Small businesses thrive on coaching
Zac de Silva is a man on a mission. He wants to grow the profitability of small to medium enterprises in New Zealand.
SMEs form the backbone of business in New Zealand more than in most countries, with 99 per cent of our companies employing under 50 people and 97 per cent employing fewer than 20. So their financial success matters to the New Zealand economy.
De Silva has been a business coach for the past four years and is already well on the way to achieving his mission. He aims to lift the profitability of the companies he works with in the first year by at least 30 per cent but he claims to have achieved an average doubling of profits for his clients so far. He cites the example of one family firm he has worked with for 18 months where turnover has risen from $5 million annually to $6.9m and profit from $110,000 to $650,000. In cases where he's been called in by the banks to help rescue failing companies, he's had one fall over anyway because he came in too late and the others recovered to trade profitably.
His company, Business Changing, is comprised of himself and a handful of contractors with different skills he calls on when needed. He's about to launch software as a service product which sets out the SME magic recipe that he will use on his clients and in conjunction with other business training organisations.
Working on the finances comes naturally for the former chartered accountant who has a fair bit of hands-on commercial experience to back up his advice. His CV includes a four-year stint as managing director of Barkers menswear and before that at the House of Travel Holidays and as a former CFO for Flight Centre.
His more than 100 clients includes some big names - the likes of BNZ, Westfield, Les Mills and Foodstuffs - as well as SMEs. Working across such a range of companies has put him in a prime position to work out the DNA of a successful Kiwi company owner.
De Silva is well aware the SMES he works with can't afford him for too long but it is about whether he delivers value rather than cost. The first year is likely to cost up to $15,000 for more intensive work, which later scales back to a monthly consultation. Like a mechanic tuning an engine, he aims to get the business running so well he's no longer needed apart from the occasional maintenance service.
Typically our SMEs are run by the owner and they're often technicians who excel at turning out a great widgit or service but don't necessarily have the commercial nous to run a business well.
Some of the common problems he comes across include the lack of a written business plan. These should be the three pages that set a road map to getting the business owner where they want to go in the next three to five years, mapping out in detail the next 12 months to head the business on the right track.
"Only about 10 per cent of businesses have a business plan, most just have an idea in their head. The thing about having a business coach and doing a business plan is that someone is then holding you accountable for delivering on it. Most people know what they have to do but don't have the discipline to achieve it."
Many of the companies de Silva works with are too small for an informal advisory board or a formal board with independent directors who would also hold them accountable.
The recipe for SME success includes knowing where you're making money and where you're not and ironing out the so-called hygiene factors like the right product, brand and marketing. Once those factors are working well, the magic happens with good leadership, he said.
"You need to have engaged employees, ones that want to turn up to work and not just for their pay cheque. People will then get a good customer experience and you then have customers for life and word-of-mouth referrals and that's when your business will go through the roof."
Another key step is to focus on the right areas and prioritise what you do, when, as business owners are often passionate and work hard but on the wrong things that don't really add value, he said.
A lot of business leaders also fail to walk the talk in their business and a surprising number fail to articulate their company values to stakeholders, he said.
By contrast, de Silva has a lengthy values list he's keen to share. These include: Making it great for the customer; to challenge, innovate and drive change; success is never final; achieve and grow together; pursue learning and inspire; say it like it is; focus on the right priorities; and make a difference in what we do.
THE DNA OF A SUCCESSFUL KIWI COMPANY OWNER
Discipline - doing the right thing and leading by example.
Humble - not arrogant and being able to roll up their sleeves and pitch in on the day-to-day operations.
Know where they're making money - having transparency in the financial welfare of the company, and what is profitable.
Believe they can make a difference - know what problem they are solving and communicate with customers about how they're solving it.
People person - if they're not a people's person, hire someone who is in order to foster teamwork among staff.
Have the pricing right - don't price themselves too low to win any business, it needs to be profitable business.
Sunday Star Times