WHY ACADEMIC QUALIFICATIONS WILL NOT HELP YOU (MUCH ...

NEW ZEALAND’S E-MAG FOR ENTREPRENEURS AND BUSINESS OWNERS

MARCH 2017 VOL 3

WHY ACADEMIC QUALIFICATIONS WILL NOT HELP YOU (MUCH) AS AN ENTREPRENEUR

Strategies for selling to procurement managers Is your business in the sweet spot for business success? Startup Watch: Hire The Attire www.nzentrepreneur.co.nz

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CONTENTS 4

Why academic qualifications will not help you (much) as an entrepreneur

10 Useful strategies for selling to procurement managers 16 The sweet spot of success

20 Startup Watch: Hire the Attire

23 Quick Fix

CONTACT US

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ABOUT / Short and sharp, New Zealand Entrepreneur is a free e-magazine delivering thought provoking and enlightening articles, industry news and information to forwardthinking entrepreneurs.

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EDITOR / Richard Liew ART DIRECTOR / Jodi Olsson GROUP EDITOR / Colin Kennedy CHIEF FINANCIAL OFFICER / Alastair Noble

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Entrepreneurship

WHY ACADEMIC QUALIFICATIONS WILL NOT HELP YOU (MUCH) AS AN ENTREPRENEUR

BY Richard Liew

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s an entrepreneur, your job is to create a replicable, scalable business model which can deliver a product or service of value to the market and also make a profit. Sounds quite daunting when you put it that way, doesn’t it? The good news is that millions of people around the world have done this, and like anything in life, you too can learn how to do it if you’re committed. Oh, and if you’re open to learning. “Open to learning?”, you might be thinking to yourself, “Oh good. I made it through high school. I have a diploma/ certificate/degree. I’ve got a masters/ PhD/MBA. So I’m good to go, right?”. Unfortunately, no. That’s not the sort of learning I’m talking about. In fact, when it comes to entrepreneurship, many highly academically qualified people I’ve encountered can be some of the least open to learning.

The real learning needed to be a successful entrepreneur can’t happen in a classroom. You can’t pay a fee, go to classes, write essays and sit an exam to get qualified. But wait! I hear some of you saying; you can study business and entrepreneurship at school. This is true, and there is a growing awareness that more emphasis should be put on entrepreneurship in our schools and tertiary institutes. Initiatives like the Young Enterprise Scheme do an excellent job of introducing Kiwi kids to entrepreneurial thinking at a young age. You can find out if your children’s school offers Young Enterprise programs here. Similarly, many business programs at universities now include papers on entrepreneurial thinking. MBAs often include the study of elements relevant to entrepreneurship. www.nzentrepreneur.co.nz

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Entrepreneurship

Don’t mistake me here – all opportunities for learning are useful, and it is a good idea to read and study everything you can get your hands on about entrepreneurship before you start. But here’s the deal: while you can get lessons on entrepreneurship in the classroom, there is so much invaluable learning to be done out in the marketplace. And the market doesn’t care how many degrees you have, what you majored in, what thesis you wrote or what school you went to.

On the plus side, there are very few prerequisites for starting your degree at the ‘university of entrepreneurship’. There are no fees; there are no age limits, you can start as soon as you The real learning you need to succeed as an like and take as long as is required. entrepreneur is far more expensive and far So, what type of things can you tougher than academic or book learning. look forward to learning? Quite simply, it’s called experience! It’s When you first start out, because it’s a bit like learning to swim; you can read the fun and exciting bit, you’ll probably about it, study it, watch others do it, write spend most of your time on the product papers about it, but at some stage, you development stuff – taking that idea have to jump in the pool and get wet. you’ve had for a product or service All that best practise business theory you studied – it’s very hard to apply it in a cool, calm, collected manner when you’re fighting for your life, just trying to keep your head above the water, so you don’t drown. www.nzentrepreneur.co.nz

and figuring out how to turn it into a tangible, saleable commodity. Then your real learning will begin when you realise you then need to build a working structure (i.e. a business) around that product to get it into the market.

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Essentially, the first year or two will be spent learning how much you don’t know about each of the key elements required to build a successful business. Sales, marketing, product development, customer service, accounting and financial management, IT, law, management to name a few. This can be a very daunting and disheartening time, and many people drop out at this stage.

In his excellent book The E-Myth , Michael Gerber refers to the difference between ‘management by abdication’ versus ‘management by delegation’.

But it is an essential first step in your entrepreneurial education, as ignorance in any one of these areas can bring your business down. Not only will you have to do most things in your business yourself, to begin with (unless you’re lucky enough to start it with a partner or two), but as a business builder, you need to know enough about each area to understand what is required in each role. This is so that as you begin to hire people to perform each role, you can manage them properly and hold them accountable.

This can be a brutal process, and you need to be prepared to leave your ego at the door. Often you will be forced to make decisions with insufficient knowledge and information, most of which will be wrong.

If, after realising how little you know you decide to keep going, your entrepreneurial education will then continue through the process of Action – Reaction – Review – Adjust – Repeat; otherwise known as cause and effect, or trial and error.

This is where your openness to learning from your mistakes comes in. Acknowledge them and learn from them, and you will hopefully not make those mistakes again. Fail to learn from them, and you’ll be doomed to repeat them time and time again, hitting the same roadblocks and failing to achieve the success you desire.

Acknowledge them and learn from them, and you will hopefully not make those mistakes again. Fail to learn from them, and you’ll be doomed to repeat them time and time again, hitting the same roadblocks and failing to achieve the success you desire. www.nzentrepreneur.co.nz

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Entrepreneurship

It’s also during this stage of the process that you will undergo the most significant and meaningful learning of all. That is the learning about yourself. Your strengths, weaknesses, discipline, mental toughness, personal character and integrity – all these and more will constantly be tested. Even your reasons for wanting to be an entrepreneur in the first place will be tested, and I know many people (including myself) who had realised that the goals that used to motivate them when they first started out no longer mean as much. Most of all, it is your tenacity and perseverance that will be tested. Those who can stay the course will continue moving through the learning process, getting better and better and overcoming the obstacles, until ‘graduation’ and the inevitable success waiting for them at the end.

If you have a degree or academic qualification, that’s great – but don’t assume it will give you any advantage as an entrepreneur. And if you don’t, well three or four years out there in the marketplace will teach you more about entrepreneurship than any qualification – so do it! Like any great undertaking or journey, perhaps the best reward will not be the things you get from building a successful business, but the person you will become. A qualified, successful entrepreneur! Note: I have long been a proponent of lifelong learning, and my journey as an entrepreneur has been probably the most valuable learning opportunity I’ve had so far. This article is simply my perspective on learning in the context of entrepreneurship. I should point out that I do have a business degree and that no, I don’t feel I have graduated from the university of entrepreneurship… yet!•

Richard Liew is the founder and editor of NZ Entrepreneur magazine. He is an entrepreneur specialising in sales and marketing and holds a bachelor of commerce in finance, from the University of Auckland. www.nzentrepreneur.co.nz T: @nzpreneur L: Richard Liew www.nzentrepreneur.co.nz

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Sales

USEFUL STRATEGIES FOR SELLING TO PROCUREMENT MANAGERS BY Paul Rogers


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recall an experienced sales manager sitting me down and patiently explaining to me how I should try and sell to the ‘MAN’; that is, the person or team in the prospect organisation who had the Money, the Authority, and the Need. “There’s no point trying to sell to someone if they can’t say ‘yes!’”, he explained. “Find out who’s got the budget, who has the authority, and who to pitch to. No point in wasting your breath selling to the wrong person!” Now, while that advice is valid, business-to-business selling has become a little more complicated with the introduction of a new participant in the sales process – procurement.

TRADITIONAL PURCHASING Most of those who have been involved in selling to corporates are familiar with the traditional purchasing department. Historically, purchasing staff have processed the purchase orders, and in many businesses, if you can’t quote a purchase order number, the invoice won’t get paid. This has led to most purchasing staff being regarded as administrative gatekeepers; they issued purchase orders and may have issued quotations or requests for proposal (RFPs), but the real decision-makers were elsewhere in the business. Traditional sales approaches, and indeed contemporary models of ‘strategic selling’, promote a model of the sales process in which a proactive sales person – you – diagnose the prospect’s needs and propose a solution based on your company’s value proposition. If the purchasing department was involved at all, it would have been involved in registering you as a supplier, managing any bid process, and probably trying a last-gasp chiselling of your price to try and get a discount.


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CONTEMPORARY PROCUREMENT

IMPLICATIONS

However, the primarily administrative contribution of purchasing staff is not the same as the more fundamental role of procurement.

This has significant implications for those of us working in a sales role and pitching to prospects where procurement takes a central role. The opportunity to influence the process, and indeed to eyeball the key decision-makers and build a relationship with them, may be diminished.

Whether labelled ‘procurement’ or ‘strategic procurement’, the new breed of purchaser is not content to be sidelined as a ‘tender jockey’. Procurement is promoted as a profession, and the peak body claims that it is the fastest-growing profession in business in New Zealand and Australia. Procurement practitioners perceive that their role begins with the definition of need; the ‘questioning funnel’ beloved of solution sales still happens, it’s just that the definition of what is necessary is undertaken as part of the procurement process, rather than as part of the sales process.


Anyone who has received an RFP which states that ‘ALL communications shall be channelled through the procurement representative’, can relate to how frustrating it can be if we are pitching to someone who does not have the budget, does not have the need, but does have the authority to say “no!”.

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Here are some key concepts which you will encounter when dealing with procurement practitioners, together with an analysis of what they mean for salespeople: • Value For Money

• Category And Sourcing Managers

Value for money can mean anything to anybody! If your prospect works in the public sector, the term has a particular meaning. Procurement governance in the public sector emphasises the importance of focusing bid evaluation criteria around ‘value for money’ rather than lowest price. In theory, this should focus buyers on the elusive ‘total cost of ownership’, but for many procurement practitioners, the challenge they face is that price is the most easily measured of all the dimensions of value.

So what is different about a category manager? A category manager is typically someone who manages the end-to-end process, while a sourcing manager will generally only be involved up to and including the award of the contract.

If you are in dialogue with a procurement practitioner, and you ask “what are your key evaluation criteria?”, the response you will get will be “we consider a variety of criteria of which cost is one factor, but not the only criterion. We also take into account quality, service and lifetime costs, to identify the best value solution.” Unless the person that you are talking to is a category manager, dealing exclusively with that category, this may be an opportunity for you to leverage your subject matter expertise. Your response might be: “based on our experience of many buyers in this market, we have found that the key decision-making factors are typically quality, service, reliability and cost” or whatever combination fits in with your offer. The opportunity is to influence the bid evaluation criteria so that your solution has the best chance.

The significance of this is that a procurement or sourcing manager is likely to be a generalist, dealing with your market today, and another market tomorrow. However, the category manager will deal with their market day in and day out and probably knows at least as much about their category and the suppliers in the market as you do. This highlights a fundamental problem of an emerging profession; the lack of standards. The business card may say ‘Strategic Sourcing Manager’ or ‘Procurement Manager’, but as there is no consensus about the role and scope of these job titles, you will have to explore with each jobholder what they do. To complicate matters more, the rapid emergence of procurement opportunities has not always kept pace with the supply of qualified personnel. In practice this means that sometimes the business card may read ‘Strategic Procurement Manager’ but the behaviours (and indeed the occupant of the role) may have more in common with traditional old-fashioned purchasing.

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Sales

• Tactical Or Strategic? So how do you tell the difference? All procurement staff are measured by hard dollar savings, but we can distinguish between ‘tactical’ procurement people who will focus disproportionately on price, and more strategic procurement people, who will tend to focus more on cost – and maybe even value. So one question to ask is “what are your key evaluation criteria?”. If the response you get is “we consider a variety of criteria, and cost is one factor, but not the only criterion”, then this is the standard reply! You need to probe deeper; “How important is quality?”.

A follow-up question should explore “who sets the specification?”. Tactical procurement staff tend to be passive in the needs definition process, facilitating stakeholders in a ‘needs and wants’ meeting. More strategic operators tend to create a cross-functional team, which collectively determine the specification in the light of technical and commercial issues.

The significance of this is that if you propose an adjustment to the specification to reduce cost, a tactical procurement person will have no authority to do this, and will decline to discuss the standards: “it is what it is.” A A tactical buyer will acknowledge the importance of quality, but will quickly focus on more strategic player may accept a trade-off the commercial aspects of the deal, specifically if it does not compromise their ‘must haves’. price. A more strategic operator will link fitness for purpose, or the performance of the product or service in use, to the total cost.

A tactical buyer will acknowledge the importance of quality, but will quickly focus on the commercial aspects of the deal, specifically price. A more strategic operator will link fitness for purpose, or the performance of the product or service in use, to the total cost. www.nzentrepreneur.co.nz

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• What It Means To You The implications of the rise of procurement for salespeople are: • The traditional sales process is no longer possible if all communication must be routed through procurement. Build a relationship with procurement people as early as you can, and try to diagnose if they are strategic operators or more tactical.

• Telltale Statements The three strongest indicators that you are dealing with a tactical operator are: • “Have another look at your prices.” • “Sharpen your pencil.” • “Come to the party.” No self-respecting procurement person would make these statements; they are all euphemisms for “I want a 10% discount, so I look good!” So if you hear any of the above, hold on tight, you are dealing with a tactical buyer!

• If they are tactical operators the procurement process will have multiple rounds, so you may need to anticipate a ‘10% discount’ request at the end of the process. You may be able to access the end-users, though tread carefully. • If they are genuinely strategic procurement professionals, accept that the same process will be applied to all suppliers, not just to you! Try to reverse engineer the bid evaluation criteria, and adjust your offer so that it aligns with the prospect’s agenda. They may not be the MAN, but procurement people are here to stay.•

Paul Rogers is a freelance procurement consultant. To find out more visit www.paulrogers.pro

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Marketing

THE SWEET SPOT OF SUCCESS BY Chris Liew


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The Sweet Spot

Differentiation

Presentation

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t’s tough to say this, but sometimes online marketing can’t help when the fundamentals aren’t right.

On a few occasions, I’ve been told there are three key determinants of business success. And while I can’t take credit for the idea (thanks, Dave*), I’ve decided to call it the Sweet Spot of Success.

Awareness

DIFFERENTIATION It’s easy to say that your business is different, but it’s actually quite hard to truly stand out in a competitive market. Often a business owner will say “it’s the way we do things that make us different“. Unfortunately, this can be hard to prove, and it’s also hard for customers to value – plus, just take a look at how many businesses say this about themselves! Your customers want to know why they should choose you over someone else, and what’s in it for them. Give them a reason to pick you that no one else offers. www.nzentrepreneur.co.nz

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Marketing

The last critical part is to get your differentiated and wellpresented offer in front of the right people at the right time.

AWARENESS

PRESENTATION Whatever you offer, you need to make sure that you present it well to your target market. If you’re selling high-end watches you need excellent branding, fantastic imagery and luxury packaging. If you’re selling affordable pet food, then branding and packaging might not be critical to your customers. Take a look at what your competitors are doing and make sure your presentation is at least up to par with the rest of them. That website you had built in 2008? It’s probably time for an update. www.nzentrepreneur.co.nz

The last critical part is to get your differentiated and well-presented offer in front of the right people at the right time. There could be many reasons why this isn’t happening. Most likely your advertising budget isn’t big enough, you don’t have time to network, or you put off picking up the phone to make another cold call. None of this matters really. The simple truth is even if you have the most fantastic product on Earth, if people don’t know about it, they can’t buy it. In the age of smartphones and social media, there have never been more options to build awareness of your business or brand. Don’t let this crucial step hold you back from success – there is always a way to get the word out there.

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THE LITMUS TEST FOR SUCCESS If you’re a business owner (or marketer), this quick test will give you a good wake up call or reason to pat yourself on the back. The point of this exercise is to strip away any sentimental attachment we have to our business or brand and think like a potential customer. Just because we believe it’s a great idea doesn’t mean anyone else will. Is your product, service or value proposition truly differentiated from your competitors? (Bonus question: will your customers notice the difference?) Is your offer presented professionally and crafted to appeal to your target customers? (Bonus question: do you make it easy for customers to judge the value you provide?) Is your differentiated and well-presented offer getting in front of the right people at the right time? (Bonus question: are you getting their attention more than once?)

If you answered yes to all three questions, you’re probably ahead of 90% of your competitors. If you didn’t answer yes to any, then you are making it hard for yourself. Obviously, this simplifies and overlooks the hundreds of other factors that make a business successful. While it’s true that a lot of ‘me too’ businesses will survive, the ones that prosper get these three things right. Take a look at any successful business and see how they score (monopolies don’t count!). *Many thanks to Dave Holden at Focus Business Management for the insight and inspiration to write this article.•

Chris Liew is the founder of Auckland-based digital marketing company Clickstream. www.clickstream.co.nz L: Chris Liew

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NEW ZEALAND IS A HOTBED OF ENTREPRENEURIAL GOODNESS EACH WEEK WE PROFILE A STARTUP WE’RE WATCHING ACROSS A RANGE OF INDUSTRIES

Hire the Attire FOUNDERS: HQ:


Kathy Li and Anna Minnery Auckland

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Designer: Zimmermann

Designer: Natalie Rolt

Tell us about your business. Our service enables women to rent a designer dress for less. We provide the opportunity to rent an outfit for a night at a fraction of the retail cost, increasing the ability for people of all incomes to access high quality evening wear. Who and where are your target customers? Women aged 16 to 30 throughout New Zealand.

Who, how and when did you first come up with the idea for your business? As most teenagers do, in the face of various social events and school balls, my business partner Kathy and I fell in love with some of the designer dresses that we saw celebrities wearing, but were unable to afford the highticket retail prices of them on a student budget. We put our heads together and with the money that we earned through part-time jobs, invested in a handful of designer dresses and began renting them out to friends of friends at school. Everyone loved our idea – they were stoked to be able to wear something amazing on a tight budget, and they were amazed at how simple the process of renting was. As friends recommended us to their friends, demand for our dresses grew, and we decided to expand our dress range and service capabilities in order to cater to a nationwide demand. And thus, we created Hire the Attire.


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Designer: Camilla

What are your three biggest unique selling points? 1. Being a thriving small business in a large industry with a specific, easily accessible target market. 2. Our commitment to sustainability in the face of fast-fashion. 3. Social entrepreneurship through improving access to special occasion outfits for people of all financial standings. What are three things about your business that you are proud of? 1. The most rewarding part is definitely the feedback that we receive from girls who have rented our dresses, who have absolutely adored the outfit and are incredibly appreciative of our service. 2. We are also proud of the hard work we have both put into the business without support from mentors or investors, and being able to continue the business (and 24/7 support) throughout full time university, or full time work. 3. Lastly, we are proud of our high return on investment. If we’re ever unsure of a decision, or doubting ourselves, that is a testament to us that we must be doing something right. www.nzentrepreneur.co.nz

Left wearing Natalie Rolt, right wearing MLM

What is the biggest entrepreneur lesson you would like to share with other Kiwis thinking of starting their own business? When you start making money, reinvest it in growing your company. Keep your eye on the prize, and reap the rewards of your hard work later.•

www.hiretheattire.co.nz F: www.facebook.com/hiretheattire/ I: @hiretheattire

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Quick Fix

QUICK FIX Learning from Objections

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o you know the most common objections you hear? If you are listening well, and customer focussed, you should be able to recite them now. Chances are there will only be three or four. Know it or not, you will have an answer or response that you will usually give to each objection. Consider also what the responses are. Now, give detailed attention to both what is causing the objection, and how you can improve your response. Improvement will come from using better questions, not better answers. You will reduce the number of objections, and when they do arise, you will resolve them sooner. Objections give you the opportunity to learn and improve. Take it. • www.nzentrepreneur.co.nz

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“We have within us the capacity to manufacture the very commodity we are constantly chasing when we choose experience.” Dan Gilbert, Ted Talk WATCH IT HERE: ‘The Surprising Science of Happiness’
