Salary, ROI or both?

If you’re like most entrepreneurs you simply live out the till.  When the till has more money in it you live a little better and when the till has nothing … well you get the picture.

As a business owner and budding entrepreneur it becomes a never ending roller coaster ride where your personal finances are as unpredictable and erratic as your business finances.  You mastered the art of financial gymnastics a long time ago but the fact that you’re fighting the fight on two fronts never makes it easier.

So let’s take a step back to before you even had your business.  At some stage I’m sure you once earned a salary.  You provided your employer with skills and expertise and for that you were remunerated at the end of the month.  You were paid by the company you worked for in accordance with the value you provided. 

If during that time you saved a portion of your salary, and put it in a bank, you expected some form of return.  The money you saved, your asset, was expected to return some money back to you, namely interest.

The same principle applies, or should apply, in your own business.  For the time and effort you put into managing and running the business you deserve to be paid a market related salary.  Depending on what you actually do this may or may not be quite a considerable sum of money.  The company, albeit yours, benefits by not having to pay other staff and therefore allows you to draw a salary.  For now let’s not focus on whether this is a drawing or an actual salary.  Your accountant or tax advisor would be better suited to structure this for you depending on the circumstances.

For most business owners, especially in the beginning, they literally work like slaves.  They put in longer hours than ever before and do literally everything there is to do.  Sadly though we know that 74% of small business owners (American stats) earn less in their own business than they could working for someone else.

Priority #1

So your first focus should ALWAYS be to get to paying yourself a MARKET RELATED salary.  This needs to happen as soon as humanly possible.  This should be budgeted for and be a regular expense item on your business’s  expenses.  You cannot work for free.  No matter how passionate you are about your business and no matter how much you enjoy the freedom and flexibility you cannot work for free.

Whilst being a business owner has many advantages it also comes with added pressure and a very different kind of stress.  It’s also supposed to be a vehicle that supports you and serves your dreams and aspirations for your life.  

It is therefore critical to ensure that you are valued for your inputs and that there is a feeling of mutual value exchanged.  You manage the business and there is a commensurate value exchange back to you.

Like it or not as humans we are wired around the WIIFM principle – What’s In It For Me.  If you don’t feel like you’re getting enough in return you will slowly build up resentment to your business.  It’s slow at first and often largely sub-conscious but it happens.  If you’re feeling burnt out and fed-up with your business first double check the level of your salary.  If it’s not what you’re worth you now have a major contributing factor to your current state of mind.  A major insight indeed.

Priority #2

Just as you wouldn’t give you hard earned savings to a bank and expect nothing in return; you can’t be ‘giving’ your business money and expecting nothing in return either.  You’d never make a fixed deposit at the bank and not expect any interest back from them.  In fact, with the advent of online or app based banking you’re probably checking your monthly interest, albeit small, a couple of times a month.

So why are you ‘giving’ your business money and expecting nothing in return?

I often hear things like, “Does it really matter?”, “It’s my business anyway” or “It’s all my money isn’t it”.  The reality though is you have two functions as a business owner.  One is an employee role in the work that you do and the other is a shareholder role as the owner of the company.  The former should provide a salary and the latter a return in the form of profits and / or dividends.  

If you don’t get both a salary AND a return you can just as well sell the business.  That way you can invest the proceeds and get a return for doing absolutely nothing.  Other people can manage your money and you simply just collect the fruits of their labour.  Skip the full spectrum of pressure and stress as a business owner and rather earn a market related salary working for someone else.

Now I realise there are often a number of factors at play and there are realities around tax, the type of business, the economy, the state of the job market and so forth but it’s the principle that’s key.  BOTH Salary and ROI are a must as a business owner especially where you still work IN the business.

If you don’t budget for BOTH Salary and ROI you invariably just get one.  You need money to live and as most of your expenses are monthly you tend to draw money from the business monthly as well.  Because a Return on Investment (profit / dividend) is not urgent, isn’t paid monthly and doesn’t really affect your personal survival it is normally the easiest to neglect and delay.  Fix this now.

To get started:

  1. Decide what your market related salary should be.  What are you worth to the company?
  2. Pick a date when your first new salary will be paid and stick to that date.
  3. Amend the budget and cashflow forecast accordingly and increase any sales targets, KPIs etc.
  4. Send me an email the day your business pays you what you’re worth and let me know how that feels
  5. Work out the correct Return on Investment for your business.  This may be based on what you paid for the business, what it’s currently worth, an industry benchmark, better than what an investment company can give you passively.  The specifics don’t matter for the beginning it’s more the habit.  It may be a percentage of turnover or even a Rand amount.
  6. You now have an annual profit target that again needs to be used for budgeting and cashflow purposes.  Again amend the sales targets, KPIs etc. in a commensurate way.
  7. Set up a separate profit business banking account and regularly move the profit out of the business’s operational account into the profit account.  The more you see the profit separately the more you’ll drive the necessary activities necessary to hit the full Return on Investment targeted number.
  8. Remember that business is like a game and it can be mastered.  Also games are supposed to be fun and remember to make sure you have that in loads.

Remember as a business owner you have two roles.  Make absolutely sure you’re remunerated for BOTH!

Harry Welby-Cooke is the Co-Master Franchisor in Southern Africa for ActionCOACH, the fastest growing and largest business coaching company globally. Harry and his partner Pieter Scholtz developed ActionCOACH across Southern Africa, which now boasts over 40 franchisees. He is also a certified, leading business and executive coach. He has successfully assisted countless business owners to significantly grow their profits and develop their entrepreneurial skills. / 012 665 1015

The Mindset of Successful Entrepreneur

Many entrepreneurs start their own businesses and focus on all the “logical” issues required to be successful in business, such as a Business Plan, a good product or service, getting the right pricing strategy, attracting the right target market, setting up good systems and recruiting top notch people.  Whilst these issues are very important to be successful, many entrepreneurs do not invest sufficiently in their own personal development and growth.  One of the most commonly overlooked issues is developing the mindset to be successful in business and this is most often the most common cause of failure for the entrepreneur.


Recently I asked a group of business owners to identify the top 10 issues that are affecting the ability to reach their business goals and what I found was business owners are easily able to identify the factors affecting their growth.  These range from – competition, legislation, bureaucracy, lack of good people to employ, access to markets etc. There was one factor that no-one listed and that was in fact the business owner themselves.


One of the greatest challenges that any entrepreneur must overcome to be successful is their own mindset.  Listed below are several strategies to implement to ensure that you are developing the correct mindset for success.


  1. Personal Development and growth is an on-going strategy


“Where you will be in 5 years’ time will depend on the books you read and the people you meet” – Jim Rohn

Successful entrepreneurs focus on continuous growth through reading or watching videos related to their profession or personal development.


  1. Clarity of Purpose


“ If you don’t know where you are going any road will take you there” – Lewis Carroll   


Being very clear about your life purpose is very important to the successful entrepreneur.  Clarity of purpose brings focus not only when things are going well but more importantly when things threaten to go off track.  


  1. Building relationships that foster growth.


“You’re the average of the five people you spend most of your time with” – Jim Rohn


When it comes to relationships we are greatly influenced by those closest to us.  It affects our way of thinking, affects our decisions as well as our self-esteem.  Research has shown that we are more affected by our environment than we think.  Whilst its ideal to surround yourself with positive thinkers this can lead to false sense of security.  Therefore, it is important to include some critics in your group as they serve to sharpen your thinking and to develop a ‘tough skin”.  


  1. Self-Belief   


Successful entrepreneurs have a very strong belief in their ability to deliver products and services that are required by the market that they serve.  They have a very clear understanding of what their strengths and weaknesses are and instead of focusing on their weaknesses will focus on developing their strengths and where possible surround themselves with people that can focus on those areas that the entrepreneur is not that good at.


A strong self-belief provides guidance to the rest of the team when matters become difficult in the marketplace.  It provides clarity of focus for all team members.


In summary, never underestimate the importance of working on your mindset as an entrepreneur – it is most often the biggest cause of failure in business and needs contact nurturing and growth.


  Pieter Scholtz is the Co-Master Franchisor in Southern Africa for ActionCOACH, the fastest growing and largest business coaching company globally. Pieter and his partner Harry Welby-Cooke developed ActionCOACH across Southern Africa, which now boasts over 40 franchisees. He is also a certified, leading business and executive coach. He has successfully assisted countless business owners to significantly grow their profits and develop their entrepreneurial skills. / 012 665 1015


Setting up an efficient business plan for your startup

Getting a new business off the ground can be daunting. The first step to creating your new business is to set up an efficient business plan. Such a document not only allows outsiders to get a better idea of your business, but it also allows you to get a clear overview of your own vision. Here are a few do’s and don’ts to keep in mind when setting up your start-up’s business plan:



  • Do your homework.


Before setting up your business plan, know: the product/service you want to provide, which business sector your business falls under, the location and team members you want to involve, as well as available local business consultants.


  • Know the elements of a business plan.


Make sure that you have a very clear idea of the elements that make up a business plan. Incorporating the following elements can give your business plan a strong and logical structure: overview, executive summary, general company description, identified opportunity, industry and market, strategy, the team, marketing plan, operational plan, financial plan, and an appendix.


  • Define your speciality.


Make sure that your reader understands exactly what makes your start-up unique. This requires being clear about what your company offers in terms of products, services, unique skill sets, and experience. This in turn will help your business idea stand out from the crowd, and encourage others to take note.


  • Make a great first impression.


Any business plan should be professional and utilise the latest techniques and technologies to ensure that your format, layout, etc. is exceptional. Proofreading and copyediting is vital.


  • Keep it simple.


Your business plan should be concise and summarised, rather than elaborate and longwinded. You can also work under the assumption that your reader is well versed in business jargon, so any over-explaining can become tedious.



  • Don’t forget your personal touch.


Your business plan should reflect your personality while remaining professional. Allow your reader to get to know you as well as your business.


  • Don’t leave your finished business plan untouched.


A business plan is not static – it is fluid and dynamic, and should constantly be reviewed and revised. Be aware of any internal or external elements that may influence these changes.


  • Don’t lose your determination.


“If at first you don’t succeed, try, try again.” The old adage applies to business plans as well – make use of any unsuccessful business pitches by consulting the uninterested investor as to where your business plan fell short. This information may be invaluable in future.

Pieter Scholtz is the Co-Master Franchisor in Southern Africa for ActionCOACH, the fastest growing and largest business coaching company globally. Pieter and his partner Harry Welby-Cooke developed ActionCOACH across Southern Africa, which now boasts over 40 franchisees. He is also a certified, leading business and executive coach. He has successfully assisted countless business owners to significantly grow their profits and develop their entrepreneurial skills. / 012 665 1015

Customer Service in the Retail Market

The motor industry, like many other industries is being confronted by many changes and many of these changes will in fact cause complete disruption in the car market. These changes are being driven by changing consumer expectations as well as technological advancements.

At the heart of the industry is the end Consumer and I believe that in order stay competitive in the market, those manufacturers that are able to build strong relationships with the consumer, focused on carefully managed brand perceptions will be in a strong position to survive these changes if not come out on top.  One only has to look at the amount of information that is available on the web today which serves to provide the consumer with relevant information about his/her purchase decision ( The JD Power CSI Surveys are a case in point)

However, let’s look a little closer to home.  What is it that motor vehicle retailers need to focus on to provide the sort of experience that the Customer is looking for when buying a new or used car in today’s market.

  1. Know your Customer.

In a recent example at my current dealership, I was looking at trading in my car for new one.  Sitting with the Sales Executive she was in the process of finalizing my quote for a new car, when the Dealer Principal arrived in the office. ( I must admit that the Dealer Principal and I know each other fairly well).  When the Dealer Principal asked the Sales Executive, which car she was preparing a quote for he replied as follows:

“ This is the wrong vehicle for this Customer!  Have you asked him what his requirements are, and if so you would have discovered that the car that you are preparing a quote for will not suit his lifestyle requirements.  If you sell him this car, we will loose a lifetime Customer.  I would rather you sell him a less expensive vehicle that suits his lifestyle better and then give us the opportunity to retain the client for a lifetime, than sell him a vehicle that does not suit his lifestyle for now and we the stand a chance of losing him to another brand when he replaces this vehicle.”

I was impressed to say the least.  The lesson here is as follows:

  1. At each purchase decision, get to know your Customer intimately.  Understand the some of the following:
    1. What does he intend using the vehicle for?
    2. How many kilometers does he travel per annum?
    3. What are his/her hobbies and how will this affect the choice of vehicle that is being purchased?
    4. What other vehicles foes he or his spouse own if any?
    5. What are his budgetary requirements – for capital purchase as well as after sales costs?
    6. How frequently does he plan to change his vehicle?
  1.  After Sales Service

In today’s technological age with advanced Dealer Management Systems and CRM systems, there is no excuse for not being able to keep in touch with client after he has made the purchase decision.  Following up on service intervals, pre-empting service intervals and assisting clients with the scheduling of these is critical.  One of the biggest bugbears that I have in dealing with service centres is the non-availability of a courtesy car if I have requested one well in advance and secondly being made to wait for a long time prior to being provided with a lift back to the office.  

It is critical to keep the customer informed of the progress being made whilst the car is being serviced.  It is insufficient to only contact the Customer, when you are requiring approval on a quote for repairs.  

  1. Use of Technology

There many opportunities to improve Customer experience at service interval time using technology and tablets etc.

First of all, make sure that the Customers details are correctly captured on the CRM systems to eliminate the need to capture the same information at each service interval.  I don’t know how many times I had to correct the contact details on their systems  prior to them getting it right.  This is inexcusable.

In summary, providing good Customer service is not rocket science.  The best way to determine what you Customers are experiencing is to conduct “phantom – shopping” exercise on your own business.  This will give you clear understanding of what needs to be addressed.   

Franchising your Business

Many entrepreneurs dream of building their businesses to the point where they need to expand their businesses into other territories or regions.  Franchising, if correctly done, provides a very effective form of leverage to expand into other regions.

However, many entrepreneurs believe that franchising your business is an easy way to riches.  This is not the case and requires careful thought, preparation, planning and execution.I would like to share some key insights into the factors that need to be considered for successful franchising.

  1. Proven Product and systems

As Franchising is all about leveraging products, services and systems it is imperative that you ensure that your idea , products and systems have been thoroughly tested.  You cannot start Franchising your business while still testing whether the product works or not, neither can you franchise your business until you are absolutely convinced that there is a need in the market for the product.  In addition, you need to be able to demonstrate that the business is able to operate profitably for a sustainable period prior to Franchising your business.  This is best done by first running a test model successfully.

2.   Duplication

Operating a successful business is one thing – being able to duplicate the business successfully is quite another.  Ensure that you have drafted a set of detailed operating manuals, brand guidelines and financial models that any potential franchisee is able to use from the start of the franchise being opened.

As your Franchise expands, you start experiencing a certain loss of control and one area that you would want to have clear guidelines for is in the area of brand guidelines.  Failure to give attention to this element could very easily result in the dilution of your brand and or proliferation of unauthorized brand logos and products and services

3.   Legal Agreements

Make sure that you appoint an attorney that understands franchising and ensure that all Master Franchise and Franchise agreements have been properly drafted.  In South Africa, you may want to consider consulting the Franchise Association of South Africa (FASA) to ensure that you have covered all the requirements for registering a Franchise.  

In addition to the above, use the services of the above experts to draw up your Franchise Disclosure Document as well. If there are patents that have to be registered, make sure that these are handled and lodged by experts in the field.

4.Controlling the Numbers

As your franchise starts to expand you want to ensure that you have access to the key numbers (financial and non-financial) that will determine your success.  Set up proper accounting systems and software that allow you to have access to the key numbers for each Franchise operation.  Having access to these numbers will provide you with the opportunity to identify which of your franchise operations are performing well and which are not performing well.  Timeous access to the correct information is critical to addressing non- performance and being in a position to coach the franchisee in the areas that he needs support.

5.   Franchise Support

One of the keys to successful franchising and one that is often overlooked is the support structures that need to be put into place to be able to roll out franchises at the pace that you are planning.  Areas that need to be put into place are as follows:

  • Training and Post training support.  Whilst the success of any franchisee will largely be dependent upon the initial training a franchisee will receive, it is critical, that the appropriate post training support and training structures are put into place.  This is an area where the strength of the “community of franchisees” is built and as a result one needs to look at regular support structures – weekly, monthly, quarterly and annually.  
  • Refresher training – Whilst Franchisees will receive initial training and post training support, I would recommend that you conduct annual refresher training to ensure that your team are kept abreast of any developments within your markets and or products.

6.   Franchise Selection

The success of any business is built on the strength of the team that you surround with.  The same applies to franchising.  Define what it is that you are looking for in a franchisee and communicate what you are looking for to all those involved in finding the best possible candidates.  

Equally important is to define your franchise sales process.  This should be designed to ensure that the process achieves two main goals:

  • Put the prospect in a position to be able to make an informed decision about whether your opportunity is the best business opportunity for the franchisee
  • secondly, to ensure that you are confident that the franchise prospect has what it takes to be successful in your business.

Often, corporate executives want to leave their highly pressurized corporate roles, and whilst being successful in their corporate roles, they might not have the personality, drive and tenacity to be successful as an entrepreneur.  Whilst it is easier to succeed within a franchise model it still takes hard work. If you want your franchise model to grow at the pace that the market requires, ensure that you select franchisees that are absolutely committed to their success as well as your brands success.

7.   Cashflow

Starting out in any business takes cash.  There is a very well know quote that states – “at the start of your business, it takes twice as long and twice as much cash”

This is equally true for you as you start to roll out your franchise operations. The set up costs relating to product development, developing systems, testing your concept store, brand development, developing Franchise training manuals, legals, research and development, IT systems as well as head office support structures are require large amounts of cash.

As a result it is critically important that you develop a proper cashflow model and budget and ensure that you track your actual expenses versus planned expenses on a monthly basis so as to be able to take corrective action timeously.

8.   Marketing and Branding

One of the key reasons Franchisees decide to join a franchise is because they lack the ability to do effective marketing and branding for themselves.  As a result you need to develop a detailed marketing plan for the brand as a whole whilst also developing a marketing plan that any Franchisee can use at the start of his franchise operation.

Head Office’s responsibility is to drive brand and or industry awareness of your franchise or product whilst it is the responsibility of each franchisee to drive their local area marketing.

As the marketing environment is constantly evolving it is the responsibility of the head office marketing team to ensure that the entire team is kept abreast of developments is this space.

9.   Relationships

Franchising is essentially about relationships between Franchisor and Franchisee on the one hand and franchisees and their customers on the other hand as well as relationships ith your suppliers.  It is therefore important that appropriate communication structures are put into place to drive and improve all the relationships that exist in the business models.

In conclusion, Franchising is an exciting way to expand your business whilst not losing control of your brand or your products.  `This can be a rewarding way to drive and achieve your financial goals if careful attention is given to the points identified above.


How to build bulletproof business systems for your SME

So you want to put your business on autopilot and finally take an unplugged vacation where you can safely step away from your laptop, phone and other devices, do you? Then you need business systems and they need to be good. Unfortunately, there’s no shortcut around this – it’s not a task you can fast track or delegate to someone else, because it’s you you’re trying to replace with these systems. But a nod in the right direction might help you to kick-start the process. Take a look at these nine steps to nailing down the perfect business systems for your SME:


  1. Take inventory

Make yourself some snacks and find a comfortable seat, because this could take a while… you’re about to draw up a list of everything you do for your business.

  1. Simplify

It’s probably a long list, but you can make it a lot shorter by prioritising each task according to importance. Start with daily tasks and move on to the less frequent tasks as you go.

  1. Get your flow

For each task, create a flow-chart or map out the necessary steps that must be taken to achieve it.

  1. Installing…

Now comes the challenge of finding someone to fill your shoes. But before you do, make sure you check to see if any of these steps can be automated. The face of technology is changing every day and you never know how many new technologies you’ve missed while trying to steer your business. These technologies may help you to let go of the wheel now.

  1. Do the math

For the rest of the steps, you need to assess their resource requirements – how much coin, effort and manpower will they take?

  1. Test the water

Come up with a plan based on your calculations and put it into action, keeping a close eye on where you can improve and streamline the system.

  1. Document the process

Having business systems in place won’t give you much freedom if it takes almost as long to explain them as it does to do them. You don’t want to be wasting your valuable time explaining them over and over again, so create a System Action Plan for ease of reference.

  1. Pass on the baton

You will need to assign accountability and establish standards to gauge the performance of your systems and the staff running them as well.

  1. Create contingency measures

The perfect system is one that knows perfect systems don’t exist. Things change, accidents happen and people make mistakes. This is unavoidable, but preparing for it could give you and your staff the upper hand in tackling these issues, as and when they arise.



This isn’t the army: Why it’s important to focus on teaching instead of punishment

When you’re in the army, the lines of power are set in stone. Your commanding officer is your superior in all ways. Bad behaviour is punished swiftly and severely, and through an atmosphere of bureaucratic fear, recruits quickly learn to toe the line. Until surprisingly recently, your average workplace would have worked in much the same way. Performance was encouraged through the desire to avoid punishment and little else. But today’s employers and their employees are different.

Though many business owners and managers probably wish they could revert to the military system from time to time, power dynamics in the workplace have changed. Through decades of research, it has come to light that employees perform better with encouragement than punishment, and that their level of personal happiness leads to improved productivity, fewer sick days, and lower staff turnover.

Punishment or Correction?

Everybody makes mistakes. We’re all human, after all. Sometimes an individual’s slip-up has far-reaching consequences for the business, and at other times performance has been slowly but steadily declining over months. Chances are, whatever the case may be, that the employee in question isn’t feeling great. In fact, they’re probably already engaging in some sort of mental self-punishment anyway.

The real secret to successful disciplinary procedures is to dispel the negative and the destructive, replacing it with something positive and productive – and that’s where teaching and correction come in. Failing to do this will do nothing to make the employee feel better, and their misery will only cause their outlook and performance to degrade further. What’s more, the general vibe in the workplace will suffer, as will the business-owner’s (or manager’s) image in the eyes of their employees.

Conditioning: Psychology 101

The old adage “you catch more flies with honey than vinegar” could not be more accurate. “Conditioning” is a concept first described by Ivan Pavlov, a Russian physiologist, in 1903. The premise is simple: You can change behaviours over time by simply rewarding desirable traits and punishing undesirable ones. This is pretty straightforward if you’re training a dog, but people are significantly more complex, and it has been shown that positive reinforcement, rather than negative (punitive) reinforcement, is what generates the best results among employees.

Classical Conditioning in the Workplace

In the above example of our underperforming employee, punishment alone will probably help avoid repetition of the same behaviour in the near future. But it will also create a disgruntled, unhappy and resentful employee (which almost always leads to them returning to their negative behaviours, resigning, or eventually getting fired).

However, if a manager were to take that employee aside, explain what went wrong (and why), and suggest methods of improvement through teaching and mentorship, the employee will not only improve their performance (in the long term this time), they will also feel valued and understood, and develop a more positive attitude toward their employers and the company as a whole. A win-win situation if ever there was one.

So although a swift punishment might be the quickest and most straightforward disciplinary avenue, it is by no means the most effective. Punishment does nothing to improve morale, employee satisfaction or workplace performance. Guidance and mentorship focussed on correcting bad performance, on the other hand, not only fixes the problem over the long term, but also encourages open channels of communication between employer and employee, as well as developing skills and reinforcing behaviours that make a repetition of the mistake a lot less likely.

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