Confusion Kills Excellent Business Processes

While travelling recently, we stopped at a food establishment in the airport.  This chain had an established process of ordering and delivery of food items. However, this process was neither intuitive nor well-posted for patrons to understand, creating confusion and frustration.

There is a lesson for Entrepreneurs. As you focus on reviewing and improving business processes, do not forget that such processes have to be well understood by the users. There should be a strong emphasis on effective communication of the established processes.

For external users of your business processes, such as clients and vendors, lack of proper communication could negate the effectiveness of your procedures regardless of their excellence. Periodic follow-up with these users as to their understanding and feedback on the process would create an opportunity for refinements.

For internal users, communication combined with training is absolutely necessary. Developing a business process, no matter how good it is, will be effective only if your employees understand it.

Develop, improve, effectively communicate and fully train the users about each business process, otherwise confusion will kill your processes.

Ravi Patel

www.patelCFOservices.com

Is Rapid Growth Always Good?

Entrepreneurs are mostly focused on growing their companies and would like nothing more than rapid growth. Compared to the alternatives, managing growth is a nice “problem” to have.

However, is rapid growth always good for Entrepreneurs? Not necessarily.

Being ready for and managing rapid growth requires tremendous preparation and infrastructure. In addition to unique product and services and a solid management team, items such as adequate facilities, reliable IT infrastructure, communication systems, developed business processes, working capital lines of credit, access to growth capital, a group of professional advisors (lawyers, accountants, etc.), an industry advisory group or Board, and so on must be in place.

Most Entrepreneurs have a few of these things in place as they expand, but reach a crisis point when certain required elements are not readily available or in place.

While rapid growth is desirable, Entrepreneurs must ensure that they have in place the requirements to manage such growth . Otherwise, rapid growth may not be good for them.

Ravi Patel

www.patelcfoservices.com

Promoting from Within or Not

As Entrepreneurs build up their management teams while they grow their companies, they are often posed with a dilemma – should open positions be filled from within the organization or should they hire from outside? This is a critical issue.

The immediate needs of the organization have to be balanced with motivating, developing and rewarding high-potential individuals internally. 

My general philosophy is to identify, train and develop loyal, internal people for the long-term management team of the organization. This is what I call Entrepreneurs  “Doing the Right Things.”

However, when the company is growing, all the necessary skills to build the company might not be available internally. In these cases, knowledgable and experienced executives should be hired from outside to fill the void.

This dilemma can only decided on a case by case basis depending upon the specific situation.Formulating an optimal balance between internal promotions and external resources is the blueprint for long-term human capital management for Entrepreneurs.

Ravi Patel

www.patelCFOservices.com

Let your People Make Mistakes

In the early stages of entrepreneurial companies, Entrepreneurs often exercise strong control where virtually all decisions are made by them. Entrepreneurs are not yet ready to delegate responsibility and trust their people with decision-making authority. Entrepreneurs do not want their people to make mistakes.

That is no way to develop your people and grow the company. Entrepreneurs have to be willing to allow their people to learn how to make good decisions on their own. This may result in a few mistakes, but let those be learning experiences rather than creating an environment of fear to make decisions.

Entrepreneurs must let their people make mistakes and learn from those situations. There is nothing wrong in having checks and balances to prevent unchecked major mistakes hurting the organization.

Managing a growing company is akin to watching a child learn to walk. Parents allow their children to fall so that they can get up and learn to walk. Entrepreneurs need to do the same.

Do the Right Things!

Ravi Patel

www.patelCFOservices.com

Informing Clients of Bad News

All Entrepreneurs at one time or another are faced with situations where they might have to share some bad news with clients. What do you do?

If you are faced with a situation where you cannot deliver a product/service to a client per the original scope, there is a quality problem, a delay in performance, cost overruns, and so on; if or when do you communicate this news to the client?

  1. Inform them right away that you are facing a problem situation and the company is actively working on a plan for correction
  2. Communicate the problem situation and the corrective action plan after it has been developed
  3. Do not communicate this to the client until they find out. At that time inform them that you were aware of the problem and were working on the solution.
  4. Never inform the client hoping it will go away. If it surfaces, blame someone else in your company.

The Entrepreneur’s consistent philosophy in addressing the above situation with either one of these or other scenarios determines the long-term relationship with clients and success of the company.

What do you do when faced with such a situation? Do the Right Things!

Ravi Patel

www.patelcfoservices.com