Verne Harnish, author of Scaling Up and Founder of the Entrepreneurs’ Organization (EO), says that most scale-ups average 25 years in business before taking off.
But time alone does not a successful business make. According to Harnish, the secret sauce of business success comes down to four pillars: people, strategy, execution and cash.
Research from CB Insights found that 38 percent of startups failed due to cashflow, followed by 35 percent which failed due to a lack of market need for their products or services. Other reasons for business failure were having the wrong team, being outcompeted, pricing issues, a poor product, no business model, poor marketing and, lastly, burnout. Each reason for startup failure falls into one of the four pillars.
Three Australian members of the EO, a 17,500-strong global network of entrepreneurs with proven business success, share their insights on how they successfully scaled their businesses with decision-making focused on people, strategy, execution and cash.
Anneke van den Broek:
Founder and CEO of Rufus & Coco and Entrepreneurs’ Organization Sydney member took her startup from an idea sketched on the back of a napkin to an award-winning global pet care business, which operates in 12 countries and is in the world’s leading major pet chains and supermarkets, in addition to three high-end grooming salons.
Founder and CEO of Be Fit Food, which increased by 1,500 percent almost overnight after appearing on Shark Tank in 2017. Today, it’s delivering tens of thousands of meals per week across Australia. Be Fit Food is in over 750+ Woolworths stores, Ritchies, IGA’s and also in various pharmacies including Chemist Warehouse, Priceline and Terry White Chemmart stores.
Bent’s business soared 700 percent in 10 months after a pivot into the United States market during the COVID-19 pandemic – with its ecommerce revenue increasing from five to 95 percent. With a team of 40 staff operating in six countries, the business is turning over millions of dollars.
EO members on people
“When the pandemic hit, I turned to my EO Melbourne business support network, which called an emergency meeting.
“I remember we were going around the room and a few people had their supply chains impacted, a bit of lost revenue, then it got to one person in the events space and they said, ‘I just lost 100 percent of my work for the next six months,’ and that’s when I knew this was going to be big.
“When you look after your people, they look after your business.” – Ash Bent
“One of the first things I did was to take steps to reduce outgoing costs in an effort to retain staff. My focus was on not losing the team. When you look after your people, they look after your business. With a massive reliance on the wedding and event industry, we gathered our whole team and just brainstormed. ‘What can we do to get the business through? Where’s the pivot? Where’s the opportunity?’ We named the meeting ‘World War COVID’.
“The pivot was to focus on our custom neon signs and, with some EO connections, we planned to launch in the United States market. With everyone stuck at home, anything to brighten their personal space or home office was a hit and, with many Instagram influencers having neon signs in their content, it quickly became our biggest success.”
Anneke van den Broek
“Many of my tough moments in business have centered on people. First, trusting myself and learning to ignore my critical inner voice. And then, most importantly, building the right team around me is a constant process.
“I’ve had to focus on finding unicorns that truly share my vision, and who can stand on the hill with me at one moment and get down and personally sow the seeds the next. Moving from the corporate world, with huge teams, to just a handful of really great people has been an adjustment, but such a worthwhile one.”
“I believe that a business is only as good as its people. Without people, businesses wouldn’t exist, therefore truly understanding what creates a winning team comes from knowing who to speak to and where to look for advice.
“Always take money before you need it because, if you wait too long, the options will dry up and no-one wants to loan money if they can’t see the future growth.” – Kate Save
“Aside from leaning on my sister, Jane Save, who is an HR consultant, I have used the full day sessions in EO to do people planning and work out who needs to get ‘off the bus’, so to speak, when there is a misalignment in either values or skills.
“I’m not a fan of conflict or confrontation. However, I have learned over time that just one bad apple can spoil the whole bunch. So, sometimes, I just need to put on my big girl pants and make those tough decisions, knowing that it will hurt either way in the long run.”
EO members on strategy and execution
Anneke van den Broek
“I actually found a distributor in Hong Kong before I made it onto supermarket shelves in Australia. The rest of the export journey has not been as easy. Very soon after launching the brand, I began attending international trade shows and partnered with Austrade and expert consultants to help understand export requirements, and introduce the brand to distributors.
“I’ve had to focus on finding unicorns that truly share my vision, and who can stand on the hill with me at one moment and get down and personally sow the seeds the next.” – Anneke van den Broek
“We had a very steep learning curve dealing with logistics, currencies and legalities. Always visit the market first, understand the retailers, the consumers, the culture. Just because it works in your market does not mean it will work somewhere else.”
“From earlier business failures, I’ve learned the importance of being extremely focused on what we are after and where we are headed.
“From a strategic point of view, having access to how other founders are achieving their success is huge. Joining the EO was like pulling back the curtain in The Wizard of Oz for me. You look at these impressive businesses and ask, ‘How does this founder make that happen?’ and, in the EO, you get access to those founders, they’re your peers, so you can reach out to them and they will pull back the curtain and let you see what levers to pull and the systems and processes that got them where they are.”
“What entrepreneur doesn’t love Strategy Day? It’s the place where we all come to be the visionary leaders and to tell compelling stories to bring our team on the journey too.
“Through the EO strategy sessions, I have learned that creating a successful strategy is a process, not just a single planning session for each quarter, each year and the subsequent three-to-ten years.
“What I love about the structure of the Strategy Day in the EO is that you get to share your Big Hairy Audacious Goals (BHAG) with other founders and then, all of a sudden, you no longer feel like you’re the only crazy person in the room shooting for the stars. It’s inspiring to be able to connect with other entrepreneurs on such a deep level and really understand what makes them tick and how their ambition drives the majority of their decisions.”
EO members on cash
Anneke van den Broek
“Money comes like a turtle and goes like a rabbit. Therefore, I treat money with respect and watch it like a hawk. It is a culture we embed. I often say to the team ‘spend money as if it were your own’.
“Get the numbers right. When you’re scaling internationally, make sure you have a complete picture of tariffs, exchange rates, logistics expenses, customer margin expectations and retail pricing.
“At one time, a tariff on cat litter into North America meant that we were almost paying the customers to buy it. There are factors outside your control, so make sure you have a buffer.”
“‘Cash is King’ is my favorite line from the cash education days in the EO. This is because, when you have it, decision-making is easy and growth is certain. However, when you are not counting the cents, then the dollars never stack up – leading to tough times and uncertainty for future growth.
“Without people, businesses wouldn’t exist, therefore truly understanding what creates a winning team comes from knowing who to speak to and where to look for advice.” – Kate Save
“As a business, we have learned to always take money before you need it because, if you wait too long, the options will dry up and no-one wants to loan money if they can’t see the future growth.
“Like most businesses during the pandemic and now in this inflation economy, cash is tighter than ever before, and managing it closely everyday will help you sleep better at night. We have faced price increases on raw goods, labor, utilities and, of course, logistics, which puts a lot of pressure on a home-delivered national food company. Having the right advice and people in your business will help you to manage this well.”
“For me, business has always been about adding value and not competing on price point. We are not the cheapest, we never will be. We are not playing that game. You need to be willing to adapt and understand there is a lesson in every mistake.”
A business idea is only as great as the demand for your products or services. If the demand is there, it’s up to you to capture the market with a clear strategy and forward-planning with room to adapt and pivot when required, a solid understanding of budgets and cash management and lastly, a team that understands and shares your vision, mission and values.
Costa Vasili is the Melbourne Communications Chair of Entrepreneurs’ Organization and CEO and Founder of Ethnolink Translation Service.
Founded in 1987, one of the world’s most exclusive entrepreneur groups, Entrepreneurs’ Organization (EO) is a not-for-profit, peer-to-peer support network of more than 17,500 entrepreneurs across 60 countries. In Australia, members comprise more than 700 of the country’s top business minds across five state chapters. For more information visit www.eoaustralia.org