Craig Connelly: Hi there, today I am with Phil Wicks, from Business Success Partners. I’ve been working with Phil and his team for the last couple of months, the other day Phil and I were out calling on his clients and we got talking after the day had finished about a scenario in New Zealand's that is interesting. That is that 65 percent of businesses in New Zealand (SME businesses) trade less than an million dollars per annum. I had just mentioned to Phil, these other businesses in the same industry that are bigger and have growth. What do they do different to the other ones, to achieve this growth?
Phil’s answer was so brilliant we actually, well I thought would do an interview on it and would help a lot of people. It certainly was helpful to me. I hope you don’t mind Phil, I actually took notes on the day so I am going to put those up on the screen as we go.
Phil Wicks: No problem.
Craig: Welcome, Phil.
Phil: Thank you, good to be here.
Craig: Just to start off, what is the main difference between the business doing 1 million or less and the business in the same industry doing 10 million or more?
Phil: Well I guess there is a whole lot of reasons, but they could all be summarised I think. In a way, by basically saying that some businesses are very good strategically, and some businesses maybe aren’t so good. I think what happens is that a lot of businesses will start off with an idea of where they want to go and have a vision and then they will have a bit of a strategy on how to get there.
They get pretty busy, they are successful, they do relatively well early on, and then I guess they get busy just doing the doing, and all those things which I sort of call…. The "strategic elements" of the business, will go out of the window a little bit. So they just get busy doing the everyday things, and doing the doing, rather than thinking about how to grow. So you’ll get businesses that sort of, they might flat line growth and be that way for ten years or twenty years.
Craig: I know on the day, the customer that we saw was a new customer, and the first thing you started out with was developing a strategy or a long term vision with them. That was the one that you sort of mentioned was the most important. Why is that one so important?
Phil: I think it’s a little bit like going on a holiday where you have a destination that you want to go to. You need to sort of know where you are going don’t you. So you need to have a little bit of a vision of where you want to go to and it’s the same with a business.
You need to know basically, what is the end result look like. Or at least the end result three to five years time.
Then if you can sort of get an idea around that, then you can build everything else around it. And then also in some cases can apply, especially if you are a husband and wife small business, to also your own personal vision; What do you want the business to achieve for yourself personally? Things like when you want to retire out of your business, or if you want to step back from your business. If you want to have your business managed. These things can’t happen by themselves. You need to initially have a vision and then have all the things in place to help you achieve that vision.
Craig: So the next one that we talked about was sales and marketing. Can you just elaborate on that? Cause it was clearly an important one.
Phil: Yes, it is. One of the key operation elements of a business is making sure you have an effective sales and marketing strategy. In regards to sales, I think that basically means not just waiting for business to come to you. Being able to actually hunt business. When times are good, the business will for a lot of businesses, it just walks in the door. But if your in a recession or something like that, you have to have the ability to actually go out and hunt business. I think that also applies if you want to grow your business too, if you want to grow your business and you need to add on sales to do that, then you obviously have to have some sort of strategy around growth.
In regards to marketing, I mean marketing has changed a lot over the last 20 years. For small businesses the ability to brand is a lot easier through digital media. That is something that is different. I think whether it’s digital media or print media, the thing about marketing is doing it effectively. A lot of people, don’t necessarily invest in their marketing properly. They spend on marketing without actually knowing how it works, knowing the correct methods, knowing the correct channels to market through. So I think a lot of that is pretty important as well.
Craig: So the other one that we talked about was systems and processes. So let’s have a chat about that one. Why is that so important for growth in a business?
Phil: Well I always think before you can grow business, if you haven’t got effective systems and processes in place then you grow too (inaudible) your not necessarily going to grow profitability. Having things around your efficiencies in your business, having things around your people, systems around, measurement systems around, even things like meeting systems, systems around your financials, measuring your KPI’s, there is a whole host of things that you sort of need to be able to regularly do and regularly look at effectively.
Craig: Is this something that when you are calling on your clients, is this something that you do together with them?
Phil: Generally most businesses will have certain processes in place already, but there quite often will be a few that either are missing, or they are just aren’t done effectively. I guess a key example could be, maybe businesses might have certain projects that they do. But do they have systems where they actually measure the profitability of those projects. As an example, and so things like that in the end are really important. Measurement in general is important, no matter what you are doing. Whether it’s through systems in process or whether it’s even your marketing. Being able to measure all elements of performance in your business is really important.
Craig: The next one we spent a lot of time talking about was leadership within the business, and that was interesting because I just had been down with Teresa and Rob that week before where we talked about succession plans. So I guess that one was tying in but tell us about the leadership and the organization why you encourage that and why you do a lot of work with your clients on that.
Phil: I think people in general are really important. I think a business really needs to value it’s people. And if a business wants to grow then it has to grow leadership. It has to be able to create people that can take responsibility and take pressure off the business owner. And the business owner has to be able to delegate. Of course for that to happen the business owner has to be willing to delegate which isn’t always easy in itself.
One of the key things when I’ve looked at businesses that have the difference between… And this is an example I can think of, I can remember a joiner saying to me, he had a million dollar business and his friend who started at the same time had a 30 million dollar business. And he said I think the only difference between the two of us is that he grew leadership in his business. And I think that is very important. The other thing it does for business owners, well two things. One is it can help create a better lifestyle if you have more people taking on responsibility. But at the end of the day if you can have a business that is managed it also creates a better… Or more attractive asset base for potential buyers.
Craig: So we talk about that with the succession planning and how important that was as well. So that fascinating. And then the next one which is the most obvious one is that all these businesses had mentors. So can you talk more about a mentor, I mean you get called an advisor, you get called a consultant, you get called a mentor, you get called all sorts of things Phil. Mentors are clearly for these businesses that you’re working with they are very, very important. Why are they so important?
Phil: I think the ability for a business owner to have a fresh pair of eyes on their business, or an outside pair of eyes can really make quite a significant difference in some of the decision making. I think one of the things that a business advisor is often adding is certain areas of expertise that the business owner might not have. So a business owner, let’s say plumber for example will start off. He is a very, very good plumber he has a couple of vans and a couple of guys, and then a few years later he’s got 15 guys and a whole lot of other vans and not necessarily making anymore money. What a business advisor can do to a business that is maybe offer expertise that the business owner wasn’t originally trained on.
Things around leadership, things around finances, and those sort of things. And I think the synergy of a good mentor business owner relationship, can be very, very powerful. It’s not about the advisor basically telling a business owner, they should be doing this or they need to do that. It’s about becoming an enabler and asking important questions. What do you think about this idea. And discussing things, and tossing things around, and I think that relationship… If the synergy is right it can be really, really powerful, I think also another aspect of that, or a good mentor will understand some of those more personal things that are happening with the business owners around pressures and stress and those sort of things. So it’s a combination of a number of things that can make that relationship really worth while.
Phil: No problem, ok great see you.