A Silver Lining

As the cliché goes, ‘there is a silver lining behind every cloud.” So it is for business and Entrepreneurs.

A new or growing business faces challenges, obstacles and failures. If you choose to focus only on these “clouds,” you could get easily discouraged. But, every failure is a lesson and an opportunity.

There must be something positive in the fundamentals of your business that lurks behind the clouds – the silver lining. These could be your product or service, people, competitive advantage, clients, vendors and so on. Find it.

Entrepreneurs need to focus on their Vision and Mission and the positive aspects of their business. There was a reason that you started your business. Aspire to look for the silver lining behind the clouds and there is sure to be sunshine in the near future.

Ravi Patel

www.patelCFOservices.com

A Financial Vision Statement

Entrepreneurs are aware of the need for realistic Vision and well-defined Mission statements for their businesses. Vision and Mission statements are generally broad in nature and can encompass more than financial objectives.

Entrepreneurs might want to consider developing a specific, long-term Financial Vision statement to have clear objectives on their financial goals. Such a Financial Vision should be time-related and include realistic targets and interim milestones related to areas such as but not limited to:

• Revenues
• Gross Margin
• EBITDA
• Company Valuation
• Exit Strategy

Actual progress towards these objectives should be measured periodically and performance strategies could be modified to ensure that the company is moving along the path to achieving these targets.

While your Vision and Mission should be broadly shared with your stakeholders, the Financial Vision could be kept confidential to limited few so as not to detract from the main focus.

Ravi Patel

www.patelCFOservices.com

Sharing During the Holidays

In a previous post on “Balanced Life for Entrepreneurs” I had mentioned that one of the four corners of a balanced life is the communities that you live in and conduct business.

Some Entrepreneurs dedicate a significant amount of time in civic, charitable and community activities. This effort is commendable. For some, it is part of their Mission and Vision.

For others, it might make sense to establish some type of focus on giving and sharing. What better time to start than around these holidays. In addition to your individual efforts in this area, you might want to lead your business and employees in community activities. Not only will that inspire your employees, but it will reflect your company’s s desire to share and give in the community that you belong to.

Happy Holidays!

Ravi Patel

www.patelCFOservices.com

Reinforcing your Vision and Mission

Entrepreneurs – have you developed a Vision and Mission for your company? If so, that’s a great step one.

If not, you need to work on that. Since a lot of articles exist on how to develop a Vision and Mission Statement, I am not going to go into that here.

Having a defined Vision and Mission for your business is not enough. Communicating that to your leadership team and employees is crucial in order to obtain wide acceptance. The Vision and Mission that you developed is only a starting point, not the end.

Most Entrepreneurs, once aware of the need to do so, are diligent about developing their Mission and Vision. They even go through a formal process of publicizing it on their website and brochures and communicating it to their employees.

However, how often is the Mission reinforced to your stakeholders, especially your employees? If infrequently or none at all, there is a strong possibility that your overall business direction will be forgotten when your employees are deeply focusing on their daily tasks. Your Vision has to be their guiding principle too!

Reinforcing your Vision and Mission frequently is a necessary leadership step to ensure that the direction that your company should be moving towards is not forgotten.

Ravi Patel

www.patelCFOservices.com

Looking at the Glass Half-Full

Entrepreneurs have a very positive outlook regarding new opportunities and ideas. They tend to look at things as a glass half-full as opposed to half-empty. This type of optimistic thinking leads to innovative businesses.

Is this always a good thing? It depends.

If the Entrepreneur has some basis in reality and/or surrounds him or her self with good advisors, there is a good probability that he or she will not venture deep into seeming opportunities that do not make sense or are far-fetched.

On the other hand, if the Entrepreneur is stubborn and relentless in the pursuit of an idea, despite repeated contrary advice, then chances of failure increase.

It is a wonderful quality for Entrepreneurs to have optimism, curiosity and a positive view of new ideas and opportunities, but a reality check is necessary for long-term success.

Ravi Patel

 

False Expectations

Entrepreneurs get into business with an idea that they hope to develop into something really big.

As they put together their Business Plan, they have certain expectations of how this idea will be commercialized and the Revenues and Income that the business model would generate.

Entrepreneurs hire people and have expectations regarding their performance. Similarly they expect clients or customers, vendors, other stakeholders will work with them in certain ways.

Entrepreneurs need to be careful about not having false expectations or hopeful wishes when they develop their Vision and Mission. All expectations need to be realistic, rational, and take into consideration the factors beyond the Entrepreneur’s control.

Having false expectations leads to unachievable dreams and disappointment. Moderate your expectations to be realistic, so that when your expectations are exceeded one has a reason to be jubilant.

Ravi Patel

 

Completing the Balance Sheet

In a previous blog, I suggested that Entrepreneurs “take an inventory” of their businesses.

Taking inventory identifies the ”assets” of your Balance Sheet  (not in the technical accounting sense, but similar). In order to complete the “Balance Sheet,” you also need to focus on your “liabilities.”

What are the areas in your business that are weak and need to be improved? What technologies and processes need to be beefed up before they cause serious problems? Do you have employees or managers that need to be discarded because they are becoming liabilities? Do a few of your clients and suppliers pose issues that account for most of your time for resolution?

Taking a true assessment of your “liabilities” and coming up with plans to address those will definitely strengthen your “Balance Sheet” to acheive your Vision and Mission.

Do the Right Things!

Ravi Patel

 

Entrepreneurial Wisdom from Magic

At a keynote speech at a banking forum, Magic Johnson made several philosophical comments that are worthy of consideration by Entrepreneurs.

Magic is a self-made, successful Entrepreneur and highlighted three principles of his business philosophy:

• Make Money and Do Good – Magic believes that Entrepreneurs should make money, but in the process of doing that they should also do something good for the community or society
• Partner, Partner, Partner - Magic attributes his success to strategic partnerships. He stressed that Entrepreneurs should complement their skills and strengths (and weaknesses) with key partnerships with others.
• Focus Making Money for Partners, Not Me - Concentrating on making money for his partners is Magic’s focus. If he is succesful doing that, money for him will definitely follow.

Magic offers thoughts that Entrepreneurs should seriously consider. Do the Right Things!

Ravi Patel

 

Broad versus Niche Market Strategy

Entrepreneurs start with a great idea and build a company to commercialize that. When the going gets tough they attempt to add new products and services to meet cash flow needs. If they try to do that consistently, they end up having a market strategy that caters to a broad market. Is this always good?

Walking into or driving through In-N-Out Burger, one can marvel at their simple model. They focus on a few items in their menu and do a great job of delivering quality to their clients. It is no wonder there are long lines for their offerings. This is a great example of adopting a niche market strategy.

Entrepreneurs need to seriously review their vision and mission to determine what is the most appropriate market strategy for them. Is it better to offer product/services to a broad or niche market?

If one can target a niche market and serve it very well, it offers a competitive advantage that might be beneficial in terms of premium pricing. If you are cost-effective in your offerings, you might be able to compete well with a broader market strategy.

Do the Right Things!

Ravi Patel

 

Crisis Management Lessons from Chile

It was inspiring to watch the successful rescue efforts in Chile. While the emerging of the last miner and then the final rescuer from the mine was the culmination, there were many leadership moves and management actions from the beginning that made it all possible.

It all started within the mine. The leadership reflected by the shift supervisor and the team spirit of the miners was the ultimate display of poise under fire. The inspiration, motivation, and organizational skills especially for the first 17 days and thereafter allowed the miners to stay sane and hopeful. Careful management of meager resources for a common purpose – to survive – was critical.

Meanwhile above the ground, a positive attitude by the President inspiring his people to band together to organize the rescue effort was nothing short of perfection. Asking help from capable countries, companies and people was not seen as a weakness but a useful, necessary collaboration. Developing innovative techniques and tools to mount the rescue effort, and meticulous planning for contingencies and backup strategies to address those was commendable. Implementing those plans with complete visibility to the world was risky, but courageous.

Hats off to all the miners, rescuers, volunteers, support organizations, families and the leaders for banding together for a common mission.

When the details of the planning and execution of the rescue come out, they will provide a textbook case for crisis management for Entrepreneurs.

Ravi Patel