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14+4 = 18 (v Brexit)

For all the naysayers and dooms-day Brexiteers out there, here’s one for you:

“14+4 = 18”

So the theory goes that the land cycle has run to this formula over the past 200+ years of recorded history. Research suggests that the economy follows the value of land (theory of economic rent… and all that!).

More specifically the theory is that the land cycle has followed a period of 14 years up (until it hits its peak) and then four years down (14+4); and this cycle has repeated itself over the past 200+ years. So this cycle repeats every 18 years or thereabouts.

You can watch Phillip Anderson (a big time proponent of the 14+4=18 theory) explaining it here:

You can see an example of the real estate graph here:

When was the last 14+4?

So we had a peak in the late 1980s and then a bust in 1992. The next peak was 2006-07 followed by 4 years of downturn.

So where does this leave us now?

So if the 14+4 theory is to hold up, the next kick up from the last downturn should have started around 2011ish and should run up to 2025 before the next crash. So we are now in the relatively early stages of a 14 year bull cycle, despite the negativity that is swirling around us.

Sure, there will be ups and downs along the way (Brexit, anyone?) but it will be interesting to see how this plays out against hiccups such as Brexit and whatever else might be heading down the pass….? It is interesting to note that stockmarkets across the globe are hitting new highs – so the early stages look promising.

Food for thought as you plan for the future in your business against what might otherwise appear to be a negative macro economic backdrop?

12 tips on building a business you can sell

Here are my notes from a very readable book called Built to Sell: Creating a Business That Can Thrive Without You by John Warrillow

  1. Do one thing well
  2. Treat like a product rather than bespoke service – one size fits all
  3. Service based companies are normally over-reliant on their founders – even if you can sell will result in an earn-out over 1-3 years post sale which is beyond your control
  4. Bill up front like a product sale – otherwise sales cycle means adverse cashflow
  5. Systematise the process into easy to follow steps
  6. Document the steps clearly so that anyone can follow
  7. Get rid of staff that are non-core to the one thing
  8. Measure number of leads and conversions to allow for systematic prediction of future revenue
  9. Hire two sales people – always two or more as they will compete
  10. Hire product rather than service sales people – the latter will use consultative selling that will require bespoke services
  11. Sack your other clients
  12. Allow three years

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25 years v 5 projects: Same yet (monstrously) different!

Lasers

“Life is long – if you know how to use it…”

– Seneca

I am unsure if it is my background of working with venture capital backed businesses but I always find myself thinking in 3-5 year time horizons.

So when I am advising businesses on strategy or exit planning this seems a natural reference point as this is the typical timeframe VCs will tend to use in seeking a return for their investors.

But I think this 3-5 year timeframe is useful for entrepreneurs with respect to how you plan your life.

Let me share a personal example: I try to view my working life in 3-5 year periods and try to allocate a project to each. I use the term “project” broadly which could mean a business, career, job, vocation, whatever. So there is 3-5 year time period to build it (whatever “it” might be) with a view to an exit or delivery on the next phase of growth within this timeframe.

Why is this important and how does this thinking help?

Well I am fast approaching the grand old age of 40 and I have been working on my current project for just over 4 years so I am now thinking:

“I have 4-5 projects left in me – what might they be?”

Thinking I might have 20-30 years of working life ahead of me allows for lazy thinking. In contrast, thinking I might only have 4-5 projects left to immerse myself in over the remainder of my life is sobering (to say the least). 

So rather than plodding on with your business or career, ask yourself how long you’ve been working on your latest “project” and how many projects you might be lucky enough to fit into the remainder of your life?

You might just find your thinking changes and you have a little extra zip in your step – and you might just surprise yourself…

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Finding your true North

Richard North, Managing Director of Wow! Stuff, provides some great advice for entrepreneurs:

“You are either an employee and you are prepared not to take risks and end up with a bonus or you become an employer, you take risks but you also end up with the rewards”

Despite selling his first business for a 7 figure sum is next venture (boystuff.co.uk) came back to bite by heading into administration in 2005. His explanation for the business downfall sounds counter-intuitive yet it is a common reason for many business failures:

“We ended up with too many people on board and too many ideas on strategy. We tried to do too many things in a short period of time”

He goes on to say:

“I had become remote from the business as there were so many people running it, so I wasn’t feeling that emotional, but what did feel emotional was that I had lost huge amounts of money”

This is where the power of leverage can go horribly wrong – leverage of people and money. In an effort to grow a business fast, it can start to lose direction and when more and more (external) strategic heads get onboard then the founding entrepreneur can start to feel disempowered and disconnected from their ‘baby’ – this can be acutely common in VC backed businesses.  Often resulting in lights out.

North appears to be growing his latest business more gradually with a focus on a handful of products that will succeed and best of all, he appears to have rediscovered his passion for his latest venture.

Good stuff. Read more at Director

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Utilising spare office space across cities

We are proud to be hosting the next Techcelerate event on Funding Options for the North West next Wednesday evening.

This promises to be a fantastic event which has been matched by the high level of interest and ticket sales so far. The rising number of attendees means that we may need to decamp the event from our office due to capacity constraints and instead hire external conference space say in a local Manchester hotel. (No longer in our building and additional cost. Ugh.)

This got us thinking about the newly refurbished (and currently empty) floor in our Manchester office building. Utilising this would have the advantage of allowing us to host the event in the same office building without incurring the cost of a hotel whilst providing a great opportunity for our landlord to showcase the available refurbed office space. A win-win.

With so much spare office space available across most major cities and towns, think about how you could match this opportunity to your future events programme with minimal, if any cost?

I should add that we’ve yet to receive the final nod from the landlord as to whether we can go ahead with this plan but hey at least the thought was there!

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Have you become a daily cyborg?

From the second my alarm goes off on my Blackberry at 6am in the morning, my daily “cyborg life” begins and typically ends with a scan through my blog RSS feeds or perhaps a read of a digital book on my iPad. It is amazing to think how much has changed in our use and interaction with technology in such a short space of time?

This short video is worth watching to reflect on just how much we rely on technology on a daily basis and how this might be impacting on us as humans. In so many ways technology has introduced changes for the better, but Amber Case also highlights some less positive factors such as the time we lose for self reflection – and therefore to re-establish our connection with our innermost self – when we find ourselves constantly reacting to information (overload).  There’s also the gradual erosion of simple face-to-face human interaction. Its funny, a client of mine moaned today about the constant use of email and how this might be slowing down the conclusion of some outstanding issues over a deal, to which he recommended that we get together over the telephone – yet this is still one stage removed with technology still in the way….!

Overall, I love technology and the changes it has made – in most cases for the better to so many aspects of our lives – but its worth taking the time to step outside ourselves and reflect on this issue.

In what ways have you become a daily cyborg?

Blogging as a relationship builder for entrepreneurs

I’ve long been a fan of Fred Wilson’s blog (‘A VC’) – if you’re a start-up entrepreneur or business owner you really should subscribe too.

The above video is a great snap-shot of the benefits of blogging in business. The gist of Fred’s words:

“blogging allows for the opportunity for VCs to enter into a dialogue with entrepreneurs over a period of time…to get to know one another…well before an investment decision needs to be made”

It is only fairly recently that such tools have become widely available and this has sooo much potential for every business owner and adviser.

We all now have the opportunity to demonstrate our approach to business thinking and to get to know one other (virtually) over a period of time before potentially entering into a (real-world) business relationship or project in the future.

Its all a bit like online (business) dating – but perhaps far more likely to find the right match over the longer term than traditional – yet speculative – business networking and marketing!

What are your thoughts on business blogging?

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Be a Better Business or a Different Business – You decide

When starting a business or reviewing your existing business strategy, you have the choice of two overarching strategic options open to you:

  1. Be better than the competition OR
  2. Be different from the competition

Which option you choose is key. The future survival of your business depends upon it.

Most entrepreneurs or business owners choose option 1. They decide to go head-to-head with the competition on quality of service, product and / or price. They aim to be the best and nit-pick in marketing literature about how they outscore their rivals on specific points of service or product technicalities or awards won etc. This is hard work. This is the toughest of the two options.

Option 2 is the easier option plus in an increasingly noisy marketplace your chances of success are likely to be higher. By being different you don’t need to compare yourself with any other businesses. You are unique. You do not need to justify your pricing policies (as no-one else sells either what you sell or how you sell it) so the risk of your prices being driven down is vastly diminished. By being different, you will inevitably alienate certain sections of society, however, if you are clear about the narrow profile of your ideal customer, then you should be delighted by this! In turn, the chances of your customers referring your business to other (like-minded) potential customers rockets plus PR likes the unique and interesting – resulting in reduced marketing costs all round.

Given this, why do so many entrepreneurs and startups pick option 1?

I think it must be the way we are wired. We are fearful of standing out from the crowd and feel safer blending in – yet in a business context this is the riskiest option of all.

Where does your business strategy currently sit – in Option 1 or 2?

If Option 1, is now a good time to revisit it?

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Why Business Leaders need Vision

“Start with the end in mind”

says Stephen Covey, in his landmark 7 Habits of Highly Successful People.

Meanwhile, Fast Company co-founder Alan Webber advocates that entrepreneurs should:

“Answer the final question first”

Two highly successful visionary guys with a consistent key message – but what does this mean for you as an entrepreneur aiming to build your business or startup?

Think back to those other entrepreneurs, bosses, managers or speakers who inspired you – what did they have in common? It is normally the uncanny ability to paint a consistently clear picture of a better future. A better place that, if everyone worked and pulled together as a team, you would reach. In a nutshell, they had vision.

All of these visionary entrepreneurs and business leaders have invested the time to think long-term about their business strategy. To be clear on the intended end game. To achieve this, they will have wrestled with BIG questions like:

  • why are we here as a business – is it to maximise profits, solve a world / local problem, have a good time (or a combination)?
  • do we want to grow the business into a global organisation or do we want to stay small?
  • why would customers buy from us? Are we the best in class, different from the rest or defining a whole new market?
  • are we building a business to sell (if so, over what preferred time duration?) or are we building a life-style business?

BIG questions demanding BIG answers.

The sooner you are clear on exactly why you are in business the easier it will be for you to make the right strategic decisions for the future and inspire others to help you build your business. If all of this is still a little fuzzy in your own mind, I recommend you get yourself out of the office for a strategy blitz to consider the BIG Qs or just go lie on a beach and think, dream and paint a vivid picture in your mind of what success in your business will look and feel like – see the end game. Have a vision.

You’ll then know and recognise it when you get there…

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