Biz Bytes
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Biz Bytes
Your Business is an Asset - Are You Maximizing Its Value?
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Have you ever wondered why some businesses thrive while others with similar products merely survive? The secret often lies not in what they do, but how they think about what they do.
Dom Bish joins me for a fascinating deep dive into the critical difference between strategy and planning—a distinction that could transform your business approach. With five years at the helm of Bolster Risk Management and over a decade in financial services, Dom brings practical wisdom about creating genuine business value.
We unpack the concept of finding your unique "business sandpit" where you can outperform competitors. As Dom explains, "The blue ocean is where you want to be. Where's that sweet spot?" With approximately 590,000 small businesses in New Zealand competing across limited industries, carving out your distinctive space is more crucial than ever.
The conversation takes surprising turns, revealing how businesses often misunderstand what industry they're actually in. McDonald's isn't just in fast food—at the corporate level, they're fundamentally in real estate. This kind of strategic clarity changes everything about how you position and grow your business.
Perhaps most valuable is Dom's framework for thinking about your business as an investment asset. Just as property investors buy, add value, protect their asset, extract income, and eventually exit—business owners should apply this same strategic thinking to their most valuable asset. Yet many fail to plan their exit strategy until it's too late to maximize value.
Whether you're a solopreneur or leading a growing company, this episode will challenge you to elevate your thinking from day-to-day planning to genuine strategic analysis. As Dom powerfully states, "Strategy is not a plan. A plan is not a strategy." Understanding this difference could be your competitive edge.
Ready to transform how you think about your business? Listen now, and discover why the best time to start thinking strategically is today.
Kia ora, and welcome to Biz Bytes, the podcast that takes a deep dive into the world of business and technology. I'm your host, Anthony McMahon, On this episode. I'm thrilled to share an absolute cracker of a chat I had with Dom Bish. Dom shares his fascinating journey through financial services and we really get stuck into some core concepts vital for any business owner. We explored the critical difference between strategy and planning, highlighting why strategic thinking isn't just an option but a must-have for success. Dom broke down everything from industry analysis and exit planning to boosting productivity and creating value through smart revenue growth and cost management. We even touched on the time value of money and why acting on your strategies now is paramount. So if you're keen to unpack some seriously valuable business insights, you're in the right place. This episode is packed with takeaways that will get you thinking differently about your own business strategy. Let's get into it. Morning, Dom, Great to have you on the show. How are you today?
Speaker 2:Mate, it's a pleasure I'm bouncing, I've got three coffees in me and I'm ready to go.
Speaker 1:You're two up on me for today, so we'll see if I can keep up with you, Nice. You're two up on me for today, so we'll see if I can keep up with you, Nice.
Speaker 2:Hey look, Dom Bolster, Risk Management tell us a little bit about what you do and how you ended up in that role. Yeah, interesting. So Bolster is back in three days' time and the 1st of June will be five years old, so we are a COVID baby. Yeah, so I've been in financial services all up. I don't know where I'm at 11, 12 years. This is my third stint in financial services, and when I came back in I was working with an advisor who's out of Christchurch and at the time it was really exciting because the industry was going through a massive change. And when there's change I see opportunity. And as I was writing my 70-page business plan, there's this little flu coming out of China next minute. So that was fun. And two weeks after I handed my notice in to the guy I was contracting to, my wife was made redundant. So here we are with new business no steady income, mortgage pandemic what could possibly go wrong? And yet here we are, five years on.
Speaker 1:And look how much has your plan changed since you started five years ago.
Speaker 2:Yeah, massively. I know we're going to end up talking about strategy and planning a bit later on, but so for me, writing that plan gave me the confidence to start. It helped clarify my thinking and it meant that when I went to the providers, to the insurance companies, and I said here's my plan for doing business, most of them were pretty shocked, because most advisors don't do that, but it gave them some comfort that I might have half a brain and know what I'm doing. Now to your point. Within about 18 months I realised that that plan was just not fit for purpose.
Speaker 2:The crux of what I was trying to do was to really use the social marketing which I didn't know a lot about first mistake and to really focus in on financial education for people. And at the time there were some other people who were doing it far better than I could. I didn't probably research that well enough and I came to the realization a lot of people don't actually want to know for themselves how to do stuff. They just want someone who's going to come in and do it for them, someone who's trusted. Dom. I got this problem solved for me without necessarily needing to internalize 20 years of financial knowledge themselves, right, so my my premise to start slightly wrong, but he gave me a foot in the door. Um, yeah, and so it's.
Speaker 1:Uh, the, the strategy now has just evolved, kept evolving which which is no different to some of the uh, the conversations I have with my clients as well as they, they're paying for the expertise, not for the training. Yep, exactly right, yep, so let's, let's just jump straight into that, then, because you've used two words in there that I find are often interchangeable, but they're not, and what I mean by that is people talk about plans and strategies all the time. I used to work for a rather large organization that talked about their blueprint and put that up as a strategy. We see these different words coming through, but treated as if they were the same thing A plan is a strategy, a plan is a strategy, a blueprint is a strategy. I've got my goals. Why?
Speaker 2:are they?
Speaker 1:not the same thing.
Speaker 2:Okay, you might have noticed, I just took a nice deep breath. First up, I'm not an academic. First up, I'm not an academic. So I need to say that there's. I love strategy and I love planning and we need both. You and I both listened to the same YouTube thing recently. They're not the same thing. I think that's how we ended up on this conversation.
Speaker 2:Let me just back up a little bit. One of the things that we know is that very few businesses will do good planning. You know there's a statistic out there somewhere around 80% of businesses don't plan what they do. Now, if we think about planning as being a 12-month, maybe two, three-year tick list I'll get to that in a moment so a lot of businesses don't do that. Of those that do do some kind of planning, very few do what I would consider to be good in-depth strategic analysis of what they're doing Right. So let's just park that observation for a moment. I think the planning part is the last bit that falls out the bottom of all the strategic head wrangling, white boarding, post-it note, conversational whirlwind of stuff that happens. No, conversational whirlwind of stuff that happens. It takes time and brainpower to conceptualise what you're trying to do with the business Yep and it really starts with and there's a term that you've used as well in your questions to me the sandpit.
Speaker 2:What is the playground that we want to park ourselves in, where we think we've got some advantage over other people, where we might increase our chance of increasing our value, either to ourselves or shareholders, customers or whatever else? Um, that is, we're starting to think about strategy there. When we're saying, um, I've got a target of a five percent gross target, and how do I achieve that? And I'm going to hire three staff and, I don't know, buy another box of widgets and whatever, that's not strategy, that's the, the output of all the strategic thinking. Saying, okay, now we've got a list of tasks or actions that we need to do to get us to that point. So that's quite a long-winded way of differentiating the two. That, I think, really is the start of it. The whole thing about strategy is. That's the part I love playing in, but, as an observation, too few people do it, I think, and so we end up with a lot of vanilla people in the market doing pretty much the same thing over and over again.
Speaker 1:Yeah, and you touched on how you started with COVID. I don't know how you found this in the market you were in trying to grow, but I certainly saw it with organisations who had no plan for a large scale pandemic, um, and this is even the big ones, uh, the big organizations who suddenly found themselves needing to do remote work and they had no plan for how they were going to manage that. So it became a mad scramble, um, and I'm just keen on your view as to whether you think that that event topical because it's timely it's an anniversary point for your business as well but whether that event disrupted strategy or whether it was an ability to continue on strategy, if people had the right plans in place, to evolve Right, wow, okay.
Speaker 2:So we've got quite a few things to unpack. First up, the business continuity planning. That's not strategy, that's just risk mitigation, to your point. Do enough organizations, of whatever size, focus enough on that as a risk management organisation? No, an example of that is I worked with quite a large health insurer early 2000s and one of my roles was to develop a PCP plan and I did some scenario planning. So that's why I view things as what happens if something happens, and so I used. I used Christchurch having an earthquake.
Speaker 2:Now, when I presented that piece of work, the first thing people said was it's never going to be Christchurch, it's always going to be Wellington and because of that, turned off most brains of the people who were looking at it, because that scenario didn't fit with how things were going to pan out. Part of that was okay. The head of the office in Christchurch is no longer there. What happens to the people? What do we do with the IT, all that kind of stuff, right, so kind of fundamental stuff. And then, literally a few years later, what happens? Yeah, I think we have a lot of human biases in everything that we do, from strategy to risk planning to everything, and when you're in an organisation that has layers, multiple layers, that you're trying to break through. There can be roadblocks so many times, and a lot of those roadblocks are ego-driven.
Speaker 1:So that's that part.
Speaker 2:The next part you said was okay, we got COVID, and was COVID a strategy disruptor, a strategy enabler or a strategy continuum? Effectively, it's three things, I think you said. I think all three, depending on who you are, where you're at and what your business is doing. So even in my industry, there were some people who really just felt like shutting the doors and didn't do anything for 12 months. Right, so okay. There were others who were like whoa, okay, okay, this whole thing is open up, let's crack into it. And others are just kind of barely holding on by the fingernails.
Speaker 2:Yeah um, yeah, and I think that's broadly across different industries. You know, for a lot of people, not just here in new zealand but across the world, people broadly fell into one of those three buckets right um, and I think that comes down to um who you are as a business leader, the type of business that you have, the type of culture that you have, and if you've got any robust planning in place for that type of contingency. Most won't have that kind of contingency planning. So it comes down to really, where is the leadership, where's the head of that leadership team? Are they capable of um taking a taking a lemon and making lemonade? You know to use it.
Speaker 1:You'll do the same yeah, we're gonna focus and that's a really good distinction that you put in there. And and I'm going to focus on one of the points that you made around ego-driven decision making, um, because I've certainly seen that in action um, we've all, and coming from a technology lens and a technology strategy perspective, there's plenty of decisions are made around what systems to use purely probably more vanity projects than ego driven, but the two of them are, uh, too intertwined. How much do you think, in your experience, have you seen personalities disrupt strategy because they just want to win at a personal level rather than the organisation grow and achieve its goals?
Speaker 2:Yes, yes it's. You know, in economics, the traditional economic theory is that we're rational humans making rational decisions. We will be available. Actually, that's crap. Doesn't happen because we're emotional beings making emotional decisions dressed up as logical, rational things. Um, so every decision is always emotional. I think the sooner people understand that, the better you can have all the pie charts and the spreadsheets and all the client analysis and feedback data you want. When a decision is made, it'll always be emotional. That's it. It'll always be emotional. That is it.
Speaker 2:Yes, I have experienced that many times at different levels and I think what we're touching on now is organization culture, which is massively important and thoroughly underrated in meaning that most firms don't look at it, even larger firms.
Speaker 2:Larger firms can be better because there's a generally, there's a hr team in place whose responsibility is to think about the culture and organization, but for smaller firms, definitely it's's an afterthought. Uh hr person is normally the last senior manager to be hired after all. The rest, the idea that you need to have a culture that's cohesive, um, that allows for open debate, that uh encourages uh the challenging of ideas from the bottom up and the top down, allows those robust discussions to have. That's a hard thing from the get-go. Most humans, any time we have a challenging conversation, we think that's a confrontation and that spirals down and then nothing happens. Being able to have a working culture where some dissent is encouraged in a some kind of structured form of way that allows for good, robust discussions to have an output of that generally is better thinking, planning, whatever else, and I think that's the part that doesn't happen.
Speaker 2:So to your point of um. In a traditional top-down type of mechanism leadership structure, organization structure, um when you're thinking about strategy or planning or just task implementation, there can be roadblocks because people are saying, actually, that's going to cut in on my turf. You know, you're telling me that instead of having a team of 20, I need a team of 10 to do my job, because bob is going to have a bigger team. Hold on a moment. I'm trying to build my empire here in the company. What are you doing here, sunshine? Stop that right. So we're not looking at it from the point of view of the company or the customer, which is normally the last person to be thought about. No, I want to protect my patch because I'm going to look better on my CV when I leave here in three years' time. Yep, yep, right. So yes.
Speaker 2:I've seen that plenty of times.
Speaker 1:Now there's the other thing I'm building my career. This is for the best outcome for my career, regardless of what it means for the and we see this time and time again as well with. I've made a decision, or a decision was made five or six or seven years ago, and all the side effects, challenges, whatever of that decision are coming home to roost, but the person who made the decision is well and truly gone and no one's accountable anymore.
Speaker 1:Yep, yeah and so let's come back to strategy on that then. Because? So let's come back to strategy on that then because it's very easy and I think this happens when people just interchange strategy, plan, direction, whatever Because it's very easy to just throw the baby out with the bathwater and start again Because of the next big fad you know we've got. Something I see with AI, particularly for organizations, is the board's focus is hyper-focused on what are we doing with AI to win. Now, megatrends like AI can come along and enhance a strategy, but they shouldn't necessarily cause you to throw your strategy out the window because your strategy shouldn't. Let me just rephrase this Do you agree that your strategy should be an enduring document, or is it disposable?
Speaker 2:uh, it needs to be flexible. Um, I think it needs to be flexible. I think anytime you're thoroughly rigid, uh, we need to be cautious. Now, that said, uh, if we think about, um, some of our our Asian friends they typically think in decades. So when they're planning and implementing what they're doing, they're thinking in terms of not this decade or next decade. How is this actually going to benefit us in 20, 30, 50 years time? Yep, the more Western style of thinking about planning used to be 20 years, then it became 10 years, then it was a five-year plan, then it was a one-year plan, and we're lucky if we get a monthly plan of what our KPIs are supposed to be, and so we're kind of going in reverse.
Speaker 2:If you have that kind of long-term focus, you have concepts, principles, values that you're aspiring to, the details and that particular journey might change the goal of what you're trying to achieve, doesn't? Yeah, in that video that we watched on Harvard, there's a really interesting point that says when you're creating a strategy, there is no guarantee. It's an idea, it's a thesis that you're trying to prove, and oftentimes you've got every man's dog around you saying it'll never work. What are you doing that for, right. And then in the last, you know the last nanosecond, it's like good grief. Look at what they did, how do, they do that you go from you know zero to hero.
Speaker 2:So it's having the convictions of your idea. Okay. So strategy? We've danced around this term. What is strategy? We've all played chess, sometimes badly, right, other people with more skill and talent. Chess is not necessarily the best one to use because really, there are a fixed number of positions that can get you the best result. The Chinese game, go, is much better. So what is strategy? A fixed number of positions that can get you the best result? Um, the chinese game, uh, go is much better. So what is strategy? You're you're developing a method to help you win, whatever. Win means win more market share, win more clients, win your sandpit, whatever. That's not. That's not, so it's figuring out.
Speaker 2:When I think this through, when I start this through, I start right at the top. What's the industry? So you asked me about my plan to start with. What is my industry? How much do I know about my industry? What's happening in my industry? What are the changes? What's the regulatory changes? What are some of the forces around that industry that are happening? What's the regulatory changes? What are the some of the forces around that industry that are happening? What's the macro environment at the time? It's covered, okay, or whatever, um, but what are, what are, um, the forces around that? What are the technology forces that might impact what, uh, the business model I'm looking at creating? So again, a real top level view of stuff. Not necessarily telling me what the model is going to be, it might not even tell me what the product is yet. It's just giving me an idea of the world view, I guess the big macro view. And then we start coming down to, I like using the business model canvas that came out, I don't know, 10, 15 years ago.
Speaker 2:It's a really nice way of laying out nine parts of the business. The key one is what's your value proposition Now? We have an idea of what the market's doing. What's the value proposition Now?
Speaker 2:most of the time, if you ask most businesses any size, most businesses what is your value proposition, they'll go what do you mean? What are my values? No, no, no. What's the thing that you're promising to do for your clients that other people can't match? I have integrity, okay, Everyone. As a life insurance guy, you know what's the typical things. You're going to die once you need life insurance. Great, trust me, I'm an insurance advisor. Okay, they're not value propositions. Let's not get confused.
Speaker 2:So what is the thing that you're promising to be able to do to give some value to your clients? Who is your customer? A lot of people get that wrong. What's the industry you're playing in? What's your value proposition? Who is your customer? So these are we're starting to figure out. You know what are some of the things that we're doing? Um, you know some of the. There's some great books. You know your theory.
Speaker 2:You think about, um, blue ocean strategy. You know what's, what's the, what's the? What's the place I can. I can play in that. No one else is playing. The red ocean is where there's all the competitors. They're fighting amongst each other. The waters are all bloody horrible. The blue ocean is where you want to be. Where's that? Where's that sweet spot? Yeah, um, how do? Um, sorry, interesting little little segue. Um, I was talking with someone from, uh, tiger tiger trade, one of the senior managers, and I said how would you describe your business? And he said, actually, we're a technology business, we just happen to trade shares. I thought now that's someone who knows the industry. They're in Something I heard years ago. I don't know you can argue this, but something I heard years ago McDonald's. We think they're in the fast food burger industry, property, property, property. They've got all over the site Now again know the industry that you're in?
Speaker 2:Yep, right, you could argue again. I'll get comments about this, but you could argue Apple, is it a technology company? Or is it a luxury item company, right, or a, you know, high brand company? Don't assume that the the industry that you're in is actually the industry you're in.
Speaker 1:Because you figure that out, a whole lot of stuff starts getting really interesting and let's just pick up mcdonald's for a moment, because there's a good point in there, because there's two layers at play in there. There's mcdonald's global, mcdonald's international, the corporation, who are in the real estate industry. Um, you're absolutely spot on there. Then there's the local operator, the, the franchisee who runs that store. Yes, they're in the fast food industry. Yes, okay now this.
Speaker 2:This comes to one of the best things, um, that I. There's a lot of things I took away from when I did the mba, but one of the things that helped me, uh, disaggregate this whole strategy, yeah, was to think about how. It was said to me there's three levels of strategy. Corporate level strategy what is the corporation trying to achieve? Right, right, and your example here is bang on. And then there's the business level strategy. So the corporate might have seven different business units, right, the overall strategy that they're trying to achieve. Then the business level strategy Okay, so what is each business unit within the corporate? What are they trying to achieve? What is their industry? What is their value proposition? Who is their industry? What is their value proposition? Who is their customer? And it's probably going to be different for each of the things segments under the corporation. And then you've got so you've got corporate, business level, and then functional level, yep, functional level, operational level. This is where you're starting to blend into planning, capital, implementation, that type of stuff.
Speaker 2:So it gets a bit harder to disaggregate and it depends on the size of the organisation you're talking about. So, again to your point, you could say that there's McDonald's corporate, there's the McDonald's franchise. Perhaps your business level and then operational level is actually your franchise holder. Great Right, because they're the one who's actually serving the customer. So what do they need to do on a daily, weekly basis? And yes, they've got their tick list of all the things they need to do.
Speaker 2:But not all McDonald's are the same. You say they are, but actually they're not, because you can go into one place messy as all hell in a bad location. Another wine is just mint and it's looking really good and the burgers actually look almost like the picture, almost, almost. So you know. Again, thinking about and it's going to be harder for different sized businesses, but think about what is the corporate strategy, what's the business level strategy? And then what's the functional, operational level? And that's a good way of I do it, mine. So I've got a corporate strategy, I've got a. The business unit is what my life insurance part of what I do does. And then I've got me as an advisor, and me as an advisor is less on the strategy, it's actually more just on my kpis, all right.
Speaker 1:so yeah, yeah, yeah. And let's stick on mcdonald's for a moment because there's one I want to just explore a little bit more there because, while and and your three tiers of differentiation spot on as well, completely agree with that, um, but at that local level the restaurant owner they may not have a strategy for their restaurant, for what they're going to do. They've got a plan. They've got a plan on how they're going to serve more, how they're going to keep things ticking over, keep the store running. Their strategy might be on how they plan to get out in 10 or 15 years.
Speaker 2:Fantastic. There we go. So now we're starting to bring in it's less about the actual business and more about what's the value for the person within the business, Correct, yeah. What's the value for the person within the business? Correct, yeah, because that is a business within the business, right? So from their own point of view, they all have their own plan. In fact, many of those franchise owners, they're multi-franchise owners, so they've got multi-sites and part of their plan is actually to sell their 10 sites as part of their retirement plan. So it's definitely a different level down. Yeah, look, the other part I like about that is bringing in the idea which I talk about often your business is your asset.
Speaker 2:So if you have a business and it is an investment asset. What are you doing with that? Yeah, I don't know too many property owners who have investment properties who just don't even look at it for 20 years and then they decide to sell or do whatever they do. No, they're monitoring their, their mortgage, their maintenance, their um, whatever else. They've got their estate agent fees and all the other bits and pieces, property management, all that kind of stuff. They'll be doing that on an annual basis and they'll be definitely they'll be monitoring the value of that investment over time and have an eye on when is a good time to sell and exit out of that business.
Speaker 1:Yeah, why don't? Why don't business owners do?
Speaker 1:exactly the same and come back to culture, because culture has played a big part. You know, traditionally the new zealand model has been for small business, at least small and medium the. The new zealand model of success has been the three b's the beach, the beamer and the boat. Uh, the beach house, the batch beamer and we hear stories all the time of people that have hit that layer, that success. Suddenly they've got the and it may not be the three Bs anymore, but there's certainly a layer that business owners look at and go.
Speaker 1:I know I've got it because I've made it, because I got to this point, but it's that looking beyond still, isn't it? It's that need to go out and go. Well, okay, great, I've achieved the three lifestyle goals I wanted. But then the question is what's next? How are you going to get out of that business? And and you've talked about this quite a few times, um over the last few months is around that, that, um, how you plan to leave your business? Do you feel that a lot of individuals there's probably predominantly individuals that are in this position aren't thinking that far ahead? They are literally just thinking about how to get their paycheck through?
Speaker 2:yeah, I think that's just my spot, thinking about how to get their paycheck through. Yeah, I think that's. That's the most part. Um, I think at the back of the mind of many business owners they'll have but have an idea of what they want and quite golden and rosy.
Speaker 2:Um, actually, I need to come back and qualify that a little bit. It seems to me that business owners tend to fall into broadly two camps. One says I'm building some value in my business. I don't know what that is, I don't know how much it's worth now, I don't know how much I need for retirement, but I'm building some kind of value and I'll think about that when I get there. And then there's the other camp that says there's no value in my business. It's get there. And then there's the other camp that says there's no value in my business. It's just me. I'm a solopreneur. Uh, the business is my income. There's no right or wrong either. I'll actually challenge those solopreneurs and say if you wrap a business system around it, you can still create some value that you could sell over time. But that's part of that for the time being.
Speaker 2:Um, for the ones who who understand they've got some capital value in their business and they're trying to build that, I would suggest that they need to start thinking about their exit as soon as possible. I mentioned this at our networking thing the other day. The ideal again, if we look at an investor, a share investor, a trader. They know what their exit is going to be before they enter. So do you know the value that you want to sell your business for before you start your business? Now, that is a concept that for many is foreign, so that's not likely to happen for many. Okay, that's fine. So then at the other end of the scale excuse me we'll hear accountants say you need at least two to three years to tidy up the books, to actually have something resembling a good package for owners to think about. It looks like a good business to buy. So we've got two ends of the scale. We've got knowing the value you want to sell at before you even start through to. You've got three years and then you're going to try and sell. I would say, try and get on as soon as possible. Part of the reason for that is if you know you've got an asset, are you not going to try and maximize the value of that asset? So if we look at it from investment property here in New Zealand, we love our property.
Speaker 2:So let's go through a little story. You buy a property great. You give it a lick of paint, you put a new bathroom, new kitchen in there you're adding some value. Great, you're going to protect that property. You'll probably get some insurance on there. You'll need to for your mortgage. Probably you might even have a property manager to go around and keep an eye on it and all that kind of stuff. So you're protecting the risk as you go through with all the rest of the rental income, paying for the costs. Okay, so you're extracting some income along that journey and then, because property tends to go up over time, we know there's going to be some capital growth. So when you exit it's going to be worth more.
Speaker 2:Four stages We've got the purchase building more value, protecting the value, extracting the value on the way and then exiting. Okay, why do we do that with our business so intuitively? People will have a business and they'll try and make improvements and their 12-month plan. I need to grow my clients. Okay, I need to hire more staff.
Speaker 2:Okay, let's just step back a moment. Have we got our ladder against the right wall? Are we actually on the right strategy? This is just going right back to the whole point of the discussion. How do we know the clients that we're getting are the right clients for us? Yeah, how do we know that the services and products we're trying to sell are actually the right products and services. Yeah, we've got 10 people in our neighborhood selling exactly the same stuff as us.
Speaker 2:Is there a better way? Is there something else we can do? So that's where you start to think about, think about strategy. So I'll challenge people to think. Think more deeply about your business, understand the industry you're in. Think about your competition. Porter's five forces of competitive advantage. What are you? Why are you better? What is it that you're doing that you can't have someone substitute your product for something else. And the whole point of doing all that is because you want to add value Right back to the typical house. You want to add your bathroom. You want to have your liquor paint. You want to tidy, uh, the typical house. You want to add your bathroom. You want to have your liquor paint. You want to tidy up the gardens. You're creating value within your business. Why? Because when you come to sell that thing, it's going to be worth more why is?
Speaker 2:that relevant, because your family will thank you, because you don't have to work through the age of 85. You can have the round the world trip 17 times with your wife. You can you the round-the-world trip 17 times with your wife. You can fund your kids' education, their grandkids' education. You can do whatever those things that you want to do, because you're taking the time now to think about. What business am I in? How can I add value? How can I maximise that value for my retirement?
Speaker 1:Yeah, and there's some things you're saying in there that I've always held true as well. And coming back to when I did my master's degree, too long ago now, some of the things that came out of that, the concepts were, through it, you can't scale what the market doesn't want, and that you might have the greatest idea in the world, but if you don't tell anyone about it, they're not going to buy it. Both of those I see time and time again. I've made mistakes on the second one more often than I can count. I've got a great idea, I'm talking to a few people about it, but it's not the same as marketing, right? And that's where you start to bring that in of what's my long-term vision.
Speaker 1:And the house is exactly the same If and the house is exactly the same If you've got a rental house and a rental property. Sure, it might be easy to do nothing now while you've got a tenant in there, but you've got to be thinking about what to do when that tenant moves on. And if you haven't done the gardens and if you haven't painted it, and if you haven't put the carpet down, replaced the carpet, and if you haven't kept the basic maintenance stuff done, that marketing spend gets really, really hard in a very short period of time, because under New Zealand law at least, the tenants can give you I think it's four weeks notice and they're gone. So you've now got four weeks to try and repair two, maybe three, maybe four, maybe five years of neglect.
Speaker 2:Otherwise people aren't going to want to live there. That's right and that interrupts your income, yep, and that's your investment. Roi just goes down the toilet.
Speaker 1:Yep. And business is the same that if you neglect the. I wrote a quote down the other day on this one. Actually, that strategy is a little bit like going to the dentist you don't have to do it, but the longer you leave it, the more painful it's going to be.
Speaker 2:And that root canal. You know, if you don't get a scene to it it can kill you. Yep, that's the guts of it.
Speaker 2:There are a lot of businesses in New Zealand. Whatever the number you want to use, somewhere around 570, 590,000 small businesses in New Zealand. That's a lot. We don't have that many industries. That means there's a lot of people fighting in the same sandpit for the same stuff. Yep, okay, my industry is no different. My industry financial advisors. It depends on the number you look at, but somewhere around $4,000 or $5,000. Right, you're going to die one day. Trust me, I have integrity hold on, okay.
Speaker 1:So what's the sandpit?
Speaker 2:that you can create, very few other people can be. Um, I mentioned some earlier. Um, some people are doing that financial education piece extremely well. They've carved out their own market and they're able to charge a premium and do all the things that they can do because they've taken the time to think about what is their value proposition, what's the market they're in, what is the industry they're actually playing in and they're doing really well. So I'll challenge other people to think about that as well. And if you say to me but Dom, I just mow the grass, I just cut lawns, really Okay, we've got a great example of that Jim's mowing out of Australia. That's all he did.
Speaker 1:Look at where he's gone. Look at where they are now. Yeah.
Speaker 2:Jim's dog washing and all these other kind of crazy things that spun off from it.
Speaker 1:Jim's cleaning. There's, yeah, jim's dog washing, jim's mowing. And then the one that that took me by surprise when I found out about it was jim's cable testing. Right same jim, they just go around and and test electric cables to make sure they are still compliant good grief.
Speaker 2:Yeah, there we go. So who knew right? So, um, so, with enough, with enough thought and lateral thinking, you can create the sandpit that you want to be in. Yes, that's the part, really. This is the crux of the whole show. That's the part that isn't done enough, I think.
Speaker 2:And it takes a bit of time and it's not for everyone and it can be challenging and you need to be challenged. You need to challenge your own assumptions. If you've been doing something for 10 years we talked about ego before if you've been doing something for 10 years and you've had some modicum of success to then have some upstart, you know little kid come along and say have you thought about doing things differently? Oh, yeah, I'm good at what I do. Yeah, great, okay. But if you've got another 10 years before you actually go to sell your business, you do something different. You actually double, triple, quadruple the size of your business because you do things slightly differently.
Speaker 2:And that's what's on the table. I got to get my little soapbox in here. We're concerned about New Zealand's productivity and it's always in the news in some way, shape or form. The productivity in New Zealand is not where it needs to be, but it measures against other OECD countries, right, okay, how do we change that? Yeah, I talked about this at our networking breakfast With so many small businesses.
Speaker 2:If we just take 1% of that cohort and improve the productivity by 1%, we'd have a massive ramification, positive ramifications, not just for the businesses, the customers, the families, but for New Zealand as a whole. And part of that is stopping to think that if you're a solopreneur, okay, that's fine, good. Earn an income from that, okay, that's good. Can you be challenged a little bit to think a little differently, to perhaps grow a business system that can evolve, that you actually have an asset that you can sell down the track and help your family, help your retirement, but in the process actually do some fundamental things for the country as well? Just that ability to think a little differently. We're not talking about being pointy heads and square eyes, whatever kind of thing you want to conjure up. There are some relatively simple things you can do. There are lots of models on the internet that you can follow around, strategy to help you think things through slightly differently and, just you know, add more value to your business and ultimately that's got to be good for everyone.
Speaker 1:Right, and just keen for your thoughts on this as well, because I've heard, seen stories, heard stories of organisations where the pointy heads for want of a better term, but the managers lock themselves in a way in a room, come up with a strategy, think they've identified all the problems and then walk back out and tell them to the staff, um, and only to be told what the hell are you on about? Versus those stories where, um and I don't remember all the details on on the one I'm going to talk to, but it's a really good example of it was a um, a pushchair manufacturer in New Zealand somewhere, and they had massive delays in getting their pushchairs out the door and part of the reason, they thought, was because the end of the production was the problem. Instead of just sitting there and trying to solve the problem at the top, they actually went to the guy at the end and said what's causing the problem? Why is this taking so long? Took his feedback on board.
Speaker 1:Now this is the guy who's been doing the job for 10, 15 years, right, so he knows. And so instead of trying to solve him as a problem and saying he was too slow and, like I say, I don't remember all the details of this I've got to catch up with a good friend of mine who knows it off by heart. Instead of trying to solve him as the problem, they went to him and said what causes the problem and worked their way backwards. And I find that's really valuable. Is actually getting out to that, to, whatever you want to call it, the coalface, the front line, the people at the end of the supply chain, and saying why is it causing a problem, and then work your way backwards from there Would you agree with that?
Speaker 2:Yeah, absolutely. Uh, the ivory tower syndrome is right, um, and it goes back to the ego and all the rest of it. I've made it to the, the management team. Yeah, you worry about the plebs down there? Thank you very much. I know, I know what I'm doing, you know you talk to them and we can, you know, go away for a week and have a piss up and we'll do half an hour strategy and, you know, play golf for the rest of the four days. Yes, seen that plenty of times and you're absolutely right.
Speaker 2:When you can bring in people from all levels and really, really get a robust, it kind of goes back to what I was saying if you've got the organisational culture, that can have a good conversation, a good robust conversation about different aspects of the business. We're currently talking to these customers with these kind of operational problems. This is kind of what our charging, this is what our costs are and this is kind of what's currently going on. Let's throw it all against the wall and go. Is this all accurate in today's world? We've been running this business for 10 years. Is all this still accurate? Is all this still valid? And in fact, just before we start doing that.
Speaker 2:Let's just take a step back and have a look at our industry Before we start doing that. Where are we in the world? What's going on in this world at the moment? What are some of the key trends that we know of? It's all about AI or big data or whatever else. Let's just map all that out, get an idea of where all that's going.
Speaker 2:Right, yeah, then let's come back to what we think our industry is. Let's just are we actually still in that industry? Are we or should we be in another industry, or should we be there? Okay, well, if we do that, well, then that means that our suppliers should be these guys. Our clients are actually these guys. Our value proposition would be this, not these guys over here.
Speaker 2:And if you're doing that with a room full of people at different levels of the business, then you're getting buy-in from every level because everyone's having their room put. You know you can create some really interesting magic from doing it. Most firms won't do that because it takes effort and there's a real it's a risk, right, yeah, if you go to the board of a mid-sized company and say, actually, we want to put, we're thinking about putting a handbrake on a current direction and go here. You know what are you doing. You know this one's given a 15% a year. But if you're thinking long-term, okay, well, in the next five years we won't have a business. We've got seven entrants coming in. Who's going to chip away at our margins? If we don't do it now, we'll be dead ducks. So it's being able to understand that, being able to have clear conversations around all that.
Speaker 1:Absolutely. And coming back to your point, making decisions as well and I find um for many consultants, our best value has been able to ask questions of those clients we're working with and draw them to a conclusion where they can make a decision, as opposed to coming in and trying to make the decision for them. If a consultant is making a decision for the client, something is like you don't want that.
Speaker 2:Um, there are a lot of consultants out there and look on, you know, technically speaking, on one, you're one, there's, there are. Everyone you bump into seems to be a consultant about something, consultant about something, which is fine, and I think it helps if we are able to give a different perspective for the people running a business. Yeah, my view, and I think it seems like you share this view it's their business. Yeah, they know their industry, they know their business. They know what they're doing far better than I will. Even if I spend, you know, three months of spend three months of immersion at their cost, I'm still not going to know everything. So what we can do is have some frameworks and facilitate Get a whole lot of sticky notes and white paper and whiteboards or pens or whatever you need to do and have the whole brain mess that goes on and facilitate by asking good questions and having some structure around where we're trying to take things. But it has to come out of their heads because they know it. It's their business, correct?
Speaker 1:And AI is a good one on this one. I've run into this quite a few times lately. Where it's just drawing that out of their heads is what do they want AI to be? Because there's a lot of hype, there's a lot of press, there's a lot of fact, there's a lot of fiction about what AI can and can't do, and everyone's looking around the table going well, our competitors are doing this thing. We should be doing it as well.
Speaker 1:And the question I first ask is what do you want the AI to be? Not, what problems are we going to solve with this? What problems are we going to solve with? This is a great one, but it's not the first question I'll add in. It's what do you want it to be? Do you want it to be something that drives your revenue and therefore you're creating an AI platform that you're going to sell to the market or do you want it to be something that supports your existing revenue? And coming back to your point, the unique selling proposition or the value proposition is do you want AI to be your value proposition or do you want it to just make you get better at what your value proposition is?
Speaker 1:And the minute that question is on the table. There's the chance to sit back and stop and think and go. Well, what's the difference? Where do we go from here? Where do we go Once we land? Nine times out of ten, most of the companies that I've worked with have gone from. We need to be doing AI to okay. We need to be doing this and we need to use AI underneath it to empower it.
Speaker 2:Yeah, yeah, it's. I really try and bring it back to if I'm talking to a business owner. Just try and simplify this language because it can get quite exclusive in some ways. If we make it really simple, the activities that we do fall into two camps, or should do Ones that create revenue, ones that fall in the cost bucket. It's either revenue bucket or cost bucket.
Speaker 2:The customers how we communicate the customer messages, customer segments, all of that products kind of stuff falls into the revenue side. Stuff falls into the revenue side, the cost side, the suppliers, what's the underlying mechanism, the operational costs and all that kind of stuff. And in the middle you've got the value proposition. It kind of feeds off both. It can be a low-cost operator offering high-value service. It can be done, but that's part of your value proposition. When you talk about something like AI, and you're exactly right, where does it fit? Cost minimization and is that part of your strategy or is it part of your revenue generating function? Yeah, be clear. So when you're talking about any activity, where does it sit?
Speaker 2:There's a quote um, there's a great book I've read called um. There's a quote. There's a great book I've read called the Four Cornerstones of Corporate Finance. It's a small little book from McKinsey. One of the quotes out of that is anything that doesn't increase cash flows, doesn't add value. Yeah, that's a pretty harsh statement because you'll have the HR person going oh, hang on, I don't sell on things If the activity you're doing isn't enhancing cash flows, it's enhancing value. I'm not talking about profitability, I'm talking about value. So value might be driven in a whole lot of different ways, but that starts to get really makes people really uncomfortable. Yeah, ways, but that starts to get. Really that makes people really uncomfortable. Yeah, is what I'm doing. Am I creating, am I increasing the flow of money coming through the business or am I decreasing the amount of money coming through the business? Am I adding value or am I decreasing value? Ai sitting on the value enhancing part or on the cost minimization part, which is actually still increasing value?
Speaker 1:yeah, so um, yeah, it's something we we used to use. We other industries use the same graph. We called it jaws. When I was at bnz and and the finance department put out the jaws graph and on one axis was the um revenue, uh, sorry, uh, income, um, no revenue, revenue, uh. And on the other axis was cost. And as long as they were a big, wide open jaw where revenue was going up and cost was going down, value was great.
Speaker 1:The closer they got together, the more nervous people got, and the worst possible obviously is when they overlap and cost is going up and revenue is going down. That's when you've got a problem and I keep thinking back to that when I'm working with customers now as well, because it's a great model is as if you want to increase revenue, you've got to push that cost line up, or you've got to drop the um sorry, you've got to push the cost line down. Get it the right way around. This is the important part push the cost line down, drive revenue up, and that's where value will increase. Um, and within that, I think that's.
Speaker 1:That's something that also ties into some of the other models that are out there of understanding that you may actually slightly increase cost for a period it's going to decrease, but you're going to get to where you want to go as a J-curve investment, and what I mean by J-curve is that you're going to have to spend a little bit of that income and increase costs a little bit in a short period of time to then start getting the gains that you're seeing. Spend a little bit of that income and increase costs a little bit in a short period of time to then start getting the, the gains that you're seeing, and and uh, the. The goal should be to uh to reduce as much as possible that expense going out and have it for as a shorter period of time as possible yeah, you brought in a fantastic concept.
Speaker 2:Um, from a from a finance point of view, uh, what's the time value of money? Yeah, so what's the value of money today versus value value money tomorrow? What is that period of time? Uh, what's it actually going to cost in real terms? And what's the roi at the end of the point, at the end of the project? Yeah, unless we do a whole other podcast on. You know, net present value stuff 100 100.
Speaker 1:do we get rid of the server now or do we hold it for another three years? Exactly, exactly.
Speaker 2:Yeah, yeah, yeah. I have to keep bringing it back to value. Yeah, what is the value today? What is the value you're trying to achieve tomorrow? How do we plug that gap? And if you don't know any of those three parts, you've probably got a problem, great.
Speaker 1:Great, and that is probably a good note to leave it on Value and we'll have to come back and have another conversation on value. But just to wrap us up, dom, what's three key takeaways that you want people listening to this to think about when they go back to their business?
Speaker 2:A strategy is not a plan. A plan is not a strategy. If you're not doing planning, start. If you're doing planning but not doing a strategy, start.
Speaker 1:Is there a third one? There's probably. I think there's four in there. So take them as they are and you're spot on. Start today, because the best time to start is right now. Hey, thanks, dom, really appreciate your time today. Thank you so much for coming on board. It's been a lot of fun. Thank you Absolutely.