JOHANNESBURG – Businesswoman Annah Maringa has put her experience as a quality controller to good use by starting her company following sweeping retrenchments at her former workplace.
Small businesses are considered the growth engines of our economy. It is estimated that small- to medium-sized businesses’ contribution to South Africa’s GDP is well over 50%, and our contribution to employment is around 60%.
Owning your own business can be as an exciting, empowering, but also daunting, experience than running the Comrades Marathon. It is hard work and you may want to give up at some stage. Be prepared for this. Dig deep to find staying power and work strategically to win the most important marathon of your life – succeeding at your own business.
It’s not a Sprint
As entrepreneurs we are running a marathon, not a 100 m sprint. It requires thorough preparation for the long journey. We need to be equipped with the knowledge and skills that keep us moving forward; otherwise we will be disqualified. And unlike most marathons, we are not competing against anyone else (even though we will have competition in business). Managing your own business is more about running your own race, at your own pace, with your own purpose.
Be your own cheerleader
We will have doubts during the race, but we will get over these hurdles because of the encouragement of the achievement of others. Look around you – witness others who are running alongside you, with similar or even more challenges than you. Think of those who have completed the race ahead of you – business success stories are truly inspirational. Follow your business idols on social media, read their books, go for coffee with a friend who owns his or her own business – let their journeys motivate and inspire you to greater heights.
Keep your eye on the prize
We have to dispose of the things that hinder and distract us during our race. Regularly review the causes of non-delivery or losses in your business. Don’t be scared to question the reasons until you have found the root cause. In prioritising your business now, you are bound to reap the rewards at the finishing line.
Exercise focus in your business
South African athlete, Wayde van Niekerk, is testimony of the importance of focus. He had to let go of different distance races to concentrate on the 400m, with the result that he reached a world record at the Olympics. You cannot be good at everything – choose your focus or core business. Too many small businesses fail because they don’t have a definite focus. Don’t let poor decision-making or greed cloud your unique selling point.
Build your trophy cabinet
We have to remain relevant – always on top of what is happening in our respective industry and the needs of customers. This will require more than one race to run. We live in a highly competitive environment with customers looking for convenient solutions that will provide maximum return on investment. Once you complete your first race, don’t just sit back and relax – set the next goal in your business. Let growth be the constant motivator in your business.
Source: Entrepreneur Magazine
Kathryn spent years drowning in debt and as a result, she was blacklisted for eight years with no access to finance or credit. On a mission to clear her name, Kathryn dedicated herself to getting to grip with her finances and learning the do’s and don’ts.
Kathryn says that during her battle of being black listed, she paid off all her debt diligently over a four-year period (half the time that it took to make it). “I made a commitment to each creditor and paid as per my agreement. When I had extra disposable income it all went straight into paying off my debt” she says.
On her journey, she was amazed to see how many people were too going through the same thing. “In South Africa, there are more people with debt than with jobs. Our out of control spending habits and the ‘buy now, pay later’ habits have spiralled out of control,”
Realising that parents are the biggest influencers on kids and that these bad habits had been passed on through the generations, Kathryn made it her mission to not only educate herself, but to start engaging on the importance of teaching financial literacy to kids and speaking openly about finances in the household.
With a firm belief in the difference that raising money savvy kids could make, what started off as a passion project has evolved into a business and today MSK partners with various big corporates to develop custom financial literacy content – all developed by Kathryn’s full-service advertising agency, Main Multimedia.
Kathryn talks to some of the financial biggest lessons that she has learned as an entrepreneur:
- Make sure to have a separate bank account for your VAT. SARS wants their money on time and if you don’t pay they take money out of your business bank account
- Never empty the bank accounts. Debit orders and payments are always going off. Bouncing debits and payments gives you a poor financial credit score so getting finance when you need it becomes impossible
- Don’t use your business account as your personal bank account. Pay yourself a salary and budget properly. Using business cash to supplement your over spending leaves less money for legit business expenses
- Always use a book keeper to ask for money. Asking for money from clients’ ruins relationships
- Make sure you are very clear about your credit terms with your customers.
After a long financial journey, Kathryn says that she does believe that banks are actively trying to be better for entrepreneurs. “I foresee a lot more support and understanding for our ventures in the next few years.”
Kathryn shares five financial tips for entrepreneurs in SA:
- Keep an updated budget that you review and amend on a monthly basis. This way you always know the situation you are in and how much money you need to make to break even or make a profit
- Always pay the tax man
- Cash flow management is extremely important. Billing out quickly and money in on time is essential
- Contracts with clients around payment terms are necessary.
Source: Entrepreneur Magazine
By now, it is accepted widely by policymakers that SMEs are the engine that will drive growth and job creation. Both government and the private sector have multiple initiatives geared towards helping SMEs.
The need for help is real. The failure rate for SMEs is very high, a reflection of the real challenges they face. According to figures quoted by the Small Development Enterprise Agency (SEDA), 75 percent of new SMEs in South Africa fail, one of the highest rates in the world.
One of the reasons for this high failure rate is that most entrepreneurs do not have sufficient focus on the business aspect of their SME – typically, they have a great idea for a product or service. So cultivating an understanding of how business works is actually a vital first step for many entrepreneurs – and something that many of the SME assistance programmes will help with.
York Zucchi, one of the co-founders of the SME Movement, makes a valid point that what SMEs need more than anything else is clients. He strongly believes that SMEs should look to other SMEs for work – the big contracts with corporates that SMEs often pursue can take a start-up out of its depth. Also, corporates and, notoriously, government, are poor at paying quickly and SMEs are invariably dependent on cash flow.
So what should savvy entrepreneurs do to maximise their chances of success? Here are some top tips:
Time is money – learn to manage your time
Entrepreneurs are invariably spread very thin. They have to be not only the face of the new entity but also do sales, accounts and so on. Time-management basics include setting schedules and prioritising tasks, constantly working to streamline what you do to work smarter and to turn good behaviours into habits.
Use technology wisely
This is a massive topic, but it can be summarised by saying that technology really can allow a small enterprise to punch way above its weight. There are several aspects to using technology to your advantage:
- Use the cloud to reduce costs (you do not have to buy software) and access best-practice solutions for accounting, billing, marketing, HR, stock management and so on.
- Technology can also allow an SME to access specialist expertise as and when needed. If you need somebody to run a social media campaign or put together a presentation, they can be found on the web.
- Technology also provides platforms like the SME Movement, which aims to help SMEs find clients, mentors, help and everything else they may need.
- Learn to communicate virtually, whether it is person-to-person or via blogging or other means. Technology can allow a small business to have a larger reach if it is used correctly.
People are your biggest asset – learn how to keep your staff motivated and productive
An SME by definition will have relatively small numbers of staff, so each one has a correspondingly important role to play. Entrepreneurs need to concentrate on their people skills to get the most out of his or their people, especially as the salary bill is likely to be the biggest monthly expense.
Build an ecosystem
Consciously develop linkages with other companies that could be interested in working with you, or to which you could offer services. Repeat business is the ideal for any business. In addition, working with other SMEs can enable your business to offer better services. Using shared workspace is a trend that is taking off and aside from cost benefits, it can be a way for entrepreneurs to build links with others.
Understand your risk and manage it from the outset
Like any organisation, an SME faces certain risks aside from all its other battles. These will include natural disasters, theft, fraud, civil disturbances, illness and so on. It is worth spending some time understanding what the most important risks are – that is, those that are most likely to materialise – and then putting mitigation steps in place. At the most fundamental level, plant and equipment need to be insured. Insurers like MiWay will have specialised business insurance – find out how you can get the right cover for your business.
The challenges of setting up and running an SME are daunting, but the rewards can be substantial. At the same time, you will be doing your bit for getting our declining economy back into growth mode, and that is a real reason to get up and get going.
Source: Entrepreneur Magazine
Given that most modern professionals are armed with a full array of sophisticated technology tools, it is safe to assume that our productivity and efficiency has reached dizzying heights…right?
With so many digital distractions and the constant pinging of notifications, most of us have severely dwindling attention spans. Several years ago, Microsoft released a study that revealed a consumer’s attention span is now less than that of your average goldfish. Moreover, our overall productivity might be plummeting. According to research from theHRDirector.com, employees are distracted at work every three minutes – and it can take us as long as 25 minutes to refocus. In addition, workers are more stressed out than ever before, a trend that has been attributed to the constant barrage of digital information and data.
The good news is that by making a few simple changes and employing the right tools (yes, tech tools), you can both alleviate your work stress and enhance your daily productivity. You can also, hopefully, become a happier human. Here are our suggestions…
1. Find Ways to Work Remotely
Although this may not be an option for everyone given his or her particular company or personality, research has shown that working from home – or from a quiet place – can boost your productivity. The average workplace is a hive of activity and distractions, making it near impossible to get critical tasks done.
Related: 14 Of The Best Morning Routine Hacks Proven To Boost Productivity
Nowadays, with enhanced mobile connectivity, employees can escape home or to wifi-hotspots (with great coffee) to focus on their work. Stanford professor Nicholas Bloom recently conducted a two-year study on remote workers that showed a massive productivity boost among the telecommuters… Moreover, his study revealed that employee attrition decreased by 50 percent among the remote workers. Also, they took shorter breaks, had fewer sick days and took less time off work.
2. Turn off Your Push Notifications
Yes, that’s right. You can do it. There is simply no need to see a notification every time someone likes your post on Facebook or adds you as a contact on LinkedIN. Also, that Whatsapp message on the group from old high school friends can wait. By constantly moving between screens, apps and platforms to keep up with ongoing digital communications, we lose focus and interrupt our creative processes.
In 2016, a Deloitte study found that people look at their phones 47 times a day on average. For young people, it’s more like 90. As Wired writer David Pierce put it, “push notifications are ruining my life. Yours too, I bet”. It might be time to turn down the digital input volume.
3. Use Productivity Apps
Yes, this might seem ironic and counterintuitive. But, there are now several productivity apps that have been cleverly designed to help – not hurt – your ability to focus. There is Todoist, which allows you to put all your to-do lists into one, easily manageable place. This app syncs with virtually any platform – allowing you to complete tasks even if you forgot your smartphone at home (maybe a good thing?).
We also like Pocket, which collects your favourite articles and sites so that you can peruse them later, instead of ‘right now’. There are also great project management tools now available, such as Omniplan and Trello, which make certain tasks appear fun and often encourage collaboration and creativity. These apps allow you to create and group tasks, organise and streamline workflows, and to file documents in a simple and accessible way.
4. Find Cool Ways to Collaborate
Although technology can fuel our efficiency (if used the right way) it can also isolate us from our peers and make teamwork (or talking to humans) seem a thing of the past. Yet many studies have shown that collaboration actually supercharges our contributions at work.
Related: How Dial A Nerd Managed To Dial Up Profits
For example, a recent joint study between the Institute for Corporate Productivity (i4cp) and Rob Cross, Edward A. Madden Professor of Global Business at Babson College, revealed “companies that promoted collaborative working were 5 times as likely to be high performing.” In addition, a 2014 Stanford study found that simply working alongside others drives ‘intrinsic motivation.’ And, as always, there’s an app for that!
The most popular tools include Slack, which allows for the sending of direct messages (DMs) and files to a single person or a group of employees. It also has the ability to place conversations into different channels (for specific projects, one for customer support, general chat, etc). Another handy tool growing in popularity is Microsoft Teams, which is included in many Office 365 packages. Businesses may have Teams available right now and not even realise it or the powerful productivity boosts it can unlock.
Source: Entrepreneur Magazine
The dream of taking a local business and going global is something many entrepreneurs have, and a few are successfully realising. I took the giant leap of introducing our homegrown ERP software solution for SMEs into several countries this year, and have been pleased with the response. So, what made me do it?
The concept of global expansion for SMEs made popular by Thomas L. Friedman in his book The World Is Flat, in which he argued that the pace of globalised trade, outsourcing, and supply-chaining was speeding up and that its impact on business organisations and business practices would continue to grow in the 21st century.
For me, the fact that our South African market was stable, and our client base steadily growing, coupled with the growing enquiries from other countries, made me realise it’s time to grow. For most SMEs the desire to expand is great, but the risks and strain it can place on a young business is something that business owners and CEOs need to take into account.
How to penetrate a foreign market
- Local first. Before you go overseas, make sure you have a solid local foundation first. This foundation will support – and probably fund – your overseas endeavours, so make sure it is solid, well taken care of, and supported.
- Get a global vision. This is dream time. Go away for a few days and expand your vision for this new market. Explore, research, read, ask international experts, feed your vision.
- Do foreign market research – Identify the following:
- Do your customers exist.
- What are their points-of-pain.
- How saturated is the market.
- Who are your competitors.
- Where are the gaps in the market.
- How can you differentiate yourself.
- Prepare a business plan
- Define a short, medium, and long-term strategy with reasonable goals to measure progress and ROI.
- Define goals, objectives, and success metrics, with assigned task owners.
- Complete the business model and structure. Decide if you set up a separate company, a branch, or a sales office.
- Develop a top-down annual budget.
- Develop a tactical project plan with commit dates.
- International business consultant – Meet with an international business consultant or coach to advise on the local business climate, opportunities, and channels to market.
- Define a go-to-market strategy
- Evaluate and select the best channels of marketing and distribution.
- If you have a limited budget, take a narrow approach first – eg focus on one city or one country, instead of one continent.
- Determine your optimum sales model and methodology.
- Determine if a new brand will be created or whether you will use the parent brand.
- Develop a comprehensive marketing plan and KPIs. Package and label your products according to international regulations.
- Evaluate your pricing model – Consumers in less-developed countries are more price conscious and your product may not fit the local economic environment. Also, be aware of tax and legal implications.
- Government support – Find out if South African government has any funds or programmes that can offer support.
- Establish a launch team – Use proven senior executives or outsource experienced subject matter experts during launch so that the company can hit the ground running. It gives you time to hire the right senior management team while the company drives deliverables.
- Product readiness – Based on the product gap analysis, take the necessary steps to make your offering market-ready.
- Review government- and industry-specific regulations to ensure that you have the right compliance and certifications.
- How does your product and branding translate in that market? Pay attention to the translation of the name of your product in the local language.
- Initiate a patent and trademark review.
- Initiate testing and quality assurance review based on local standards.
- Find local distributors / business partner – Distributors are great as a distribution channel because they offer foreign customers top-notch service and are easier for you do deal with because they typically buy enough of your product to build up an inventory.
- Final budget prep – Develop a three to five year budget and forecast and a 12-month business plan with detailed KPIs, and update / review these quarterly.
- Take is slow and be flexible – Be realistic with your growth. Learn from local feedback, and be nimble and agile with your positioning and approach as you find your niche in this new space.
Source: Entrepreneur Magazine
In an entrepreneurial business it’s easy to get really close to clients, suppliers and most of all staff. In theory, this is a good practice and relationships are often what hold an entrepreneurial business afloat, but that is only when such relationships are not interfering with sound business decisions.
Whether in a corporate or an SME, decision making should be based on cold data that is efficiently analysed in order to determine the correct decision to be made – there is no room for emotion.
When a client requests a discount because of its own budget restraints, the entrepreneur should have the cost of sale figures available to determine at which point a loss will be made on a job and have the courage to walk away if the job is no longer profitable, even if the client has become a close friend.
Making tough choices
Similarly, when suppliers are charging too much and thus affecting profitability negatively, it is the duty of the entrepreneur as custodian of the business’ finances to find alternative suppliers. If one has been working with a specific supplier for years, then this can become difficult to do, as it could mean disrupting an otherwise good relationship – but not doing so will be even more hazardous to the longevity of the business.
The most intricate and difficult area is that of staff. There is a basic principle in life; spend less than what you make. Especially in the service industry, salaries can easily become a huge portion of the company’s expenses and when there is free capacity in human resources it is as good as having wasted stock in the warehouse of a manufacturing business.
It’s the duty of the entrepreneur to ensure that there is just enough capacity to service the clients and fulfill on the requirements of the business. Extra capacity should be cut. It seems like a heartless approach to take, but keeping wasted capacity for the sake of relationships or compassion will put the sustainability of the business and, ultimately, everybody’s jobs at risk while compromising the credibility of the entrepreneur. Another pitfall is to tolerate non-delivery by staff or suppliers due to relationship and for the sake of keeping the peace.
Related: Wonder Jonamu Explains How To Be A Good Leader
Difficulties arise when suppliers and employees are fulfilling on all requirements, but an over supply of capacity is forcing an entrepreneur to cut back. The word retrenchment is probably one of the most feared words an entrepreneur can use. Not just for the employees, but also for the entrepreneur. It accompanies a feeling of failure.
When managing a small business, relationships will be much closer than in a corporate environment and it is always a hard decision to let go of talent and allow someone to re-enter the market when they have intimate knowledge of the company’s intellectual property. But the hard reality is that stock availability should match requirements and, similarly, human resource capacity should match service requirements or the business will burn money and will therefore not be sustainable.
There are two ways in which retrenchments can be rolled-out; operational requirements or last-in- first-out (LIFO), each with their own set of procedural requirements. Once again an entrepreneur has to be careful not to let personal relationships cloud sound judgment.
When a retrenchment principle has been chosen, it has to be adhered to regardless of personal feelings or relationships. When choosing to retrench on operational requirements, decisions have to be based on which employees have too much spare capacity or whose absence will not negatively affect the business. It is important to be able to justify the decisions made.
Managing a business, especially a small business, is not an easy task and requires continuous planning, organising, leading and control. Management of any business needs to be approached in an unemotional and analytical manner in order to make sound business decisions. While in some instances compassion is a good thing and can foster wonderful working relationships, without balance and objectivity it can easily kill a business.
There are many tools available to entrepreneurs to ensure sound running of the business. When business processes have been developed and quality and HR policies and standards are in place according to client requirements, there are measurements available to measure the performance and profitability of each client, supplier and employee. Any variance from standards or policies and any non-compliance with processes should be addressed immediately, regardless of the relationship involved.
Related: Passion Is The Key To Entrepreneurial Success
Finding your tools
According to Churchill and Lewis (2000), the tendency of entrepreneurs to focus on their own skill and relationships often leads to them ignoring the ‘science’ of business and operational management.
They contend that this is the main reason for the low entrepreneurial success rate. Systems development is neglected and the owner-manager remains the main survival factor of the enterprise. During the life cycle of an entrepreneurial enterprise, the rapid growth phase is often followed by chaos, especially where there are no processes in place.
The need for sound processes increases as the enterprise progresses to a rapid growth phase. Hall, Daneke and Lenox (2010) argue that without processes and an awareness of sustainability, entrepreneurship will remain uncertain. Hung and Whittington (2011) believe that process and system theory will institutionalise entrepreneurship. They contend that entrepreneurs should use systems and technology to build legitimacy and mobilise resources.
Other tools which entrepreneurs should be using include role definitions and performance management systems. Service level agreements should be in place with suppliers and clients. Both the performance management system and the service level agreements should be used on an ongoing basis to track whether value is derived for the organisation.
When an entrepreneur realises that profitability will be affected by the performance of employees and suppliers, it becomes easier to manage the business based on facts and action, which leads to the creation of a win-win situation for the business itself, its employees, suppliers and its clients.
When running a business, there are various elements affecting its success and sustainability. The most important aspect for an entrepreneur is to ensure that the business is profitable. This cannot be achieved when relationships interfere with sound decision making processes.
Source: Entrepreneur Magazine
Entrepreneurs make an astounding number of decisions daily. They are faced with choosing which opportunities to move on and must solve problems big and small.
By setting up a framework of questions to ask yourself daily, you’ll give yourself some markers to help guide you through these difficult situations. Knowing where you stand on these questions will empower you to make good choices that ultimately lead you to your desired outcome. It will give you a deeper understanding of your motivations and your feelings about your business, and can help you clarify future plans.
Here are five powerful questions all entrepreneurs should ask themselves daily to ensure they are consistently moving toward their goals and making the best decisions for themselves and their business. Ask yourself these questions with an honest and open mind, and see where they take you.
1. Why are you doing this?
What makes this one little question so powerful is that it forces you to examine your desires and impulses, and helps you chart how those motivations change over time. It forces you to look at things from a different perspective. Asking yourself this question every day reaffirms your ambitions and the mindset behind why you are doing what you’re doing. If you don’t know why, you’re in trouble!
Asking this question opens the door to a plethora of other questions that will give you food for thought. What is the reason for launching your business? Why are you passionate about doing this? Are you the right person to run this business? These answers may change over time. At first it may seem difficult to truly nail down the “why” behind your motivations. Maybe there are competing interests that are driving you. But when you really think about it and drill down into this question, there’s probably a simple answer. Just be sure you’re being truthful with yourself.
Why you do something also gives rise to the question: what do you hope to achieve? You need to know what your end game looks like, and what success means to you. Is it about attaining a certain level of wealth? Is it about being the top in your market? Is it about earning respect? Are you looking to rule the world (or at least a niche market), or are you simply hoping to earn a living doing something you love?
Start your day by asking yourself this question and see where your answer takes you. By spending a few minutes pondering this, you’ll gain clarity that will help you steer your career in the direction you want it to go.
2. What is your company’s purpose?
See if you can answer this question in a single sentence. A good place to start is with your mission statement: what are the formal aims, goals and values of your company or organisation? This should be clear and concise – it should get to the heart of what your business is about.
Your company’s purpose is the foundation that all else is built on. It should have enough flexibility to grow and allow for change, but be specific enough to be meaningful and relevant. Ultimately, this question should help you understand what the heck you’re really doing here.
This question should be at the forefront of your mind when making important decisions. Ask yourself whether this new venture or idea would reinforce or logically contribute to your company’s overall purpose. Are you staying true to your calling?
That’s not to say that your purpose can’t change over time. However, if it does, the change should be purposeful and executed with care. Thinking about this will help you identify your long-term business goals and may lead to bigger questions, such as: What do you want your company to mean to your customers, what is your company’s place in world and what is its ideal market?
3. Where is your business at right now?
The goal with this question is to take both an analytical and emotional assessment of your business. This is a chance for you to take a hard look at where your company sits. Is it on the right track? What seems amiss? What is going right and how can that be reproduced throughout your business?
It’s also important to acknowledge your emotions and to be mindful of how you are feeling about your business. What is your gut instinct saying? Are you feeling anxious or excited about the business? Whether you are having negative emotions or positive ones, it’s important to recognise what you’re feeling and why you’re feeling that way.
This will give you a chance to better understand your mental state and how that may be influencing your decision making. It’s also about understanding what kind of vibe you are putting out. Are you feeling clear-minded and balanced? Or are you feeling off-kilter and out of sorts?
Being in tune with your emotions and having a clear view of what’s going on with your business will ensure you’re on an even keel. It will help you avoid overreacting or under-reacting to situations.
4. What lessons are you learning?
Every entrepreneur faces an uphill battle to achieve success. Every day you should be learning and growing, and the best way to do this is through a great deal of reflection on the lessons that present themselves each day.
Ask yourself whether you’re learning from your mistakes. Failure is a part of every entrepreneur’s journey. The question is, will your mistakes allow you to learn and grow? If not, you’re liable to fall into the same pitfalls and missteps. Conversely, are you learning when to jump at an opportunity and when to let it go? This is the ultimate lesson every entrepreneur is trying to learn, and it’s never an easy one.
The next time you’re weighing whether or not to take a risk, try asking yourself: “When I’m 80, will I feel sorry if I hadn’t gone for it?” Jeff Bezos does this as a way to crystallise whether he will regret not taking action on something. In the big picture, it’s often what we fail to do that we see as our biggest mistakes in life.
5. What’s next?
If you ask yourself one question every day, this should be it. As an entrepreneur, you always need to be anticipating what’s next. You need to anticipate what’s coming down the road and formulate a plan to take it on. This is the question that forces you to look up from that pile of work on your desk and think about the big picture and next steps for your business.
What strategies will you need as you keep pushing your business into the future? What trends or shifting interests are coming up that may affect your business? How will new technology impact the way you manage the company?
Disruption will happen in every market because change is inevitable. Businesses that survive see that wave coming and start making adjustments early on. So, in a way, change is predictable because it will always come. Innovation and ingenuity will always be the key to success – and those who seize opportunity will ride the crest of the next wave.
So when you ask yourself “What’s next?” make sure you have your blinders off and are looking at things with a curious and open mind. Make sure you’re staying open to new ideas and embracing creative solutions. Keeping looking for the “wow” factor.
By Deep Patel
This article was originally posted on Entrepreneur.com.
If you’re like me, then you love reading online articles, opinion pieces and general books on the topics that you find interesting. It’s one of the ways that you can ensure that you keep your interest piqued and stay abreast of what’s going on in your industry. One of the topics that gets me thinking has always been the concept of branding.
It’s why I studied an undergraduate degree in marketing and I completed honours in brand management at Vega, the Brand Leadership School. I’ve always been curious to find out more. But one aspect of branding that hasn’t been given enough thought I believe is the relationship between the brand and the CEO of that brand.
Who should be more prominent?
It’s a straightforward question: Should the brand of the CEO or the brand of the business be more prominent?
What are the implications of the CEO’s brand being more prominent than the business’s brand? Similarly, what are the consequences of an unknown CEO where the business’s brand is the hero in the relationship?
Let’s perhaps start answering that question by talking about what a brand is. At university, you’ll be taught by your lecturer that Philip Kotler says a brand is a ‘name, term, sign, symbol (or a combination of these) that identifies the maker or seller of the product’. That’s technically correct. However, I’ve always believed that at the heart of branding lies perception. A brand is a perception. As marketers, we’re ultimately in the game of shaping positive perceptions, because perception sells.
I believe perceptions are shaped by three factors. What the brand tells us about itself (including what Philip Kotler mentions), what our acquaintances and friends tell us about the brand and what our personal experiences are with that brand.
Then there are the secondary factors that include where you were born, your cultural nuances, your history and so on. I’m sure it’s becoming clear that no two people can have the same perception. Nevertheless, perception matters and the art and science behind branding matters in shaping those perceptions.
So, then what’s more important? The brand of the CEO leading the business or the business’s brand? Depending on who you ask you’ll receive different answers.
CEO vs business brand
Let’s introduce two well-known South African brands into the conversation. Discovery and First National Bank. Both operate in the financial services industry, both are healthy brands — but chances are most of you can only name the CEO of one of them, and I’m guessing its Discovery.
That’s a typical example of CEO brand vs business brand. Adrian Gore, Discovery’s CEO, is an influential leader with a strong personal brand that works hand-in-hand with Discovery’s overarching brand. FNB’s CEO is Jacques Celliers, and in this instance, he’s mostly unknown to the general public. So, which then is more important? I spoke to a few thought leaders about this, and the general sentiment is mixed. Some believe a strong CEO brand does well for the business, others think the company comes first, and it’s first about the brand of the business. Personally, I believe it depends on the company and the health of the brand.
Let’s look at other examples; Apple and Steve jobs, Amazon and Jeff Bezos, Tesla and Elon Musk. All of these businesses, we can agree, are a success mainly because of the value that the CEO’s personal brand brings to the table. On the other hand, we have Coca-Cola, BMW and Microsoft. I bet most of you couldn’t name the CEOs of those companies off the cuff.
People do business with people
I believe that fundamentally people buy into people, not brands. That’s why I think there’s a strong case for a CEO with a solid brand. However, there are cons that exist. What happens when the CEO leaves? Has this CEO become so large that the business fails without them? After all, leadership is about passing the baton. In my opinion, Steve Jobs is the ultimate reason for Apple’s success, however he did a poor job of passing the baton. Luckily, Apple’s brand is strong enough to withstand uncertainty, but I think we can all agree that under Tim Cook, Apple has started to decline.
I used the example of FNB earlier because one of my favourite CEOs is Michael Jordaan. Under his leadership, FNB had what I like to call it’s ‘glory years’. They were simply unstoppable and every other bank in South Africa was struggling to keep up. Or at least that was the perception from the outside. Remember perceptions? Michael’s brand is strong, so much so that since his departure FNB has lost its story-telling innovative mojo.
Enter Bank Zero. An app-driven bank opening in South Africa in the fourth quarter of 2018. Why is anyone even paying attention? Because it’s Michael Jordaan. His personal brand is strong enough to grab attention. If it was a no-name would we care as much? Would there be nearly as much hype?
We therefore have two sides to the coin. A CEO’s personal brand is incredibly important when the business’s brand needs an injection of credibility. But the CEO must be careful that he doesn’t become too big when credibility is formed or restored. After all, great leadership is about passing the baton and leaving a sustainable legacy. Which means the CEO has built a brand that the customers buy into. I think Coca-Cola, Microsoft and BMW have done brilliantly at this. Their brands are sustainable because it’s about the brand, not the CEO’s brand. I also think there’s a strong case for choosing the next CEO from within the current pool of employees of that business.
The elements of a strong CEO brand
- A fearless leader who motivates his/her employees into action
- A leader whose vision is simple and easy to follow
- A leader who rallies not only his employees but customers and clients too
- A leader who isn’t afraid to be in the media and on social media.
On the business side, here is what you should keep top of mind when building your corporate brand:
- Create a strong corporate identity. That doesn’t mean doing it yourself, get the professionals to do it. It’ll include your logo, collateral and how your brand lives online.
- Create your experience. It’s incredibly important that what you say is also experienced by your potential and current clients. This includes user experience offline and online.
- Run online thought leadership and PR. This is what builds credibility. It’s one thing for you to talk about yourself, but when others talk about you it builds your brand in a way that adds much needed credibility. This also increases your SEO because any online thought leader should be linking back to your website.
- Lastly, drive brand integration through your value-chain. When your audience and stakeholders see your brand they know you and what to expect.