Coaching SMMEs to remove risky business assumptions

An opportunity for impact

• Coaching SMMEs to remove risks

• Better deals with less risk

• Can assess the entrepreneurs progress over time

Effectual thinkingThe logic of expert entrepreneurs

Source: Sarasarvathy (2011)

3 40 start upsto

$200 million to $6 billion

1IPO

Bird-in-the-hand principleBegin with your means

People

Knowledge

Resources

Market

GapPlan

Market

Research

Causal thinking

Opportunities

Knowledge

People

Resources

Outcome

Outcome

Outcome

Outcome

Outcome

Outcome

(Imaging a possible new end using a given set of means)

Effectual thinking

Opportunities

Knowledge

People

Resources

Outcome

Outcome

Outcome

Outcome

Outcome

Outcome

Effectual Thinking

(Imaging a possible new end using a given set of means)

Gum trees

Piping

Library

books

Bicycle pump

Motivation to

help

Think a lot. Let’s create a plan.

Make progress with what you have.

Minimum variable product

MVP definition:

A product you can create quickly that customers will use/buy

LESSON: LEVERAGE OTHER BUSINESSES

2 HOUR SEMINARS Book

Lesson: Be creative with delivery

ANAT FOOD CHAINFLEE MARKET STAND

Lesson: A low cost way to deliver the product

Lesson: Manually deliver the product

Skinned Wordpress sight

Filemaker to create PDF coupons and emailed

LESSON: USE EXISTING TOOLS AND PRODUCTS

LESSON: DO IT MANUALLY

Lesson: Leverage other businesses

2 hour seminars Book

Lesson: Be creative with delivery

ANAT FOOD CHAINFLEE MARKET STAND

Lesson: A low cost way to deliver the product

Lesson: Manually deliver the product

Skinned Wordpress sight

Filemaker to create PDF coupons and emailed

Lesson: Use existing tools and products

Lesson: Do it manually

Affordable loss principleProtect the downside

Richard griffin

Richard griffin

“It was the first time in business that I felt real shame,” he says. “I couldn’t pay bills, I couldn’t pay staff, family and

friends who had invested in me and the business lost huge amounts of money and it was all because of me. It was the first time in my life where I just couldn’t find a way to come

up with a second plan. There was this thing that was beyond my control that I couldn’t fix – and it just broke me.”

Risk takers?

Risk takers?

Risk Taking

I’ll start cheap make sure I… cover my cost don’t have to take huge risks…. uhm… one thing I’m sure about my

experience… never take any risk if you can help it… it is just the opposite of what most people think about….

Entrepreneurs [E5]

Source: Omidyar (2002)

“Back when I launched eBay on Labour Day 1995, eBay wasn’t my business – it was my hobby. I had to build a system that

was self-sustaining… …because I had a real job to go to every morning. I was working as a software engineer from 10 to 7,

and I wanted to have a life on the weekends. So I built a system that could keep working – catching complaints and

capturing feedback – even when Pam and I were out mountain-biking, and the only one home was our cat.

Jean Marc-Tostee

Time

Size

‘92 – Gotcha, Wrangler Agencies

& Biotribe factory

R30 million – ‘98

100 employee – ‘97

R50 million - ‘01

Time

Size

‘92 – Gotcha, Wrangler Agencies

& Biotribe factory

R30 million – ‘98

100 employee – ‘97

R50 million

Chinese Imports

R6 to R13 to dollar

- ‘01

Having lost my business so suddenly, I was now

setting up a licensing base and succeeding in

spreading my risk across a number of products,

licensees and manufacturers. We have the brands,

they have the factories. With this licensing model,

we find the best manufacturers and negotiate a

win/win partnership with them – I provide the

product ideas and brand knowledge and they

produce products they are already successful at

making, but under our brand. Together we have a

thriving business.

Time

Size

‘92 – Gotcha, Wrangler Agencies

& Biotribe factory

R30 million – ‘98

100 employee – ‘97

R50 million

Chinese Imports

R6 to R13 to dollar

2 employees – ‘05

- ‘01

R160 million – ‘09

’04 – 20 Licenses

‘01 – Licensing model

With the benefit of hindsight, I know now that back

in 2001 the business I had built was hugely

exposed to external risks. Today, I would not

employ that many people. I would not make and

distribute so many diverse products from just one

facility. It makes far more sense to outsource

production to manufacturing and distribution

experts who have all the expertise and channels in

place. I would, and do, take forward cover on any

international forex importing and exporting we do.

I keep overheads to an absolute minimum and

maintain tight control over all financial aspects of

the business.

Do everything you can to lower the risk of failure

and protect yourself if you fail.

I always go into a deal anticipating the worst. If you plan for the worst—if you can live with the worst—the good will always take care of itself.

Coaching SMMEs to remove risky assumptions

What would you suggest this entrepreneur do? (15 mins)

What would you suggest this entrepreneur do? (15 mins)

Conclusion

100 MILLION TREES SAVED

HAGEN STEHR

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