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[youtube][/youtube] In this video, I discuss the myth that when businesses grow faster than usual, employees tend to get overworked, which leads them to either leave the company or to experience productivity declines. Today, I will bust that myth and discuss plausible explanations of why this happens and how your business can prevent these from happening. Misconceptions about causes increased employee turnover and drop in productivity The impression that most business owners have about growing rapidly is that it usually results in high employee turnover. Employees leave because the sudden spike in the workload overburdens them. Too much work can lead to productivity—that is, employees will likely work longer hours, get tired, and become less efficient in the long run. This seems a logical argument about the downside of growing a little to quickly. However, studies have shown that this is not necessarily true—that is, that high turnover and low productivity experience is caused by too rapid growth. In fact, a specific study on the reality of work done in mid-market companies in the United States that looked into employee turnover from over 800 companies and 125,000 employees uncovered some surprising insights:

 “The faster the growth, the lower the turnover—for every additional 10 percent in headcount growth, turnover was, on average, 1.6 percent lower.”

The results of the study run counter to the common but false impression that rapid growth results in high turnover. So if it isn’t growth, what causes high turnover and low productivity? What causes high turnover and low productivity? Just imagine this scenario. Your business is experiencing rapid growth, and you find that your premises might be too small for your operations. There might not be enough space or even equipment for everyone to work efficiently. While moving to a large space or buying new equipment might be the answer, you might not have enough cash in the short term to support expansion costs. You probably think that the natural course of action would be to try and generate more income to get enough cash—but then this puts additional pressure on your employees, your equipment, and even your current space. Expanding might not be feasible for you in the short run. There may be a shortage of cash to meet expansion costs. You may resolve to take on more work—more clients, more projects—to generate more income, which places additional pressure on your premises and staff. Overworked employees can cause productivity to drop. The quality of your products or your services can decline, too. When this happens, you may lose your customers to your competitors. What then? Staff morale drops, which may cause them to leave. The problem in this scenario is that the business is operating re-actively rather than proactively, which negatively impacts resources. So what is truly causing low productivity and high employee turnover? In this particular case, it is not growth but the lack of strategic planning to respond to the changes brought about by growth! If you want to know more about what causes high employee turnover, watch my 3-part series explaining why employees leave. What can you do?
  1. Have a plan. A well-thought out plan serves as a map on how to achieve growth. An effective plan will have an action plan for possible scenarios, so you are steps ahead before problems arise. Because of this, it is important to revisit the plan as often as you can—especially if you are aiming to grow exponentially!
  2. Talk to your team. They are part of the solution! Brainstorm with them, ask them where they are having problems and where they think they can improve things. Morale usually drops when people feel that they do not have support—and when things get tough, communication becomes very important.
  3. Find help! Especially if you’re having challenges yourself or if you know that this can be done better than doing it all by yourself. You are not the first business owner who has experienced growth challenges, and there are many out there who are willing to help. Find a mentor or even a business coach who has the wisdom and experience to help you find solutions.
If you are interested to know more about what a business has to go through when facing exponential growth, you can download the first chapter of the book, ”$20K to $20 Million in 2 Years” absolutely free here. The chapter talks about the differences between a good and a great business and puts out questions that make you consider how you can turn your business from good to great.

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[youtube][/youtube] Bunnings is a popular Do-It-Yourself (DIY) hardware store brand that is beloved for its tools and do-it-yourself solutions. However, a recent business decision made by this company resulted in a loss of over $1 billion. In this video, I discuss what this mistake is all about, what we can learn from it, and how this mistake can be avoided in your business. What made Bunnings popular in Australia? Founded in Australia in 1887, Bunnings Warehouse is a household hardware store that operates over 300 branches all over Australia and employs more than 30,000 employees. The company earned A$11.6 billion in revenue in 2016. Bunnings is considered a success here in Australia. Why? Here are three important reasons for Bunnings’s success:

  1. Bunnings made household hardware become accessible to everyone. And with that, they have done a great job of building and nurturing a market for people interested in DIY.
  2. Bunnings has a good marketing campaign that caters to the DIY market. No question fielded by any of its customers is too dumb for its well-trained staff to answer—customers come out of the store confident that they have the right information to tackle their DIY project.
  3. And more importantly, Bunnings has made sure to provide products that cater to what the market wants.
So, as with many successful businesses, Bunnings had this impression that since they were successful in one market, they could easily replicate this success in another market. With this thought process, Bunnings bought a range of stores in the UK to give them an immediate presence in the new market and replicated the Australian model in the UK, expecting the business model to work and the profits to start rolling in. What happened, however, was a series of bad decisions that led to a $1.3 billion write-down for the company. So why isn’t Bunnings’ working in the UK?
  1. Unlike Australian customers, their UK counterparts want things done for them, rather than do things themselves. Australians are into DIY, whereas in the UK, the preference is for Do-It-For-Me services. You can easily imagine that a DIY business model will not work well in a DIFM market.
  2. UK customers want to see aisles and displays that provided inspiration for home projects—and buy finished projects, rather than tools and parts that one needs to work on them. The Bunnings model provided the tools, but not the finished product.
  3. UK customers have no interest in outdoor furniture or BBQ grills—products that very popular in Australia but are not so in the UK. One factor for this taste difference is the difference in the weather in the two markets.
  4. The Bunnings brand is literally unknown in the UK. Coming into the market by merely taking over a business that was not doing well in the UK did not do Bunnings any favours either.
So, while Bunnings Australia’s business model fits the Australia market, it cannot be said the same for its UK market. It would seem that there is a mismatch between what customers in the UK wanted with what Bunnings UK had to offer: their product line, store layout, and displays didn’t entice customers to purchase. What lessons can be learned? From a business point of view, business arrogance is defined as follows:

“The side effect that one gets when the business under your charge is doing extremely well, even when your competitors may be struggling.”

Business arrogance makes one mistakenly assume that a successful business model will work elsewhere. The obvious lesson here is that one should not assume that one’s success in one market can be successfully replicated in another market by simply doing the same exact thing. Bunnings’s mistake was to use a copy and paste business strategy—they copied what was working in Australia and pasted the model into the UK market, without taking into account the different taste and preferences of the two markets. Do you suffer from business arrogance? If you do, you might not even realise it. I, sometimes, cannot even tell if I am suffering from business arrogance. But what I do have a group of people who I am accountable to—people who can call me out and who can tell me if I am being arrogant. You should have a similar group of people, too, as this will save you a lot of money. So what can we learn from Bunnings UK? Understand the market. Take some time in understanding the market you will enter, and particularly the potential customers that you want to serve. Understanding what they want (and don’t want) may save you from the headache of stocking up on unwanted inventory. Rationalise strategically. When cutting down on costs, do not take out the one thing that makes the most difference. When Bunnings entered the UK market, they promised to provide the “widest range, lowest prices, and the best service” available. But when Bunnings started realizing that the business was not doing well, they opted to cut down on their staff. They took out one of the important factors that would allow them to successfully provide what they promised— the best service. If you are interested to know more about what a business has to go through when facing exponential growth, you can download the first chapter of the book, ”$20K to $20 Million in 2 Years” absolutely free here. The chapter talks about the differences between a good and a great business and puts out questions that make you consider how you can turn your business from good to great.    

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[youtube][/youtube] Why do people leave the organizations they work for? Is it because of the pay? The perks? Or the lack thereof? In this three-part series, I will explore with you the common factors that cause employee turnover, the strategies you can use to counter these factors, and, finally, focus on how to deal with a common factor that many rapidly growing small business face:

A Heavy Workload.

In this first video, the first of a three-part series. I discuss the common factors found in many organizations that may be causing employees to leave at a faster pace than average. Are you finding it difficult to retain employees, even when your business is doing very well? Are you wondering why your employees leave despite best efforts? Employee turnover is costly for any organization, but more so for small businesses. Consider how much it will cost you to replace the employee—you will need to find someone with preferably the same qualifications and experience to replace that person—you also need to train the new hire, and introduce him or her on how you do things in your business. You need to do all of these at your own expense. Case study: ice cream deli in a high tourist area in Mexico Let’s consider the case of an ice cream business in Mexico. I chose this case for two reasons. Firstly, why not Mexico? Why stick to your own backyard when you can explore and learn from other businesses in other parts of the world? And secondly, this particular business was surveyed, scrutinized, analyzed, and the results of the study were published in a study that could benefit business owners like you and me. This particular case is the subject of a study published in the Journal of Business Case Studies. They wanted to know why the staff of this deli kept leaving the company even if the business was doing very well, especially during the peak tourist season. In the service industry, like any other, there are seasoned peaks and lulls. Volunteer turnover—that is, when employees decide to leave on their own—that happens during the peak seasons can pose a challenge to businesses, which can impact on their workload, stress levels and the morale of the team. The study found quite a few reasons why employees left this particular organisation. Here, I highlight the top three reasons for employee turnover. Reason 1: No clear track for career development or growth The employees complained about two things:
  1. that there were limited opportunities for career growth and
  2. that there were insufficient opportunities for training and development.
Good employees want to advance in any job in the same way that business owners want their businesses to grow. When employees don’t see themselves growing in a particular role or organisation, many of them will leave and look for better opportunities elsewhere—and at your expense. Reason 2: Bad company culture Those surveyed expressed that there were instances were supervisory and management staff showed signs of favouritism and treated some members of the team differently than the others. Many employees also felt that they were not being recognized for their hard work. Employees want to be treated reasonably. They want to see great work commended and bad work penalised. Favouritism is unfair and this can be demoralising to the members of the organisation—prompting them to leave the company. Reason 3: Demanding work schedules Work can become very demanding, particularly when the business is run by a lean team. This is the reality for many small businesses. The problem is further worsened when there are other causes for the heavy workload. Many times, this is caused by unclear workflows and processes—leading team members to be unsure of what is expected of them. When employees don’t know what to do because it was not properly explained to them or because there are no clear processes for certain conditions at work, this becomes a recipe for high employee turnover. So what should we do? The answer is to address why the employees leave in the first place.
  1. To provide career development and growth within the organisation for all employees,
  2. To develop a company culture that cultivates a safe and motivational working environment, and
  3. To develop clear workflows and processes that will alleviate the heavy workload of your team.
But how do you do that exactly? I’ll explain more in my next video! So please, watch out for the next installment of the Employee Turnover Series, as I explain how to counter the common factors that cause employees to leave. If you are interested to know more about what a business has to go through when facing exponential growth, you can download the first chapter of the book, ”$20K to $20 Million in 2 Years” absolutely free here. The chapter talks about the differences between a good and a great business and puts out questions that make you consider how you can turn your business from good to great.

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Great Business Series // Moleskine on staying relevant

When your business is under threat and new technology provides an alternative to your core product, what do you do to survive, stay relevant, and still manage to grow? What is Moleskine? Moleskine is a French-designed notebook with a legendary pedigree, known to have been used by renowned artists and writers that include Vincent Van Gogh, Pablo Picasso, Ernest Hemingway. It is a company that produces a host of different paper notebook varieties, such as journals, sketchbooks, and planners. What threatens Moleskine’s business? Analogue tools, such as journals, vinyl and film photography, have recently experienced a revival of sorts thanks to the Millennial generation, the digitalisation of our age remains as Moleskine’s, or any stationery manufacturer’s, most significant threat. The threat of the paperless office began in a 1975 Business Week article, with the introduction of computers and the prediction of automation. The influx of smartphones, tablets, laptops and a host of other gadgets continues to the push towards digitalisation and connectivity. And many companies whose main product involved paper felt the threat of the world going ‘digital’ and becoming less reliant on paper. How does Moleskine address the threats? Moleskine realised this potential threat. The understood that there is no connectivity as far as analogue tools go. To digitise your notes, for example, you need to scan each page, and it becomes a static document that is challenging to edit or revise. At the core of this strategy is Moleskine’s understanding of its customers. According to Moleskine CEO, Arrigo Berni, their market are so-called "knowledge workers"; these are designers, architects, engineers, and lawyers. A Moleskine notebook provides an add-on to what smartphones or a laptop can do, which the company saw as a need, particularly after a survey of 4,000 designers which found 65 percent of them prefer a pen/notebook combination for recording ideas. After all, once these knowledge workers hash out their ideas on paper, they will need to find an efficient way to digitise their sketches and notes, which they need to develop the final documents or plans required in their respective occupations. People like the idea of writing down their thoughts, and also be able to capture the information digitally. And so Moleskine embarked on an initiative to look at how their notebooks can be used to capture ideas on paper and digitally as well. In 2012, Moleskine partnered with Evernote to create an Evernote Smart Notebook that allows users to migrate their analogue notes into the Evernote system by taking a photo of their notes using the Evernote smartphone app. In 2017, Moleskine introduced the Smart Writing Set that allows users to write down notes on special notebook paper using an infrared pen, which in turn digitize notes in real time through a companion app. The new product provides users with flexibility, and notes can be synced with other apps, such as the Google Drive, Evernote, Apple’s Notes App, email, among others. What is remarkable with Moleskine’s strategy is that it embraced its threats by innovating its existing product line. In essence, Moleskine created a new product that seamlessly integrated analogue and digital tools, and in the process, provided a flexible solution for their customers. Today, Moleskine has a value of AUD 192 Million. It continues to innovate and use its threat to its advantage. For example, in July 2017, the company launched the Moleskine Open Innovation Program, a digital crowdsourcing platform urging its customers to submit project proposals to add to its growing line of products. What can we learn from Moleskine? The advancement of the digital age may significantly reduce the need for using paper, but Moleskine will be well-positioned to capture the market with its continued integration and innovation in the analogue and digital space.

There are opportunities to grow your business in the most unanticipated areas.

The paperless office was a real threat to manufacturers of paper products at that time, but it took an ingenious innovation of integrating a paper-based product with a digital idea to help a company stay relevant to its customers. What can you do with your product? How can you modify it to better appeal to your market? How can you take your threats and embrace them to innovate your product and take advantage of these threats? If you are interested to know more about what a business has to go through when facing exponential growth, you can download the first chapter of the book, ”$20K to $20 Million in 2 Years” absolutely free here. The chapter talks about the differences between a good and a great business and puts out questions that make you consider how you can turn your business from good to great.

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[youtube][/youtube] {The following is a summarized transcription of the video} Have you ever wondered why some businesses grow exponentially, and why some businesses fail to grow at all? Based on my experiencing working with businesses, I find that there are three general reasons that impede the growth of a business. Reason #1: The mindset of a business owner. There is a difference between an entrepreneurial mindset and an employee mindset. What prevents many businesses from growing is the business owner’s inability to switch from having an employee mindset to an entrepreneurial one. What is the difference between the two mindsets? There are a lot, in fact. While entrepreneurs work to develop their skills, employees work to improve upon their weaknesses. While entrepreneurs thrive on risks, employees try their best to minimise or even avoid it altogether. While entrepreneurs delegate tasks and other responsibilities, employees try to do as much as they could themselves. It is common for many first-time business owners to develop and possess an employee mindset, especially when they’ve only recently switched careers from being an employee to starting their own venture. However, business owners need to shift their mindset if they want their business to grow. What can they do?

  1. Learn to get comfortable with the uncomfortable. Having a business means embracing uncertainty, and understanding that discomfort is part of the entrepreneurial life. On the bright side, the best and most rewarding ideas develop outside of one’s comfort zone.
  2. Enjoy breaking the rules. Some rules are meant to be broken (but this has nothing to do with doing anything illegal or breaking the law!). But the intent of breaking rules should be to find ways to improve—to challenge the status quo in order to innovate and provide better solutions to existing problems.
  Reason #2: Lack of experience and expertise The lack of business acumen can lead to several poor decisions: poor planning, procrastination and poor time management, “putting all eggs in one’s basket,” poor record keeping and financial controls, poor money and cash flow management, among many other things. This may even cause the demise of your business. The solution, however, is not to try to improve on each and every aspect that you lack expertise in—remember, that is the employee mindset! The best thing to do is to acknowledge your strengths and weakness, and find help in the areas that you lack experience or expertise in. Do not be afraid to ask for help! You can hire someone who will complement your skills, or you can find a business coach who can provide you with guidance on how to navigate your business. As a business coach myself, I help businesses by providing a sounding board for their ideas, by providing an objective point of view of the competence and deficiencies within the organization, and by providing recommendations on how to improve certain areas of the business. Reason #3: Failing to reinvest back into the business You cannot grow your business by doing the same thing over and over again. In order to grow, you must reinvest a part of your profit back into the business. There are several ways of doing that.
  1. You can grow your marketing and sales expenses.
  2. You can increase your assets, such as your machines, equipment, or even your shop or office.
  3. You can extend your inventory.
  4. You can hire new staff or outsource some areas of your operations to allow you to focus on what matters.
Another area that many business owners forget to do is to invest in themselves. Remember, an entrepreneurial mindset requires one to improve upon skills and expertise. By investing in yourself, your business’s greatest asset, you also invest in the future of your business. Your business’s growth requires that you grow, too, as a business owner. If you are interested to know more about what a business has to go through when facing exponential growth, you can download the first chapter of the book, ”$20K to $20 Million in 2 Years” absolutely free here. The chapter talks about the differences between a good and a great business and puts out questions that make you consider how you can turn your business from good to great.

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