance future easily conspire to thwart even the most optimistic personalities. Getting help should span business consulting, personal mental health and everything in between for you and your team.

Take an agile approach and contract on just the next month’s quick wins or next 3 therapy sessions. A business coach can help keep you focused on near-term goals. A therapist can help preserve a positive outlook. It needn’t cost more than a few thousand rand.

2. Change your strategy

Start with your owner’s mandate: can this business give you the returns you deserve for your time and money? How can you build confidence and commitment in this?

Can you change your business model i.e. the fundamental way you make money? For example, with the property rental market declining since COVID started and, rather than holding empty rental space, property developers are switching from build-to-let to a build-to-sell model.

Analyse your product-market mix and prioritise your intersecting niches of product lines and customer segment. Which niches have the most profit, the best cash flow, the quickest sales cycle, or least competition? Can you shut down poor-performing niches and survive on only the one or two best niches?

3. Overhaul your operations

Take a zero base budget approach and imagine re-building your business from the ground up. Can you deliver the same value to customers with less infrastructure, less labour, use outsourced services, or find suppliers with better payment terms? Can you automate or exploit better technology to improve productivity?

4. Consider business rescue

In the same way that a debt rescue practitioner negotiates easier payment plans with personal creditors, business rescue can ease the burden with business creditors and develop a plan to turn around a decline. The success rate is not high – estimated at 10%-30% – but it could be a better option than immediate liquidation. (fin24, 07 Jun 2020)

Could you achieve this result informally? E.g. contract on exclusive supplier agreements to get longer payment terms and extend your payables’ days.

5. Keep comms channels open

When there’s bad news, the worst thing you can do is keep your support team in the dark. Keep your partners, staff, even clients and suppliers informed of your plans.

Now might be a good time to lean on them a little differently and ask for input in designing your turnaround. Getting their contributions also could build a sense of shared ownership, which raises their commitment to seeing you win together.

6. Micro manage your plan

This is not about micro managing people – focus on the results. Get obsessive about your short-term goals because you don’t have the luxury of waiting.

Break down your planning into shorter periods. If you had monthly management meetings, run them weekly with weekly targets and deliverables. If you had weekly team meetings, start daily stand-ups, and again, set goals to match the new timelines.

7. Do what scares you

Each of these tactics is surely not news to you, but maybe there are combinations of them that you’ve not yet thought of. As the saying goes, if you want different results, take different actions.

But different actions start with different thoughts and feelings. The bigger the result, the scarier those new thoughts and feelings.

If ever there was a time to epitomise entrepreneurship, it’s when the going gets tough. Because this is what it means to be an entrepreneur: the courage to bring things into reality that others cannot.

“After everything I’ve put into this project, I can’t give up on it now.” Ever heard yourself say this? Or replace “project” with “business” or even “relationship” and I’m sure you’ll easily answer “yes”.

Being sentimental about things or relationships we’ve invested in – money, time, or effort – can be endearing. Imagine how cold and meaningless life would be if we didn’t value what we put into our projects, whether it’s our business, staff, clients or even personal relationships. Maybe the symbolic value of that old family heirloom outweighs its high maintenance costs?

But there’s a place where sentimentality or loss aversion gets us into trouble. Especially for business owners and other decision-makers.

If ever you’re facing a major decision, whatever you’ve invested to date is irrelevant.

In the business case for a big disinvestment – ending a major project or operation – only future costs must be factored in green-lighting the decision.

Sunk costs – expenses incurred and which cannot be recovered – have no place in your cost-benefit analysis. In deciding to end an investment, we must compare only the future costs of keeping it going against the benefits it’s expected to yield. What we’ve spent is water under the bridge – it’s never coming back.

The only time a cost that’s already spent could be a factor is if you’re certain you can recover it. But our assessment of certainty is usually clouded by our irrational emotions:

- In taking steps to recover a bad debt, at what point do you realise you’re throwing good money after bad?

- You’ve invested thousands in a marketing campaign for a product launch, but it’s not gaining traction – when do you cut your losses?

- When you’ve paid for a big-ticket conference, but you've fallen ill on the day, how sick must you be to convince yourself that your debilitated attendance is not worth it?

- Do you over-eat at the fixed-price buffet because you have to get your money’s worth?

The most common dilemma I’ve seen business owners grapple with is when an existing project or operation is challenged by a replacement. It’s even harder to kill a project if it’s already produced some assets, like useable software or production machinery. But despite whatever has been produced, assuming projects A and B will yield identical benefits, the time and money already spent on project A are irrelevant.

To choose between finishing project A and starting project B, only project A’s remaining costs are relevant. If project B’s total costs are less than project A’s completion costs, the decision is simple: switch to project B.

When you’re deciding to switch from one investment to another – a project, a business, a key relationship – the only costs relevant in your business case are the future costs.

As an entrepreneur, building a business inevitably means working with others. Achieving our goals demands teamwork.

So, the bigger the team, the more we can achieve, right?

Yes and no. Although bigger organisations can usually achieve bigger results than their smaller counterparts, all other factors being equal, the paradox is that bigger organisations pay a higher price in their communication overhead. Literally, the bigger our team, the greater the cost of unproductive time in co-ordinating and keeping everyone aligned.

“The more the merrier” might hold true for social celebrations, but it’s anathema to agile projects, decisive leadership, and just getting things done.

In each team, consider just the one-to-one relationships each person has with each other team member. A team of 2 people has just one relationship to manage. A team of 3 has 3 relationships. 4 people have 6 relationships, 5 people have 10 relationships, while 6 people have 15 one-to-one relationships.

For each person added, have you noticed how the number of relationships increases exponentially? I won’t bore you with the mathematical formula for this principle, but consider: can a team of 10 people really be considered a “small” team when they have 45 one-to-one lines of communication?

That’s not even counting the various sub-groups that typically evolve as team size grows beyond 3 people.

If you identify with a democratic leadership style, that’s a lot of relationships to slow down your decision making. Big teams just can’t be agile when decisions are by consensus.

Interestingly, this comms overhead extends beyond internal team relationships to our suppliers and clients, too. If you’ve struggled to close a deal or finalise terms with a supplier, maybe there were simply too many fingers in the pie?

And if your growth strategy is through acquisitions, a big red flag is a target business with more than 3 shareholders, especially if some are silent partners.

In economic terms, the ceiling of marginal gains for each additional person added to your business is reached much sooner than we might think.

This is also why many small businesses fail to grow beyond small: the owner fails to transition from managing the work to managing the manager (who manages the work).

As you grow your business, watch out for the communication overhead: each person added to your team will add an exponentially greater demand for your attention.

Are you still measuring productivity as profit ratios on your income statement, or sales conversion rates, or widgets per worker? If you’re an owner in a small or medium business, it’s time to introduce a different metric to measure performance: learning.

A lot of traditional methods for adapting to change involve rigorous, detailed and slow change programmes. This approach often leads to perfect product designs and intricate changes to sales and production methods, but by the time the solution reaches real customers, it’s not what they want.

Unless you’re in a well-established business selling proven products or services to customers whose needs seldom change, you’re unlikely to remain competitive with industrial-era management.

Without learning, concepts like agile, MVP (minimum viable product) and pivoting are mere clichés. Specifically, the learning is about validating your ideas as quickly as possible.

Lean validation improves your organisational learning to respond to market needs and be more successful, or at least to stay in business during tough times. Here’s how it works…

As a customer-centric business, your starting point is to define your customer, problem and solution hypotheses. The customer hypothesis describes our assumptions of who we think our customers are. It could be based on demographics, but more likely, a good customer hypothesis identifies people in specific situations or with specific behaviours or preferences.

E.g. people who want to do something about global warming but do it as conveniently as possible.

Then define this group’s problem hypothesis. The problem is not just the symptoms we might observe, e.g. “People aren’t recycling.”

Go deeper to find the root cause behind what we think the customer’s problem is. E.g. “They forget to put out recycling the night before,” or “They don’t know how to sort the 7 different types of plastics,” are two discrete causes. Each one might need a different solution.

But don’t worry about the solution just yet, because so far we’ve likely made multiple assumptions. We need to eliminate them by proving or disproving them, transforming them from assumptions into facts.

Identify as many core assumptions as possible. Focus on the riskiest ones that, if incorrect, would break your business, or at least guarantee product failure.

Then ask, “What do I need to learn?” Starting with the most risky assumptions, design your MVP as an experiment to test your hypotheses.

To test your assumption, figure out what you actually need to build in order to learn if the assumption is valid. What you build is not necessarily the MVP itself – imagine investing the time and money in building an actual product that no one wants!

A good experiment helps you to fail fast. Which is quicker and cheaper: building a survey and collecting 100 responses (from the “right” customers) or building a prototype and trying to sell it to 100 customers?

Decide on the minimum success criteria. How many “yes” responses will be good enough? Just 1? Or 10% of all responses? Or maybe 100%? How many responses in total would yield a statistically reliable result?

Now get out there and test your hypotheses. Using the data you gathered from real customers, is your assumption validated? If yes, move to the next stage of development, which is to test your next riskiest assumption.

As soon as an assumption is invalidated, it’s time to pivot to a new set of hypotheses. E.g. for the same type of customer, instead of the problem hypothesis being forgetting to put out their recycling, work with an alternate hypothesis that they don’t know how to sort their recycling. Then figure out new assumptions, design your MVP to test the riskiest, set your success criteria and run the experiment.

Only once all assumptions are validated would it make sense to invest in changing your product, sales and production processes to actually start selling the new product.

The goal of being agile in business is getting solutions to market quickly, but achieving that is by learning to fail fast.