Along with principles like agile, lean, and just-in-time production, the principle of MVP—minimum viable product—is a popular buzzword in business. Especially among start-ups and small businesses with tight budgets. (Well, big businesses also have tight budgets, but in a small business, it’s much more personal.)

Except it looks to me as if many entrepreneurs might be missing the essence of MVP. I see it in businesses that waste time and money, ugly and buggy products, and services that fail to satisfy customers’ needs.

MVP too often turns out to be too much M and too little V.

MVP can be a powerful antidote to the perfectionist’s trap of failing to launch until the product is perfect, but pushing crap out the door swings the pendulum too far. Both scenarios lead to failure: customers either have nothing to buy, or there’s no demand for an inferior product.

The key to any successful MVP design is to intimately understand the customer’s needs. But how do we know whether our design will earn customer happiness points? How can we tell if our MVP is too minimal or truly viable?

Customer surveys, prototypes and opinion polls can cheaply give us some useful early indicators of demand. But they’re only indicators.

The only reliable way to validate our design is this: “Has a stranger bought it?”

Your real customers are not friends or family giving sympathy votes, or beta testers who get free access. Validation through actually selling the product is the only test for viability—the crux of MVP—does it give value to the customer?

Also key is that the M of MVP doesn’t mean incomplete, but simple. The point of M is to invest the least effort and cost to test what works. But an incomplete product probably won’t satisfy the customer’s need. This holds true for every stage of your MVP development path.

For example, early versions of Google Docs had only about 3% of MS Word’s functionality, yet it was a complete product—all functions worked—and it satisfied users' needs for simplicity and collaboration. (A Smart Bear)

Google Docs now has much more complexity than its early versions, yet the development path involved a series of complete products, albeit simpler versions of the final result.

This aligns with principle #1 of the Agile Manifesto’s 12 principles: “Our highest priority is to satisfy the customer through early and continuous delivery of valuable software.” (2001)

Contrast this with the waterfall lifecycle, which many newbies conflate with agile and MVP principles. For example, developing a software system might involve building the database, then the front-end user interface, then the functionality. Although this is an incremental development approach that seems consistent with agile principles, none of the product iterations has value to the customer until the last release.

In other words, it's unlikely you'll get to sell the final, complete version of your product if your development path doesn’t deliver products that customers value at every single stage.

Every business needs four types of people:

· Customers to make purchases.

· Suppliers to provide goods and services.

· Employees to do the work.

· Owners to invest capital.

Customers want the best value at the lowest price. Suppliers and employees want the highest compensation for the lowest cost. And owners want the best return on their investment.

Sustainability hinges on maintaining a satisfactory trade-off between these competing needs, but it's impossible to achieve a perfect balance. Some will enjoy higher prioritisation than others.

So who comes first?

I suspect most entrepreneurs would argue that their customers come first because, without them, there would be no revenue and, thus, no business. Some might opt for their employees instead, claiming that you can't sustain a good client base without a good workforce.

Personally, I believe that owners always come first, but no-one ever admits to that because it's not politically correct. We've been socialised into believing (or at least claiming to believe) that “the customer is king” and “our people are our most important asset”. But when times are tough (cf. COVID), unprofitable customers are ditched and non-critical employees are retrenched. Owners are always first in and last out.

The tendency for owners to neglect their own needs is compounded by the media's schizophrenic presentation of entrepreneurship: you're either a selfless innovator striving to make the world a better place, or a corporate sociopath who'll stop at nothing to maximise personal gain.

There's no rational (or relatable) middle ground. No-one celebrates the sensible owners who look after their customers, employees, and suppliers, while also protecting their own financial interests. We're too distracted by Elon Musk memes and Bill Gates conspiracy theories.

As an owner, you assume all of the risk. Yet most of the owners I know believe that they're doing the right thing by putting everyone else's needs ahead of their own. They usually only pay attention to their own interests when their business is in dire straits, and by then it's often too late.

Look after yourself while you're looking after your business. No-one else is going to do it for you.

Failure demand is a false demand from customers for your services. It’s the opposite of value demand. But if value demand is when customers demand a service they’re willing to pay for, does that make failure demand something customers “want” but would rather not pay for?

In a sense, yes. But it’s much more than this.

Failure demand is, “The demand caused by a failure to do something…right for a customer”. (Medium, 10 Sep 2020) It was introduced by John Seddon in 1992 to highlight the distinction between systems that satisfied customer needs versus command and control-oriented management.

Value demand looks like quote requests, purchase orders, or the sound of the cash register’s ka-ching. It’s what happens before your customer writes an appreciative testimonial. These are the activities in your business that are driven by customers wanting what you’re selling.

On the other hand, failure demand is a buggy product to be repaired, a billing query to be answered, an unfathomable user guide that needs explaining, or making another call to the dispatcher to re-schedule the service consultant who didn’t show up. Again.

It’s the vague, generic job ad that garners 100s of CVs, each earning an impersonal template rejection email or, worse, the insulting last line in the job ad, “If you don’t hear from us, your application was unsuccessful.”

Both types of demand use up your business’s capacity. The one satisfies customers and earns revenue, but the other eats profits straight off your bottom line. Naturally, we’d want to reduce failure demand to free up more capacity for value demand.

But while it’s easy spotting failure demand activities in your business, it’s much harder doing something about them. The more you focus on them, the more you’ll get. Especially as you scale your business.

Failure demand thrives with management controls like activity-based costing, growing customer support call centres, standardised job descriptions, or rigid processes that remove decision making power from customer service. This is especially problematic in service-oriented businesses, where the one-size-fits-all service is almost guaranteed to fit no one.

This is the trap of failure demand, when management attention is mis-directed at inward efficiencies instead of systemic effectiveness in satisfying the customer’s need the first time around.

Failure demand is not fixed by addressing failure demand.

Don’t set targets to control the turn-around time or cost to fix errors. Don’t build admin and reporting software to monitor fault resolution. This just entrenches failure demand.

The only sustainable solution is to focus on the system that gave rise to failure demand.

So how do you know where your system is broken and where it needs fixing?

It starts with tuning in to your customer. Ideally, if every customer is satisfied and there are no come-backs, then you’ve eliminated failure demand.

The gains are typically much better than marginal. Many service-based businesses waste over 50% of all customer service activities on fixing errors. (Vanguard Consulting) The problem with failure demand is not the demand from failures, it’s your systems that aren’t meeting customer expectations.

Eliminate failure demand and you’ll probably discover all the capacity you need to build loyal fans and grow your business.

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References:

1. “Failure demand vs Value Demand”, Medium, 10 Sep 2020.
2. “Failure Demand”, Vanguard Consulting, sourced 08 Oct 2021.

Image credit: Business News Daily

Proposed amendments to the Employment Equity Act include the prohibition of non-compliant companies from doing business with state entities. Of particular interest is that the compliance requirements for small enterprises (i.e. those employing fewer than 50 people) are lighter than those for large companies.

Unsurprisingly the Department of Labour has framed this as a victory for SMEs, but I'd argue it's yet another administrative incentive for staying small instead of scaling up. The Broad-Based Black Economic Empowerment framework, Labour Relations Act, and Small Business Corporation tax structure are just some of the other regulatory initiatives that directly encourage entrepreneurs to dial down their ambition.

South Africa's entrepreneurial environment could not be more schizophrenic. On the one hand, a vast network of government agencies, incubators, and enterprise development programs relentlessly encourage people to start their own business. But those who do, and who survive for long enough, quickly discover that there is an exponential red tape burden beyond a tipping point.

None of this makes any sense.

The cost of starting a business (i.e. actual cash outflows as well as lost opportunity costs and expenditure in kind) is very high, yet the survival rate is very low. So why are wide-eyed entrepreneurs, ill-equipped for the reality of running a business, herded lemming-like to the precipice of economic disaster?

Every other medium of economic participation has an exhaustive framework to protect new entrants from bad actors as well as their own naiveté. Job-seekers are protected by labour laws. Borrowers are protected by the National Credit Act. Investors are protected by a litany of financial regulations and agencies.

There is no safety net for entrepreneurs. Instead, those who are brave, stubborn, smart or lucky enough to beat the odds are rewarded with an avalanche of red tape that punishes them for growing their business, creating jobs and contributing to socio-economic development.

When describing your business to a stranger – a customer, a supplier or potential business partner – how do you help your listener to truly get it?

The challenge, like with sales calls or business networking introductions, is that it’s easy to launch into explanations that bore the listener with details. That’s far from the ideal conversation where speaking and listening are shared, not one-way traffic, and where both sides feel understood.

It takes time and skill to craft an opening sentence or two that gets your listener engaged. So what’s the best way to figure out what information matters?

The enterprise context model (ECM) can be a time-saving technique to literally draw a picture of who and what matters to your business. At its core, the ECM is a simple black box of your business that shows the key stakeholders that interact with it.

It’s a tool every good business analyst (BA) will know. And because every good entrepreneur is also at least conversant with key BA techniques, this should be a standard tool in every business owner’s toolbox.

So why don’t more entrepreneurs use it? Anecdotally, I think most people just don’t know about it. It’s not something I’ve seen in management textbooks or online literature for entrepreneurs. Also, it’s a simple-looking model, so maybe its apparent lack of sophistication is a turn-off?

The thing is, the ECM has immense power in its simplicity and its variety of applications. You can use it to design a new venture or product, review your business strategy, rapidly onboard new hires, or identify the best angle to open a sales call.

Here’s how it works in a nutshell:

The easiest way to start is to think of a simple linear process model of inputs, throughputs and outputs. Your business is the “throughputs” part, which we show as a “black box”.

On the left, we show key sources of inputs and on the right are the targets of our outputs. This picture already tells us a lot. For starters, it directly illlustrates where your business fits in its industry value chain.

Add to this your collaboration and accountability stakeholders below and above the enterprise box. Collaborators are vital in supporting or even outsourcing key processes, while accountability stakeholders are people we need to satisfy for governance, social or economic drivers.

If you start with my template illustrated above, you’d obviously replace each yellow stakeholder box with names of specific players, like suppliers or distribution channels, or at least aggregate each type of stakeholder. You may also want to label each arrow with the specific things that flow into and out of the business.

And that’s it. Plain and simple.

Actually, I lie.

The purpose of the ECM is not merely the output of having a picture. I’ve found time and again that the greatest feature of the diagram is not the diagram, but the conversation in developing it. The process is both conflict-rich and unifying in getting your team on the same page – literally!

And we’re only scratching the surface of the ECM’s applications. You can integrate it with other business models, like the value chain, process models, capability maps, or the business model canvas. You can use it to strategically surface interaction weaknesses to overcome departmental silos or business-versus-technology barriers.

But even with its most basic use, you’ll have a plethora of angles and stories about your business.

Most importantly, the enterprise context model will help you clarify who your key stakeholders are so you can tell each stakeholder just the right story about your business – the story that matters to them.

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Boredom is a virtue. Its absence directly limits entrepreneurial growth and success.

When last did you embrace feeling bored for an extended period, say, at least 10 minutes?

Chances are, you haven’t felt bored recently and, when you did, you most likely killed it by grabbing your cell phone. These anti-boredom devices are ubiquitous, whether we’re in a shop queue, traffic, or even the toilet.

Almost everyone has experienced boredom as a negative state, even distressing and tiring. Workplace outcomes are often negative: anger, absenteeism, errors, risk-taking.

Avoiding boredom is reinforced by social conditioning: the devil makes work for idle hands. Militaries love to make “busy work” to keep soldiers from vandalism and sabotage.

In moments of low stimulation and underwhelm, most people would rather fill slow time with an activity, even an unpleasant one. Researchers wrote in ScienceMag (2014): “[We] found that participants typically did not enjoy spending 6 to 15 minutes in a room by themselves with nothing to do but think…many preferred to administer electric shocks to themselves instead of being left alone with their thoughts.”

But boredom has a bad rap that’s just not merited.

As with all emotions, boredom has a message and drives specific behaviour in response. Occasionally, boredom is a coping response to information overload or complexity that “goes over our head”. But most commonly, boredom tells us that we lack presence, that our current options are not meaningful or novel enough. This is different from “having nothing to do” or feeling ennui—it’s rare for anyone to literally have no options to do anything. Boredom is when the available options are not compelling.

Hence, boredom drives us to change our activity, to increase stimulation or meaning. But if we can’t change our task, we’ll find stimulation in our thoughts.

Sometimes we’ll get stuck in negative thought patterns, like ruminating on our shortcomings or fixating on unsolved problems. Conversely, people “with high working memory capacity are more likely to engage in prospective mind-wandering, and…autobiographical planning.” (Consciousness and Cognition, 2011) In other words, we’ll plan and anticipate future goals.

When our thoughts turn to shortcomings, problems or goals, we’ll probably want to do something about them. In this way, boredom can enhance creativity and problem-solving.

Some research shows that an acute sense of aimlessness when bored could prompt us to ponder existential questions, meaning-of-life stuff, down to our very identity and who we want to be.

But if we’re always preoccupied with day-to-day trivia, we’ll rarely lift our heads to ponder the bigger picture and a meaningful life. (A surge in recent years of depression and anxiety disorders correlates with increased access to anti-boredom devices.)

For entrepreneurs, this can profoundly affect our relationship with our business and its raison d’etre.

Paradoxically, if boredom is an emotional trigger to daydream a healthier life and better business, then the act of envisioning the future instantly stops boredom. And implementing the plans to achieve that vision further reduces the opportunities for boredom.

So how do we exploit boredom, especially as a business owner? After all, entrepreneurs can’t ever be bored when there’s always more on the to-do list than time available to do it.

I’m obviously not suggesting boredom as the goal; rather, make time for uninterrupted thinking. Carve out small chunks in your day to meditate. Anything from 5 to 15 minutes once or twice daily can help us re-connect with our purpose. Longer chunks done weekly or monthly are good for designed reflection or a thinking framework to revise strategies and tactics.

This is the essence of strategic tasks: where the sense of pressure or urgency is low, but meaning and impact are high. It may look like we’re doing nothing, but just thinking is probably the most important activity an entrepreneur can do.

When last did you think? I mean, when last did you really stop doing to just think?

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References:

1. “Just think: The challenges of the disengaged mind”, ScienceMag, 4 Jul 2014.

2. “Back to the future: Autobiographical planning and the functionality of mind-wandering”, Consciousness and Cognition, Dec 2011.

Image credit: Wallpaper Flair

The Competition Commission vetoed the sale of Burger King to a foreign buyer based on, for the first time, BEE and not competition. (Lexology)

Is this another short-sighted bureaucratic bugger up?

Yes.

On 1 June, 2021, when the commission blocked the deal, it cited concerns over black ownership dropping from 68% to 0%. This was despite the buyer committing to 4 other significant BEE-related goals worth hundreds of millions, possibly billions, and directly benefitting over 1,250 black workers and plans for future black ownership.

Although ownership is an important BEE factor, the commission is obviously misinterpreting BEE and competition legislation. In its view, ownership apparently trumps all other factors that might support BEE, including denying present black owners from realising the value of their investment.

This runs against the intentions of BEE and the commission’s mandate. The decision directly prejudices blacks from participating in the economy by (a) blocking black owners from growing their business and cashing out and, (b) blocking or slowing benefits to thousands of black workers and suppliers.

The decision also sets a precedent that disadvantages everyone in the economy, especially black entrepreneurs. To the cynical, it’s another notch in the woke list of “white privilege” factors: reducing black ownership is irrelevant to a white-owned business.

What the commission is actually saying to black entrepreneurs is, “If you’re black, you can sell to only other black entrepreneurs.”

That restricts buyers to only South African investors (because non-South Africans can’t be “black” in BEE terms) and only those who are blacker than you.

It seems the commission is missing the point of entrepreneurship being to grow your business in order to enjoy the profits, whether as dividends or exit capital. Especially that last bit about exiting. When you sell out and you’re limited to a tiny pool of buyers, it devalues the realisable value of your business. It’s a clear disincentive against black entrepreneurs to grow beyond a small business.

It’s ironic that, instead of assuring healthy competition, the commission is stifling it. It also reinforces the concentration of black wealth amongst only those few who can afford major buy-outs and a key failing of B-BBEE not actually being broad-based.

What to do?

Fortunately, as statistics indicate, most businesses are not big enough that their sale triggers an eyeballing by the Competition Commission. So don’t fret about it. Just keep building your business.

In fact, building a business big enough to merit the commission’s attention would be a badge of honour—would you prefer an insignificant business or one that gets the Competition Commission’s panties in a knot?

Image credit: Wallpaper Flare.

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Popular business literature typically focuses on either big companies or start-ups, seldom the guys in the mid-sized sector. Yet mid-sized companies—let’s say, those with revenues of at least R100m per year—are usually much more resilient than their smaller cousins.

Illuminating data from US companies during the 2008 financial crisis show that 82% of the mid-sized players survived, while only 57% of small businesses lasted. Medium businesses also added an average of 20 jobs each while big companies down-sized. (Harvard Business Review, 2016)

We see similar results in South Africa during the lockdown crisis, where small ventures are most at risk, while medium and large companies have deeper reserves to ride out the storm.

But the challenge with inferring a company’s resilience based on its revenue, or even its net profits, can be grossly misleading.

In our M&A work, we regularly review client and acquisition target businesses. What we often find is that, although the financials might flatteringly put a business in the “M” category of SME, the underlying fundamentals are much closer to the “S”.

In other words, the business has grown, but its capabilities have not scaled. Growth is where inputs and revenue grow at the same rate, whereas scaling leads to revenue increasing exponentially faster than costs.

In scaling, the business “machine” that generates those revenues is more intelligent, efficient and reliable than a business with a more-of-the-same approach to growth.

It’s like seeing a business with R100m in revenue trapped by its systems designed for only R10m. It’s not sustainable.

If you want to scale your business sustainably—versus purely grow the financials—here are 3 areas to focus on:

1. Define your strategy by your market position and brand identity. Vision, mission, KPIs and financial projections are important, but they’re stand-ins for real strategy.

Customers won’t care about you if they can’t distinguish your brand from your competitors. No business has a strategy unless it’s driven by how customers see it and experience it.

2. Don’t replicate; build capabilities to scale. You may have found a niche and grown rapidly, so there’s nothing wrong with a “rinse and repeat” growth approach to exploit this.

But riding the crest means you risk crashing when the wave breaks. Fundamental growth means continually asking what your business must look like in order to capitalise on the next wave.

Planning for future scenarios means pre-emptively designing your talent, processes and technology to be ready for the next scenario and not playing catch up after the world has changed.

3. Systemise. I’ve noticed many of our clients baulk at the word, as if I’ve just sworn like a sailor at them. But in fact, innovation and growth are impossible without an underlying platform of stability, which can only be achieved through governance and SOPs.

Start by mapping your key value-chain capabilities, then prioritise which ones will yield the greatest value from raising their maturity. Stabilising how things are done not only increases quality and efficiency, but it literally liberates attention to focus on strategy and innovation instead of the minutiae of operational work.

Whether you’re building a lifestyle business or an asset to fund your financial freedom, use these techniques to level up your business.

(Image credit: Fintel Connect Technologies Inc.)

The balanced scorecard is misleading. Perhaps it’s even a misnomer.  Developed by Robert Kaplan and David Norton, it was popularised by management consultants (including me!) in the 1990s. The philosophy helps to balance executives’ attention on a spread of KPIs (key performance indicators) instead of fixating on, say, only a financial indicator or a growth target.

The model’s generic areas of focus are financial, customers, internal processes, and innovation and learning.  A good consultant would facilitate clarifying your vision, then devolving this into an objective for each area, which then cascade into KPIs and key results for each objective.

For big companies, Balanced Scorecard came like a panacea to corporate silos and their myriads of often conflicting targets and metrics.  The model helped simplify complicated plans and focused execution on what mattered most.

All fine and well for big business, but this is invariably the completely wrong approach in a small business.  Executing a strategy—or even tactical plans—with attention on so many areas and KPIs is precisely what blocks many entrepreneurs from success.

The concept of “scarce resources” is not merely a concept in small business, but a lived, daily reality.  As owner-managers in small businesses, every decision we make should be to move the needle on just one strategy or key objective.  There’s no luxury of a corporate head office staffed with MBA graduates fussing over exotic models.  We cannot afford to distract ourselves from a singular focus.

If you’re familiar with Balanced Scorecard and you’re keen to apply it in small business, there is a hack solution.  Instead of balancing the 4 perspectives with equal priority, arrange them hierarchically where the lower levels support and enable the higher levels.

Starting with financial objectives at the top (e.g. revenue, EBIT), identify the customer targets that will achieve this (e.g. NPS, CSAT), then the internal processes that enable these (e.g. cash cycle, conversion rates, quality), and lastly the underlying innovation KPIs that can improve all the higher-level metrics (e.g. suggestions per employee, time-to-market).

If you’re questioning why finance is the highest priority, then the more important question should be, why are you in business?  With this adapted structure of finance as the priority, there’s plenty of room to serve the community and “make the world a better place”.  If finance were not the top priority, you can’t achieve anything else.  Even not-for-profit companies know this truth about the money.

If you want entrepreneurial success, prioritise one thing at a time.

Holding out for better days is not a viable business recovery strategy. The recent re-tightening of lockdown rules should prove that this external locus of control – expecting factors outside our business to fix our business – is really no control at all.

If you’re a business owner struggling to keep your head above water, you’ve surely taken some steps to stay afloat. But maybe it’s time to get unreasonable, time to adopt extreme measures.

“Extreme” doesn’t mean cutting costs to the bone, though that might be needed, or taking reckless risks. I mean trying new combinations, or trying entirely new things.

“Extreme” includes trying on thoughts and emotions that you’ve been afraid of, until now. Here are some thoughts that might be scary, but life-saving for your business...

1. Get help

The combination of economic uncertainty, social distancing (physical isolation) and a bleak vista of the middle-distance future easily conspire to thwart even the most optimistic personalities. Getting help should span business consulting, personal mental health and everything in between for you and your team.

Take an agile approach and contract on just the next month’s quick wins or next 3 therapy sessions. A business coach can help keep you focused on near-term goals. A therapist can help preserve a positive outlook. It needn’t cost more than a few thousand rand.

2. Change your strategy

Start with your owner’s mandate: can this business give you the returns you deserve for your time and money? How can you build confidence and commitment in this?

Can you change your business model i.e. the fundamental way you make money? For example, with the property rental market declining since COVID started and, rather than holding empty rental space, property developers are switching from build-to-let to a build-to-sell model.

Analyse your product-market mix and prioritise your intersecting niches of product lines and customer segment. Which niches have the most profit, the best cash flow, the quickest sales cycle, or least competition? Can you shut down poor-performing niches and survive on only the one or two best niches?

3. Overhaul your operations

Take a zero base budget approach and imagine re-building your business from the ground up. Can you deliver the same value to customers with less infrastructure, less labour, use outsourced services, or find suppliers with better payment terms? Can you automate or exploit better technology to improve productivity?

4. Consider business rescue

In the same way that a debt rescue practitioner negotiates easier payment plans with personal creditors, business rescue can ease the burden with business creditors and develop a plan to turn around a decline. The success rate is not high – estimated at 10%-30% – but it could be a better option than immediate liquidation. (fin24, 07 Jun 2020)

Could you achieve this result informally? E.g. contract on exclusive supplier agreements to get longer payment terms and extend your payables’ days.

5. Keep comms channels open

When there’s bad news, the worst thing you can do is keep your support team in the dark. Keep your partners, staff, even clients and suppliers informed of your plans.

Now might be a good time to lean on them a little differently and ask for input in designing your turnaround. Getting their contributions also could build a sense of shared ownership, which raises their commitment to seeing you win together.

6. Micro manage your plan

This is not about micro managing people – focus on the results. Get obsessive about your short-term goals because you don’t have the luxury of waiting.

Break down your planning into shorter periods. If you had monthly management meetings, run them weekly with weekly targets and deliverables. If you had weekly team meetings, start daily stand-ups, and again, set goals to match the new timelines.

7. Do what scares you

Each of these tactics is surely not news to you, but maybe there are combinations of them that you’ve not yet thought of. As the saying goes, if you want different results, take different actions.

But different actions start with different thoughts and feelings. The bigger the result, the scarier those new thoughts and feelings.

If ever there was a time to epitomise entrepreneurship, it’s when the going gets tough. Because this is what it means to be an entrepreneur: the courage to bring things into reality that others cannot.

What do you want to achieve with your business?

Not what you tell your friends, or your accountant, or your employees, or even your significant other.

Deep down, where do you want to be? What price will you pay to get there? And how far will you settle?

There are only three types of entrepreneurs:

The survivalists battling to get through today. They tell themselves that they'll plan for the future as soon as the present settles down. Some of them mean it, but many are so addicted to the chaos and crisis management that they never escape the storm.

The pragmatists building a better tomorrow. Occasionally they're seized by flights of hyper-ambitious fantasy, but ultimately they want a lifestyle business: one that is profitable enough to look after their family and fund their financial freedom, but small enough to manage without too many headaches.

The contrarians obsessed with legacy. Their singular concern is impact at scale. They can never get big enough fast enough, and are frequently incensed by the sanguine pace of everyone else around them.

When you're all alone and no-one is watching, which one are you?

It's not easy being an authentic entrepreneur when the media is saturated with outliers. Most of us will never disrupt our industry, hammer out billion dollar deals, list on the stock exchange, or exit for a fortune.

That's OK.

What you choose is less important than the authenticity of your conviction.

“After everything I’ve put into this project, I can’t give up on it now.” Ever heard yourself say this? Or replace “project” with “business” or even “relationship” and I’m sure you’ll easily answer “yes”.

Being sentimental about things or relationships we’ve invested in – money, time, or effort – can be endearing. Imagine how cold and meaningless life would be if we didn’t value what we put into our projects, whether it’s our business, staff, clients or even personal relationships. Maybe the symbolic value of that old family heirloom outweighs its high maintenance costs?

But there’s a place where sentimentality or loss aversion gets us into trouble. Especially for business owners and other decision-makers.

If ever you’re facing a major decision, whatever you’ve invested to date is irrelevant.

In the business case for a big disinvestment – ending a major project or operation – only future costs must be factored in green-lighting the decision.

Sunk costs – expenses incurred and which cannot be recovered – have no place in your cost-benefit analysis. In deciding to end an investment, we must compare only the future costs of keeping it going against the benefits it’s expected to yield. What we’ve spent is water under the bridge – it’s never coming back.

The only time a cost that’s already spent could be a factor is if you’re certain you can recover it. But our assessment of certainty is usually clouded by our irrational emotions:

- In taking steps to recover a bad debt, at what point do you realise you’re throwing good money after bad?

- You’ve invested thousands in a marketing campaign for a product launch, but it’s not gaining traction – when do you cut your losses?

- When you’ve paid for a big-ticket conference, but you've fallen ill on the day, how sick must you be to convince yourself that your debilitated attendance is not worth it?

- Do you over-eat at the fixed-price buffet because you have to get your money’s worth?

The most common dilemma I’ve seen business owners grapple with is when an existing project or operation is challenged by a replacement. It’s even harder to kill a project if it’s already produced some assets, like useable software or production machinery. But despite whatever has been produced, assuming projects A and B will yield identical benefits, the time and money already spent on project A are irrelevant.

To choose between finishing project A and starting project B, only project A’s remaining costs are relevant. If project B’s total costs are less than project A’s completion costs, the decision is simple: switch to project B.

When you’re deciding to switch from one investment to another – a project, a business, a key relationship – the only costs relevant in your business case are the future costs.

Whether you're starting out or scaling up, time will always be your biggest constraint. There's never enough time to do everything, and growth introduces new responsibilities that further erode our finite capacity.

There are plenty of productivity "hacks" for short-circuiting habitual profligacy, but there's clearly an upper limit on how much additional time we can wring from an average day.

Moreover, Parkinson's Law advocates that work expands to fill the time allotted, so there's a good chance that efficiencies in one domain will simply lead to inefficiencies somewhere else.

Since (significantly) more time is wishful thinking,  optimising how we utilise our capacity offers more productivity potential than scavenging a few extra minutes here or there.

To-do lists (and similar tools) are a logical starting point because the benefits of planning our work in advance ought to be self-evident. However, the problem with to-do lists is that they're prone to bloat: it's unlikely that you're going to get everything done, so the incomplete tasks inevitably roll over to the following day and get compounded by the perpetual influx of new assignments.

Before long, everything important is also urgent, and everything urgent feels important.

The antidote is a to-don't list, which is exactly what it sounds like. Write down the stuff that you definitely won't do today. Not only is it incredibly liberating to take back control and cull the stuff that you know you're not going to get around to doing, it also helps to bring the really important stuff into sharp relief.

Much like completing a complex puzzle, it's a lot easier to begin by setting aside most of the pieces before starting with the corners and edges.

COVID has forced many business owners and their employees to work from home on a partial or full time basis. If you've been similarly affected, don't forget to claim any eligible home office expenses when submitting your income tax return for the 2021 year of assessment.

To qualify as tax deductible, home office expenditure must satisfy both a positive and negative test: the positive test (i.e. permissible deductions) falls under section 11 of the Income Tax Act, while the negative test (i.e. restrictions and prohibitions) is covered under section 23.

As far as section 11 is concerned, any non-capital expenses and losses incurred while generating an income may be tax deductible. Common home office expenditure that may qualify include rates and taxes, office equipment wear-and-tear, phone and internet, as well as repairs and maintenance.

In terms of section 23, deductions aren't permissible unless they involve a section of your home that:

1. You're occupying for the purposes of trade.

"Trade" includes "every profession, trade, business, employment, calling, occupation or venture", so any work you're performing from home in the ordinary course of your business ought to qualify.

2. You've specifically equipped for the purposes of trade.

This will obviously vary from one profession to the next, but a workstation with a computer will probably be sufficient for most deskbound owner-managers.

3. You're using regularly and exclusively for the purposes of trade.

"Regularly" is open to interpretation, but occasional work from home (e.g. every now and then over the weekend) probably won't cut it. "Exclusively" is far less ambiguous: your home office space can't be used for anything other than work, and will probably need to be a separate room.

Note that qualifying expenses may also be subject to apportionment using the ratio between the space dedicated to work and the total premises. This calculation must be based on the entire area of all buildings (not just the main residence) as well as exact floor area measurements (i.e. don't rely on estimates).

As always, check with your accountant for any additional provisions that may affect your particular circumstances. For example, section 23 also differentiates between variable and fixed income-earners, so your compensation structure may also impact which home office expenses you can claim.

There are very few brands that are truly remarkable and worthy of global renown. Even the most successful brands reach only an itsy bitsy fraction of the world’s population. In other words, “big” brands are successful despite their limited reach.

It’s good to have a grand vision for your business, but the surest way to get there is with small goals. That includes starting with the smallest market possible.

That might sound absurd, but aiming to please everyone leads to mediocrity. We end up with a business designed by committee.

If you reflect on when you started your business, I bet you over-estimated how big your market was. It’s normal. You wouldn’t be an entrepreneur if you weren’t optimistic.

Most start-ups and new products far underperform their up-take projections. So don’t plan to fail. Capturing the whole market doesn’t happen in one step.

When we limit our audience, we automatically pay a lot more attention to each special customer. Focusing on a select group of customers makes us lean, agile and efficient. Loyal fans can help us fix our product until we’re ready to scale up.

For your next product launch, imagine refining your marketing so that only your ideal customers respond. It will need you to define your audience precisely – vague, abstract criteria won’t do. Compared to trying to sell to the masses, a well-defined target audience is a small audience.

Then imagine if everyone who responds buys from you. Now imagine that everyone who buys from you is so delighted they’re compelled to spread the word.

Win your first loyal customers, then build from there.

If limiting your target audience sounds scary, ask yourself which you’d prefer: a mediocre business for the masses, or a remarkable business in a profitable niche?