Are Good Decisions Always Fair?

Leadership is about making optimal decisions for the company as a whole, not only for certain segments of stakeholders. As they say, “you cannot please all the people, all the time.”

Entrepreneurs like to be loyal to people, especially those who helped them start the business and were early employees. However, as the company grows, Entrepreneurs have to make decisions that might be tough, unfair to some, and unpopular.

Good decisions involve doing the right things even it means that some people might be adversely affected by such actions. Fairness is a great moral value, but sometimes business decisions cannot be optimal if everyone’s interest is taken into account. Entrepreneurs, on the other hand, should not in any way go out of their way to make decisions that purposely hurt certain people. That would be grossly unfair.

While difficult, make optimal decisions for your business that are ethical even if they might cause hardship for some people.

Ravi Patel

www.patelCFOservices.com

Avoiding Rather Than Solving Problems

A clever person solves a problem. A wise person avoids it – Albert Einstein

Should Entrepreneurs be wise or clever? Unexpected problems pop up in any venture and one needs to be clever to solve these issues on a timely basis.

However, if you could create a business culture that avoids problems or prevents them before they surface it would be wiser. How do you do that?

In any functional area of your business, strong business processes are required. If such processes provide triggers to flag potential problems, it is possible to avoid a taxing situation later.

A simple example – if you anticipate that you can not meet a customer’s delivery requirement after the order has long been placed, avoid a problem later by informing the customer well ahead of the delivery date and work jointly to create an alternative solution. Similarly, if there is an employment situation that could result in potential litigation, do not sit on it. Identify the possibility of such situations and create systems to resolve them before they become serious problems.

Avoiding problems would be more cost-effective than solving them. Do the Right Things!

Ravi Patel

www.patelCFOservices.com

Collaborating with Unexpected Partners

In order to be successful Entrepreneurs might have to “partner” with unexpected parties. Keep an open mind.

Entrepreneurs cannot do everything themselves. Collaborating with their stakeholders – employees, customers, vendors, bankers, lawyers, and so on – is customary and expected.

However, there might be times when Entrepreneurs might have to partner (not necessarily in the legal sense) with parties that they might not normally do business with. Competitors are the most common category of such unexpected partners. Entrepeneurs should never close their mind to working with competitors for the right reasons. Even giants such as Apple, Microsoft, Yahoo, or Google collaborate with each other. The operating philosophy behind such partnerships should be that it is a win-win strategy for both parties.

There might be other unexpected parties – Government, research organizations, foreign companies and so on – that an Entrepreneur could collaborate with. Keep an open mind and explore the possibilities as long as it does not take your focus away from your Mission.

Ravi Patel

www.PatelCFOServices.com

 

Vision with Execution

“Vision without execution is a daydream. Execution without vision is a nightmare” – Japanese Proverb. How appropriate is this wisdom for Entrepreneurs?

Many people with good ideas keep on dreaming of making it big. But they don’t (or can’t) as they do not put their ideas into practice. Not executing your vision gets you nowhere except in your dreams.

Action-oriented people rush to do things, but are they doing the right things? If you don’t have a plan or vision, what are you executing? It is like driving fast, but not knowing your destination. How can you get there and even if you do, is that the correct destination?

A successful Entrepreneur combines a realistic Vision with proper execution to reach his/her goal. Having the proper balance between the two and synchronizing the efforts of your actions to the purpose of your Mission is necessary for success.

Don’t dream of doing things; Do the Right Things!

Ravi Patel

www.patelCFOservices.com

 

Published in: on July 10, 2012 at 5:32 am  Leave a Comment  
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Independence for Entrepreneurs

As we are about to celebrate our nation’s Independence Day, a few thoughts on Entrepreneurial Independence.

Entrepreneurs start their own businesses primarily for two reasons. They either believe that they have a better product or service, or they do not want to work for anyone else. The latter is born out of a desire of having their own independence.

As they grow their companies, Entrepreneurs lose their independence because they cannot effectively manage their businesses and/or get into a financial bind. In such cases someone else has to come to lead the company or exercise financial control (through investors or lenders), depriving Entrepreneurs of their independence.

How can Entrepreneurs maintain their independence?

First, understand one’s limitation in managing the business and build an effective management team to adequately complement the Entrepreneur. An enlightened Entrepreneur might even have to hire a CEO or COO to lead the operations of the company while the Entrepreneur focuses on his/her core strengths.

Second, pay attention to the financial strength of the company. Manage the growth and cash flows effectively such that lines of credit and borrowing are sufficient so as not to dilute equity. Even if equity capital needs to be raised, go for it when the value of the company is high enough so that the Entrepreneur can retain the majority stake.

Entrepreneurs can maintain their independence, but they have to work at it.

Ravi Patel

www.patelCFOservices.com