THE ENTRECODE BLOG
How has ‘Moneyball’ ideas helped entrepreneurs build successful businesses?
In his book ‘Moneyball – The Art of Winning an Unfair Game’ Michael Lewis describes how Billy Beane’s analytical evidence based approach had transformed the fortunes of his baseball team ‘The Oakland Athletics’. What has this got to do with entrepreneurs? We have used the principles of the ‘Moneyball’ approach to help entrepreneurs improve the performance of their businesses. You too can enjoy the benefits. Here are some examples:
Customer Perception Surveys reveal your customers key buying priorities, how you and your competitor’s rate on them and what you need to do to make more sales.
“This process helped us to focus our efforts and create more business.” Paul Mackie – CEO, Rex Procter & Partners
Detailed product profitability analysis provides critical insights into where you are really making and losing money.
“We were surprised to find we lost money on our core product, which we loved, but could make much more money by sticking to decking which we did and tripled our profits.” Mark Eggleston – Owner, W J Components
The easiest way to make money is to stop losing it and the process of fixing system slippage finds the hidden profits within your business.
“We used the process to identify over £400k of costs which we discovered were out of control.” Simon Keats, MD, North Staffs Caravans
These are just a few examples of how we have applied the ‘Moneyball’ principles to help entrepreneurs to boost their businesses. The key lessons from applying ‘Moneyball’ to boosting businesses are:
- Identify a good internal researcher/analyst
- Get a toolkit or process
- Dive deep on the detail
- Hire an experienced external facilitator to help
For more information on how you can benefit from the applying the ‘Moneyball’ principles to boost your business call David on 07710 914171.
How to significantly boost your profits in three months…..
In my consulting practice one of the most successful contributions I ever make to a client’s business is by fixing system slippage. This rarely fails to identify significant opportunities to improve a client’s profits.
I developed a toolkit which has been used by many clients to help to improve their profitability. The toolkit is here so have a go yourself and let me know how you get on.
Good luck!
Biz Week Event 2014
EVENT TITLE: Finding Your Hidden Profits How you can replicate the Keepmoat success story
WHEN: Tuesday 3rd June 2014, 10am – 11:30am
WHERE: The Village Hotel, Hull
DETAILS:
David Hall, the BBC BAFTA award winning business consultant, will present this workshop with Terry Bramall, the original owner of Keepmoat, one of Yorkshire’s most successful businesses.
David and Terry worked together for over 35 years, building the business from £25m to £750m. Over a 10 year period from 1997, Keepmoat posted profits of 10% per annum, whilst its competitors struggled to make 4%.
- What were the key building blocks that helped to create the success?
- How did they create the unique team that produced industry leading profits?
- What did they do to capture the hidden profits within?
Many people, particularly in the City, wondered how it was done. You will find out by attending this event.
During the session David and Terry will share their experiences to help you to replicate Keepmoat’s success.
COST: FREE (70 places maximum)
WHO SHOULD BE THERE: Business owners, CEOs, MDs, FDs, and Directors of large and medium sized businesses.
HOW TO BOOK: Email Lynn Bradshaw: lynn@davidhalluk.com
Finding Your Hidden Profits……
My job is to help my clients to find the profits which are often hidden away in their business.
You can divide my clients up into three groups:
- Those who struggle to break even every year or make a small profit. The hidden profits here are found by applying the principle ‘the easiest way to make money is to stop losing it’. Back to basics tools like Zero Based Budgeting, Fixing System Slippage, and ‘Moneyball’ type analysis generally reveals significant hidden profits which can be quickly liberated. This normally lifts them to their industry average.
- The second group flat line along around the norms for their industry often 1-5%. Some are happy to do this and that’s fine, others want to grow the business or prepare for exit and need to boost profits in order to achieve their goals. The key is to help them look at their business differently, the opportunities to boost profits come from in-depth analysis of where money is made and lost in existing products or markets. Exiting loss makers and refocusing on profit makers is a good start. Then a range of tools and analysis can be used to really drive up margins including customer perception surveys, efficiency groups, better alignment between goals and strategy and an array of others. A number of businesses have become market leaders in profitability in their industry using these approaches.
- Finally the third group consistently make profits 2/3 times the average for their industry (these are rare). The key here is to conduct a detailed risk analysis so they don’t go backwards. Most business failures are generally preceded by a period of sustained success, this unfortunately only becomes obvious after their demise.
I will be presenting a workshop at BizWeek 2014 in Hull for CEOs and senior managers on how their businesses can find their hidden profits.
Watch this space for more details…….
Five things you probably didn’t know about successful entrepreneurs
- A high percentage of entrepreneurs are dyslexic, but this does not stop them from being successful. If anything, it drives them to want to succeed.
- Many entrepreneurs left school early with no qualifications. This seems to provide the energy to want to prove to themselves and others that they are OK.
- People often become entrepreneurs because they want to be independent and be in control of their destiny, not usually to get rich quick.
- Many entrepreneurs are quite introverted and shy but they come alive and become animated when you ask them about their business.
- Once successful, many are keen to contribute to their community or industry sector.
HOW TO BECOME A ‘ROCK STAR’ ENTREPRENEUR
Great entrepreneurs think and behave in unique and idiosyncratic ways. Getting and staying in the zone enables them to be innovative, focused and inspirational. One tool they use is personal mantras to help them control their self-talk and to keep them going when the going gets tough. You can do the same and achieve results way beyond expectations. Here’s how:
Typical Mantras:
Getting into the Zone
- ‘Keep the eyes on the prize’,
- ‘Just do it’,
- ‘Stay focused’,
- ‘Get into the zone’
Staying in the Zone
- ‘Avoid the energy vampires’
- ‘Prioritise and sacrifice’
- ‘First things first, second things not at all’
- ‘Plan A didn’t work, so now to plan B’
- ‘You always get one of two outcomes, success or learning – and I value both’
- ‘Keep it simple’
So use these mantras or get your own to help you get and stay in the zone. You will become much more efficient and productive when you do.
How your business can innovate the entrecode© way
A recent study at Harvard Business School revealed that 90% of existing businesses said that innovation was a priority and the same 90% said that they struggled to do it!
Why? We researched the problem back in 2000 and developed a solution that has worked for many businesses since. Here is how to do it:
- Find the entrepreneurs in your business and give them the challenge of innovating. About 1:10 people have natural entrepreneurial talent, so liberate them. Bureaucrats or steady state managers find innovation a problem.
- Create an achievement culture around the entrepreneurs.
Corporate or Management Culture – Power and Control
- Rules
- Procedures
- Job descriptions
- Meetings
- Systems
- Formality
- Rule compliance
- Politics
- Risk avoidance
Innovation Culture – Achievement
- Autonomy
- Ownership
- Trust
- Break the rules
- Risk taking
- Informal
- Trial and error
- Intuition
- Seek forgiveness, not permission
95% of all innovations in the last 100 years have come from small entrepreneurial firms of less than 20 people operating in an achievement culture.
So there is your recipe for success for introducing innovation into your business.
3 ways top performers get into the zone
High performing people including entrepreneurs, athletes and musicians perform at their best when they are ‘in the zone’. This is a state of optimal functioning both mentally and physically.
How can you get into the zone and fly?
- Keep your eyes on the prize. Keep your vision of success at the forefront of your mind so you can “see it, smell it and taste it”, as one entrepreneur told me. This should enable you to function with a positive attitude, avoiding distractions and staying persistent.
- Start something. Disorderly action is better than planned inaction every time because you get success or learning. When I am writing a book or a report I just sit down with a pen and a clean sheet of paper and start. Things start to happen and I get energised and focused.
- Get a routine that works for you. My daughter Penny got into the zone during her exams by using the same routine every time. She didn’t talk to other students beforehand and get worried. When she got into the exam room she placed her watch on the table in the exact same place, same with her pens and equipment. She read the exam paper slowly right the way through. She then started and allocated herself ten minutes at the end to review. It worked for her every time.
You know when you have been in the zone because you are focused, at your best and time elapses at a different speed. So try these techniques or develop your own and good luck in learning to fly!
5 Great Ways to Innovate
Many clients’ issues require more innovation in order to boost their business. Here are some of the ways we have helped them to innovate:
- Find the entrepreneurs within the business (about 1:20) using the Entrepreneurial Potential Report (EPR) Saville Consulting and set them the challenge of innovating. This unleashes their natural talents and energy.
- Create an achievement culture. Innovation cannot occur in the traditional power and control culture that prevails in many businesses so get a small group of people (preferably entrepreneurs) and create an achievement culture by agreeing some important ground rules e.g. there are no rules!
- Ask the question “who does this best in the world” and go and find out how they do it. We went to Walmart to find out how they bought and this added tens of millions of pounds additional profit to my client Keepmoat.
- Give smart young people e.g. graduates the challenge of innovating. They are less likely to be tainted by the existing culture and norms so they are more likely to look at issues through a fresh pair of eyes. Our EPR research shows that graduates are better at spotting new opportunities whilst existing managers are better at building capability.
- Try small scale pilots which are low risk but you get either success or learning from them. Make sure you have short feedback loops. If this works scale it up, if it doesn’t, try something else. If you don’t take any risks or make any mistakes then you are unlikely to come up with anything new!
Good luck in boosting your business in 2014.
The five common mistakes that entrepreneurs make that you should avoid
Working with entrepreneurs over 35 years I have noticed a familiar pattern in the mistakes they make that affects the success of their business.
- No strategy. Entrepreneurs often have a short attention span dealing with the immediate challenges they face. They confuse strategy with long term financial planning which they usually avoid. Strategy is the DNA of the business, deciding the mission, vision and values gives the business an identity and adds real value.
- Find it difficult to let go. Entrepreneurs often want to try to do everything themselves. They need to learn to pick the right people and to delegate. This mistake limits the growth potential of many businesses. Ironically, the more they delegate the more they control.
- Too busy working IN the business to work ON it to make it better. Once entrepreneurs learn to let go to grow they can stand back and work on the business to improve it. Without this input the business stays the same.
- Not building a competitive advantage and competing on price. Entrepreneurs often make the mistake of trying to be different but they actually need to be better than the competition. Their product or service must be better than the competition in order to enjoy competitive advantage and higher margins.
- The net result of the above is often low or poor margins. The mistake then is to cut costs in marketing, service or quality in order to boost margins. Actually what they need to do is address 1 – 4 above then 5 will happen!
So, learn from those who have gone before and enjoy high sustainable margins.
