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Small businesses can do big things. In this new series of videos, we will look into small businesses in Australia—their humble beginnings, their growth story, and the lessons that we can learn from them.

Today, we will look into the story of Billie Goat Soap and its founder, Leanne Faulkner.

Their story

Leanne Faulkner, whose youngest son was born with eczema, is the creator and founder of Billie Goat Soap. Her young son used steroids to treat eczema, and she was concerned about the effects of long-term steroid use. This led her to do research on how to naturally treat and manage eczema.

Faulkner described herself as a frustrated farmer—her family owned a few acres of land and had dairy goats in the property. She researched about the benefits of goat’s milk in treating eczema, learned how to make soap from goat’s milk and natural oils, and used her homemade soaps on her son. Seeing the results on her son spurred her to start her goats milk soap company in 2005.

Faulkner used her communication and selling skills to bring the first batches of Billie Goat Soap into the market. She was very strategic on who, when, and how to approach about her product. She started introducing her products to health food stores, then farmers markets, then retail and gift stores, and finally to department stores.

Faulkner worked in organisational development and employee training prior to starting her company, and she used her background to grow her sales team. As a small company, she didn’t have the resources to put a sales consultant in every store. Instead, she trained the sales personnel in the retail stores that carried her product. She built strong relations with these sales people, even going so far as sending a bouquet of edible blooms in every counter with a personal card attached.

By working and leveraging on available resources, Billie Goat Soap grew and sold across Australia. It also successfully expanded its product line to include balms, skin care, and even a baby care line. At its peak, Billie Goat Soap turned over AU$2.4 million annually.

Unfortunately, a stress-fueled breakdown brought by a retail slump and the demands of running a small business led Faulkner to step down from her post and sell her company to The Heat Group in 2012. Today, Faulkner advocates for moremental health resources to support small business owners.

What can we learn

Not all small businesses have a happy ending, but there are lessons that we can learn from Billie Goat Soap’s story.

(1) Forecast what is needed to grow

Faulkner advices small business owners to plan appropriately for growth—specifically, having the right amount of funding to drive business development and expansion. While funding is important, I think the example of Billie Goat Soap also shows that having the right skills, such as management and leadership skills, is also very crucial.

And so, when we plan for growth, we need to also consider the resources needed to grow. In my video, When does your business benefit from seeking professional advice? (link forthcoming—not yet published), I share advice from Howard Schultz, the founder of Starbucks, who believes that planning to grow entails planning to hire or work with people who have the skill base and experience that matches your growth objectives.

(2) Communicate to your employees, to your customers, and to your suppliers

Clear communication helps to ensure that anyone connected to the business knows what the goals are and understands how the business aims to achieve them.”

Build a relationship with the people you work with. In Faulkner’s case, she took the effort to build strong relationships with the sales people working in the retail stores who played a major part in growing the revenue of the company.

How can you continue to build strong relationships with your employees, your customers, and your suppliers?

(3) Look after yourself

Faulkner is an advocate of mental health. She has been vocal about her stress and anxiety—and how this affected her mental health in 2011.

In my video, Overcoming Entrepreneurial Exhaustion, I discuss three things that entrepreneurs and business owners can do to overcome exhaustion. That said, mental health is a medical issue. Whilst we expect to look out for and manage stress that comes with operating a business, bringing consultants and expending your team can help in many areas. But there are instances when stress starts to change who you are.

If you feel that the stress of running a business is getting to you, please seek help from a professional because they are trained to listen unconditionally and provide much needed intervention.

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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How do these team-building activities improve collaboration in the workplace? Are they really as effective as they purport to be?

In this video, I explore why team-building activities may not necessarily improve collaboration in teams or within the workplace—and what you can do instead.

Team-building activities can be fun: scavenger hunts, obstacle courses, cooking or art classes, and even activities that mimic reality TV game shows. These can bring out unique skills from employees and allow one to see a different side of their co-workers.

In order to cater to demand, there is an entire team-building industry across the globe—and even here in Australia. And I have to admit that some of the activities they offer are fun and one-of-a-kind, as kendo and samurai classes, mountain climbing and sailing experiences, or themed scavenger hunts. These are just some of the activities they offer for team building or team bonding.

But given their costs, how effective are these team-building activities in improving collaboration within employees?

Do team-building activities work?

There is currently no hard research to support that these activities improve collaboration in the workplace. The problem is that while these activities may bond people through shared experiences and emotions—they do not last long enough to hold up under the day-to-day pressures at work.

One reason is because they do not really mimic what happens at work—they do not represent the routines that employees face on a daily basis.

Furthermore, one activity alone does not change the office dynamic. It takes sustained and recurring efforts to do that.

There are also other factors that may be preventing employees at work to collaborate effectively: unaddressed conflict, role confusion, bureaucracy, inexperienced leaders, learning gaps, just to name a few.

Why don’t they work?

Perhaps the long-term study conducted in Mars, Incorporated, the American global manufacturer of confectionery and pet food can help us understand why team-building activities don’t work.

The company wanted to improve collaboration across their organisation but was stumped when they realised that employees were not collaborating as closely as they wanted them despite providing support and following best practices. And so they sought to understand why this was happening.

What they found out changed the way they view collaboration. Most collaboration studies and best practices claimed that collaboration begins with trust and relationships—when you build trust amongst employees, collaboration will naturally follow. While trust is an important factor in collaboration—it is NOT, however, its defining factor.

The problem was that most employees viewed collaboration as a vague concept—and merely a tool to get something done. It is viewed as something important but not essential for their work.

The idea of collaboration is this: If Ted, Dan and Bill—all outstanding sales employees—put their heads together or collaborate, perhaps they could potentially sell more product.

But what the Mars, Inc. study found out was that what made Ted, Dan and Bill outstanding employees was their individual motivation to do better each time and relying on their own selves to get the job done. So, instead of depending on each other and working together—they went about their work individually to sell more product and get the job done.

They found out that Mars, Inc. had a bunch of very competent and highly motivated employees—and it was this internal motivation that was preventing people from collaborating!

What to do instead?

The key was to change mindsets. To do this, Mars, Inc. had to focus on what motivated each employee.

1. Define what collaboration is

The first step was to define what collaboration is—that collaboration is not merely a tool to get something done but a goal to be achieved. People would collaborate more if they were held accountable for it.

2. Reinforce the collaboration goal

The next step was to reinforce the collaboration goal with making teams understand why it was important. Each collaborative team member was tasked to come up with an answer to the question: Why is your working together, as a team, more valuable than just the sum of your individual efforts?  Why should we collaborate as a team? What good will it do for us?

This step was crucial to getting everyone to buy into the idea that collaborating was not only useful to the team but also crucial for their performance and growth. To get people to work together, the team had to figure out why and how that would actually improve results.

3. Identify roles and tasks

The last step was to identify roles and tasks. Specifically, what work, which specific tasks, would require collaboration to achieve those results? This step took the most time to do. Many assume that when teams collaborate, they give up control over results. But this step provided a way to define and measure collaborative efforts. For highly motivated individuals, this was very important because it made clear who was accountable for which tasks and determined how much they were accountable for.

The end result? The team that the study focused on grew 33% overall—with the primary brand in their portfolio growing by 60%.

In sum, team-building activities may be fun, but they may not produce lasting results. It may do your team of employees better by making them define what collaboration means to them as a team and how this will help achieve your business goals as a whole.

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.

Read more >

Growth is a good thing—until it is not. In this video, I discuss why growth for the sake of growth may be a bad idea for your company—and what you can focus on instead.

What is good—and what is wrong—about growth?

One of the more common growth strategies include product lines extension and business diversification. The idea is simple—offer something else or something more to your existing consumer base to increase your revenue. Many global brands and companies have used these strategies to their advantage. The idea is simple: offer something else or something more to your existing customer base to increase your revenue.

A product line extension entails using a popular and established brand name for a new item in the same product category. A successful example of this strategy is Diet Coke, which is a product line extension of Coke.

Diversification, on the other hand, entails entering into additional markets or using a different pricing strategy. Amazon, for example of successfully diversified its offerings when it launched Amazon Prime, Kindle and Alexa. Amazon Prime offered a premium delivery service for a fee, while Kindle and Alexa are two products that extended Amazon’s offerings.

Diet Coke, Amazon Prime, Kindle and Alexa all strong arguments for the viability of these growth strategies. Done well, product line extensions and diversification can lead to growth.

However, these strategies aren’t fool-proof—and they can especially lead to a financial disaster if a company uses it merely to grow without concern for how this affects the company’s overall operations or how its customers will respond to these strategies.

One example of a failed product line extension is the New Coke. The New Coke was meant to compete head to head with Pepsi. To do so, the New Coke was formulated to taste exactly like Pepsi. This left Coke fans confused—and Pepsi fans remained loyal to their brand. The product was pulled out of the market after suffering severe losses.

The Amazon Fire Phone is considered as one of—if not THE most expensive mistakes Amazon has ever made—in fact, it made US$170 million in losses. While the idea of the world’s largest online retailer launching a phone made sense in its early stages, it quickly became apparent that the phone did not meet the needs of its users, despite its many features.

If I don’t focus on growth, what should I do instead?

New Coke and Fire Phone are perfect examples to the phrase—just because you can do it doesn’t mean you should. Having a goal to grow is not necessarily bad—but growing for the sake of growth can hurt more than benefit you and your business. And many times, focusing on something else—something more important—may be what you need in your business.

What can you focus on instead?

  • Focus on what you do.

I can appreciate why one would want to diversify—don’t we always say that we should not put all of our eggs in one basket? That said, we also need to choose which baskets we put our eggs into.

Before we diversify, for example, we need to ask ourselves several questions. Do we have the expertise to diversify and offer a different product or service? Does it make financial sense to offer this different product or service? Do we have the equipment and infrastructure to support this?? Do we have the labour resources? Do we understand enough about the new market we will be entering to know what market wants?

If you find yourself responding with a “No” to any of these questions, perhaps it’s a reminder that we do not always need to diversify right now. Maybe what we need to do is to focus on what we do well—and find ways to improve on that.

  • Focus on what works.

You do not need to reinvent the wheel—especially if the current solutions or offerings work well. The New Coke was meant—in the company’s terms—to reinvigorate the market by offering a new formula. Unfortunately, Coke’s fans did not like this new formula—and openly protested that there was never a need to reformulate to begin with.

When we implement something new, are we offering a better product? Are we introducing a simpler solution? Or are we messing up with a formula or product that already works? Are we trying to reinvent something that doesn’t need reinvention? Are we changing things merely to introduce something new?

  • Focus on your customers.

What Amazon and Coke teaches us is that the best strategies and the best products are the ones that keep the customers happy. Diet Coke works because it provided an alternative for Coke fans who wanted or needed to cut back on sugar. Amazon Prime, Kindle and Alexa provided Amazon customers convenience—a better way to enjoy the products they bought from Amazon.

The New Coke and Amazon Fire also remind us that new features and supposedly improved formulas don’t always lead to products that existing customers will love.

The line that separates Diet Coke, Amazon Prime, Kindle and Alexa from New Coke and Amazon Fire can perhaps be defined by this question: who was the product designed for?

Are you offering a new product and service with customers in mind? Are you diversifying to offer better solutions or to make things more convenient for your customers?

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.

Read more >

[youtube][/youtube] The common belief is that employees are motivated when they are rewarded for their good behavior. However, this may do more harm than good. In this video, I explore how reward systems and policies can be discouraging the behavior you want from your team. Can rewards motivate behavior? In a recent study on organisational behavior, they found that employee reward systems and policies can be counter productive and may even cause poor performance. This study looked into the effects of an attendance reward program rolled out to motivate employees to come to work on time. Those employees who came to work on time every single day for the entire month were given recognition. If, however, any of the employees came in tardy at any time during the month, they will not be eligible for this reward. At the end of the program, the company found that the policy became counterproductive. In fact, the company discovered that they lost 1.4% of daily productivity! What they found out was that some employees ‘gamed’ the system. Those who knew that they will be coming in late would instead not come to work at all and use their sick days, just to maintain their reward eligibility for the month. Other employees, on the other hand, reverted back to poor behavior when they lost eligibility for that particular month. In some cases, they even became increasingly tardy. What was interesting,  is that the program was found to have a negative effect on employees who were already exhibiting good behavior prior to the policy. The “good” employees were found to have developed poor behavior—the company observed that “good” employees had increased tardiness when they found themselves ineligible for the month’s reward. How does motivation work? Motivation, as it turns out, can come from two sources: internal and external. Employee reward systems and policies are examples of external motivations—these aim to influence people to behave in a certain way. Internal motivation comes from within—this means that a person decides for himself or herself to behave in a certain way. Internally motivated people are those who take the initiative to perform well and develop their skills on their own. They are motivated by goals and objectives that they set themselves—they are motivated by the internal desire to be better. Entrepreneurs like yourself are good examples of people who are motivated internally. You do it because you want to and you believe in what you are doing. From the employees’ perspective, the study found internally motivated people are not motivated by external factors at all. In fact, they find it unfair to be rewarded for behavior that everyone should be doing to begin with—such as coming to work on time. And those who are externally motivated to behave a certain way? It turns out they’re only motivated to “earn” the reward—but not necessarily motivated to perform better. When you take these rewards away or when they find out that they are not eligible for these rewards—they go back to their old ways, and even perform worse. What does this all mean for my business? What the case seems to suggest is that external motivation does not effectively influence people to behave positively. At best, the positive results are short-lived—but in the long term, the company will find themselves worse off. “External motivation does not effectively influence people to behave positively. At best, the positive results are short-lived..” Apparently, bribing people to perform turns them into mercenaries. It degrades, and demeans the work that they do. Besides, there is already an established “reward” for performance—and it’s called a  “salary.” What seems to work is when we reward exemplary performance. If you need to motivate people to do what is expected of them, perhaps it’s time to rethink whether these are the employees you want to keep working with. 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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While over 70% of Australian businesses are family run, did you know that only 30% survive the transition from first to second generation and just 12% making it to the third generation? In this video, I explore succession issues that affect family-run businesses, and how they can address these to ensure that they not only survive but also to grow through generations to come.

There is a distinct advantage of running a family business and it lies in its culture. There is an implicit but well established way of doing things, particularly in decision-making. In small family firms, a capable and entrepreneurial leader who makes smart decisions can bring growth and profitability to the business.

But as the family business grows, size may become an issue:

  • The common belief is that the succeeding generations are ill-equipped to lead a family business because of in-fighting, lack of vision, or complacency.
  • The entrepreneurial leader refuses to cede decision-making even when the business has already outgrown the leader’s ability to run it alone.
  • Succession is a sensitive subject for many family businesses, because it involves filial relationships and possibly the reluctance to let go of control.

How does one maintain entrepreneurial drive?

To maintain the entrepreneurial drive alive and strong in a family-based firm, it will be important to address these three problems. At its core, this means once should effectively, perhaps even meticulously, plan for succession.

What does succession planning involve? Succession planning should take the following 3 areas into account.

  1. It involves planning for training

Planning for training entails understanding what kind of skills and attitudes the next generation will need to successfully run the business. It also involves knowing how they will learn and acquire these skills. What kind of training will they need: formal education, apprenticeships, or on-the-job training? This involves understanding financial reports, understanding the market, and learning the soft skills required to successfully operate the business.

  1. It involves planning for structure

The complexity of handing over a business from one generation to the next depends on many factors. For example, the process of handing over the business from the first generation to the next—maybe just a parent to a child—is different from handing over a well-established family firm that has been in business for several generations.

As a business grows, structure also becomes an issue. And structure is important because structure essentially determines who makes the important decisions in the business—and how they will be made.

  • Will the decisions come from one person from the top, trickled down to the front lines?
  • Or will it involve a democratic process wherein all stakeholders—that is, all members of the family—will be given a voice?
  • Or will the decisions be decentralized, with each member of the family assigned a particular area or unit in the business that they will be responsible for?
  1. It involves planning for when to hand over complete control

When do you plan to cede complete control of the business? What factors should be considered? What conditions should exist? What or who determines when the next generation is ready to take over the business?

These perhaps are the most contentious issues when a family business discusses succession planning. As a business owner, there is a sense of pride and ownership—after all, you started the business and you made it grow. At the same time, the next generation will have their ideas on how to operate the business.

However, instead of focusing on what is different—why not focus and plan for what every generation shares? The family business has a unique DNA—just as family members share a common DNA. This DNA resides in the business’s mission statement. While each generation may have a different way of running the business, this DNA will be passed on from one generation to another.

This DNA should give the older generations confidence in the next generations. Once plans have been laid—that is, the younger generation has been trained and a business structure has been put in place, the older generation may be able to decide more clearly on when to pass on the baton. Transition, after all, is not a question of if, but of when.

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.

Read more >