Changing Gears

How to Take Your Kiwi Business From the Kitchen Table to the Board Room

David Irving, Darl Kolb, Deborah Shepherd, Christine Woods

• Publisher: Auckland University Press
• Year: 2013
• Print ISBN: 9781869404505
• eBook ISBN: 9781775580386
• Topic: Business
• Subtopic: Entrepreneurship
• Index: Business

Rooted in the success stories of real companies, this guide presents a concise outline of the key business principles behind generating growth, profitability, and market penetration. Illustrated throughout with diagrams and exercises, this accessible handbook provides answers to the most critical questions regarding business models, financial drivers, leadership, and team-building. From start-up entrepreneurs and established family businesses to farms and factories, this examination draws on real-life business careers and international research, celebrating the vision, determination, and tenacity of owner-managers. Stressing a healthy balance between professional and personal lives, this analysis is the essential toolkit to conducting small to medium-sized businesses more efficiently.

1.
Paying your own wages

In this chapter, we introduce you to some owner-managers in New Zealand and remind you of how important you and they are to the country’s prosperity. As an owner-manager, you and your business are unique. You may be an entrepreneur, or part of a long-lived family business, or you may have purchased a going concern. However, you are likely to share some of the following important characteristics with other owner-managers. You (and your business):

• represent a significant proportion of our national economy;

• make up the majority of every industrial sector in New Zealand, i.e. agriculture, primary production, tourism, manufacturing, food and beverage, wholesale and retail, etc.;

• are part risk-taker, part conservative, and have real assets and wealth at risk every day;

• contribute to your community directly or indirectly in many ways; and

• unlike corporate or professional managers, pay your own wages!

Bill Day began his business as a commercial diver in Nelson when someone asked if he could help pull up a sunken vessel. From there he jumped into larger and larger projects, eventually serving the oil and gas industry in New Zealand. Since those humble beginnings Seaworks has expanded to establish bases in Wellington and Dubai, still serving seagoing infrastructure projects (oil, gas and telecommunications), but on an increasingly larger scale and with increasingly sophisticated technology. The company now owns and operates under-sea robots and has purpose-built ships built to its own customised specifications. There are two points to this story. The first, of course, is that this is a high-growth, highly technical New Zealand business with offices here and in the Middle East. And the second point is that you probably have never heard of Seaworks or Bill Day, which leads us to why we wrote this book. It was to address, inform and maybe even enlighten those of you who own and manage your own business in New Zealand.

New Zealand owner-managers are the understated heroes of the New Zealand business landscape. You are essential to the success of our economy but little is known about you. Of course, there are ‘how to’ books for ‘small business’, but you already know how to run a business. You already have turnover in the millions, or at least over a million dollars a year. Your questions are not about if you can make a go of it, but rather if, when and how you can grow, sell or re-invigorate your existing business.

Getting to know you

In our experience working with New Zealand owner-managers, we have found significant differences between you and the typical MBA-type corporate manager. Here are some key distinguishing characteristics worth mentioning:

1. You are understated, rarely showing signs of bravado or elevated self-importance. Ironically, the richer you are, the less pretentious you tend to be. Many wealthy owner-managers drive a ute to and from work.

2. Short-term personal wealth and luxury is not so important. The idea that owner-operators are not interested in growing their businesses once they have a ‘beemer, bach and boat’ is overstated — at least in our experience with growth-oriented companies.

3. You have taken risks to get where you are. However, as your company grows, you find yourself thinking differently about risk, because now risk involves more than just money. It involves people you care about.

4. No one understands the business like you do, making you feel quite alone in your business. The accountant prepares standard financial statements, often showing no appreciation of your company’s business model. Your lawyers might lack business savvy and you seldom have open, honest discussions with your bank manager. Your partner at home does his or her best to understand the business, but can easily tire of day-to-day business problems.

5. Though you have business savvy, you seldom think conceptually about ‘the business model’ that underpins your business. You struggle to imagine the sorts of new business structures, new markets and new customers that may be required as your firm gets bigger.

6. You rely on your senses and intuition and will frequently decide what to do much more quickly than managers in bigger businesses. Once you get an idea or solution in your head you get on with it, usually telling your staff rather than asking them for their opinions. In short, you make big decisions in the same way you make small decisions.

7. You are ‘comfortable in your own skin’. You know who you are and if you didn’t keep your feet on the ground, your staff would label you a phony leader.

8. You are both generous and tight. You may be quite generous to the sick employee or the local school, but you watch your pennies when it comes to discretionary expenditure like research and professional development.

9. Loyalty is hugely important to you. You are loyal to your staff and expect loyalty in return. You may be especially loyal (sometimes too loyal) to those that were with you from the beginning of the business.

10. You are time poor and not in good physical shape. Willing to solve business problems by working ever-increasing hours, you sacrifice yourself for the good of the business and ignore exercise, healthy eating and sufficient sleep.

11. Family matters often infiltrate your business. Ownership structures, sibling rivalry and questions of fairness all affect the family-owned business, with or without family members physically in the business.

12. Finally, your management capability is limited. Even if you are an excellent manager yourself, you struggle to expand this capacity throughout the business. Developing a business plan, operational excellence, human resource practices, marketing strategies and creating a senior leadership team represent major challenges for you. At some point, a lack of management capability begins to have a real bearing on the ability of you and your firm to grow.

PROFILE SEAWORKS

Seaworks today is a sophisticated international business, offering marine expertise and services here in the Pacific and the Middle East. However, this is a far cry from its early beginnings when founder Bill Day started the business as a dive school. Soon people started approaching Bill and his colleagues to take on commercial jobs and as Bill says, ‘The jobs just got bigger and more complex and we were getting paid to have “boy’s own fun” and to do something we loved.’ It wasn’t long before they were asked to lay the electrical cables between the North and South Islands. Eventually a recompression chamber was needed and at this point the adventure games just got bigger. So too did the stakes. The credit cards got ‘cranked up’ and Bill has vivid memories of the bailiff knocking. The evolution, according to Bill, was from a bunch of cowboys to a genuine business that had something to lose. It was also an evolution from an opportunistic start-up willing to take any job going to survive and generate some revenue, to a strategic organisation — one that soon had to choose between more than one opportunity and come up with the right criteria to make those choices.

Today Seaworks is a marine services company with specific expertise in a small number of chosen fields. ‘We are big enough to be able to bring significant resources to a project, yet small enough to still deliver focused marine excellence. We are people with passion, expertise and drive.’ Seaworks offers a commitment to cost-effective client solutions. ‘Seaworks is all about doing things smarter, faster and more efficiently than anyone else. We deliver innovative solutions for our customers — solutions that then become the industry standard worldwide.’

Seaworks is recognised internationally for its expertise in maritime cable laying and surveying of oil and gas pipelines and platforms. The company has exported to many markets, but now focuses on the Middle East, with a base in Dubai and contracts in Saudi Arabia, Iran, Egypt, Qatar and the United Arab Emirates. About half the company’s revenue is export-based, with that percentage growing. It owns a fleet of custom vessels, including seafloor robots and state-of-the-art live-aboard facilities to attract and retain the best people on its 130-member staff.

Former Entrepreneur of the Year, managing director Bill Day holds a BA, LLB and MBA from Victoria University. Combining personal passion with his business’s logistical capacity, Bill has undertaken ancillary projects like working for Steven Spielberg on a film set in Fiji and a 1995 expedition to the sunken General Grant and its treasure in hostile sub-Antarctic water.

Taken together, these characteristics of owner-managers should remind you how intertwined you are with your business. You may often feel that you are the business or that the business is your life. Others around you may feel that way too. Of course, there is undoubtedly a large overlap between you as owner-manager, the business and your life. On the other hand, each of these elements should have a life of its own. Your business should be able to operate without you in it. And despite your great love for your business, you may want to be a mother/father, daughter/son or community member and not ‘just’ your business role. We recognise this competing and complementary intersection of interests and portray them together as key intersecting elements of the owner-manager’s world.

Owner-managers operate at the intersection of their business as a going concern, their role in business and their personal life.

The three circles

We see the owner-manager’s life as three overlapping circles, as shown in Figure 1.1. You probably focus a lot on just one circle — the business. This is good because seeing the business as a going concern, independent of you, is an important way to improve the likelihood that the business could run without you. At some point, however, you may find yourself too focused on the business. It is consuming all your time and energy and ultimately this will limit your capacity to manage the business effectively. This syndrome is quite natural as the demands of the business squeeze other realities from your consciousness. Indeed, much of the support you have received so far — such as formal training, books or magazines, even most mentoring — probably focused primarily on the business. In this book, we will address other aspects of your business and personal life.

The good news is that you get to design your own organisation. The bad news is that it generally takes a lot of talented and experienced people to design an effective organisation and you have … you.

The book will address the traditional circle of ‘the business’ (see Figure 1.1) including its purpose, values, competitive advantage, core competence, strategy, business model, assets and liabilities. We will help you develop a business profile that describes the current state of the business and also help you consider next steps for your business in the future.

‘You in business’ captures the way you conduct yourself in the enterprise or enterprises that you own or of which you are a partial owner. Typically, you are the boss, which means you direct, manage and lead the business. Your role in the business may have been inherited from your parents or from a former owner. It may reflect your unique approach to management or it may be just doing what you think you should be doing. The good news is that you get to design your own organisation. The bad news is that it generally takes a lot of talented and experienced people to design an effective organisation and you have … you. Basically, you have the opportunity to design your own boat — while sailing it! If only you could step off the boat and not be submerged in an overwhelming sea of daily priorities.

FIGURE 1.1 THE THREE CIRCLES

The ‘you’ circle is about just that, you yourself, a person who happens to own a business, but who also may want to make a life, not just a living. Your desired life might include good health, a happy and fulfilling relationship with your life partner, children and friends, and even some reflective time for yourself. This good life is not independent of, and need not run counter to, your business interests. If you are in good personal health and a strong state of mind you are better able to contribute to your business. Especially as an owner-manager, your health and well-being is pivotal for the three circles to work together as a whole. And when they all work together, life is invigorating and fun. As Bill Day says, ‘I’ve always tended to see the upside rather than the downside. We’ve done many things over the years that are uncomfortable, but you just have to deal with that. I don’t think of fear and I don’t differentiate between work and play. To me it’s a hell of an adventure and I see the world as a fun place.’

EXERCISE 1.1

In each of the three circles, identify the key issues that concern you most at this time.

YOU __________________________________________________

YOUR BUSINESS _______________________________________

YOU IN BUSINESS __________...

Table of contents

• Cover Page
• Title Page
• Copyright Page
• Contents
• Acknowledgements
• Prologue
• 1 Paying your own wages
• 2 Making money today: your business profile
• 3 Being at the top: lead, follow or get out of the way
• 4 Management matters: it’s people, people, people (and systems, processes and technology)
• 5 Keep on going, you’ll be dead soon: staying alive and healthy in your business
• 6 Making money tomorrow: where to go, how to grow
• 7 Where to go when you don’t know: perspective, advice and wisdom
• Index
• Footnote
• Back Cover