Pavlo Phitidis shares insights that are sure to help you make some serious decisions about your business and your business strategy in 2020.
Hopefully, you’ve been reinvigorated by a break, your batteries are charged and you’re ready to take on whatever 2020 brings.
You’re probably going to need all the energy you can muster, and your positive attitude will make all the difference between success and failure for your business this year. Because, the reality is, nothing about the socio-political and economic environment that we operate in changed over the holiday season.
There’s nothing you can do about the environment you operate in. Blaming external factors that you have no control over, for poor growth in your business only serves to weaken and diminish you.
Everything beyond your control is a fiction. But you CAN and HAVE TO make firm choices and take decisive actions to lay the foundation for success in 2020 and beyond.
It’s Decision Time
Here are the three options you face:
Are You In?
Ambivalence around your business’ future will only lead to stagnation. Once you’ve committed to being in for 2020, then growth is your choice:
- Focus on your business growth, and free up your time by simplifying and systematising as much as you possibly can.
- Slim down your operations to focus only on your core business, and invest in suitable technologies to offset the effects of power disruptions and other uncertain circumstances.
- Invest in the right kind of people and don’t be tempted to just fill a vacancy because it needs filling – the cost of hiring the wrong person is so much higher than you’d expect. Check those references, and thoroughly research your applicants.
- A tight economic environment means that your customers need cost-effective, efficient solutions to their problems. Centre your 2020 business strategy around ensuring you solve your customers’ unique problems in a specialised way.
- Build, maintain, and grow a solid, continuous sales system, with deep consideration given to your direct and indirect sales channels, which are imperative if you want to scale your business.
Are You Out?
If you decide you’re out for 2020, you’re going to plan to sell your business. If you’re out, then craft your business strategy as an exit strategy. Prepare to sell your business by:
- Running the numbers and figuring out your business valuation: If you’re not happy with the numbers, then build a 2020 business strategy that’ll get your business to the point where you feel confident enough to sell it. Determine the value you want, and build towards it.
There are three important levers linked to your business valuation. These are:
- How far into the future can this business operate? Will it last? Will it perform in the future the way it has performed before? Does it have good growth prospects for the future? The longer you can see into the future, the higher the valuation.
- The second lever is the seam of free cash flow. How much money will the business make each month? How thick is this seam of free cash flow? The thicker the seam, the higher the value of the business. 3.
- The third lever is the risk of sustainability. Especially if you aren’t there anymore to drive the business.
When you look at these three levers and assess each one, you can put together a model for valuation.
Optimising your business
Optimising your business with those three levers in mind will enable you to build your Asset of Value towards your ideal selling price.
- Understand your ideal buyer: A year before you hit your business valuation target, start looking to find the ideal buyer for your business. You’ll need to choose from three different types of buyer situations:
- A private buyer, who wants to purchase your business and continue growing it
- A no-man’s-land buyer situation, where your business is too big for a small buyer to purchase, but it’s too small to be of interest to a large company
- A listed entity or large company, where you’ll need to learn more about their acquisition strategy, and how to make your business attractive enough for them to want to acquire it.
Are You Doing Nothing?
Choosing to do nothing in 2020 could lead you to lose out on market share though, as your competitors move ahead with their business strategy.
If your 2020 business strategy is to just let things tick over, then don’t use it as an excuse to sit still. Commit to learning something new, expanding your skill sets and abilities. It could lead you in an entirely new direction.
Don’t let complacency set in as your year gets busy. Make the right decisions for your business, so you can continue to build an Asset of Value™.
Words by Pavlo Phitidis
Pavlo Phitidis has over 25 years’ experience investing in, starting, building and selling businesses. He is the co-founder of Aurik Investment Holdings business growth services. Pavlo’s book: Sweat Scale $ell, offers business owners practical insights to implement in their own business, to drive growth and deepen value.
