Focus on Revenue Generation Processes

Almost everyone has heard the cliché that in order to help a hungry man for the longer term one teaches him how to fish rather than giving him fish.

Similarly for Entrepreneurs to be successful they should not only focus on increasing revenues, but should more importantly also improve the processes that deliver those revenues.

Entrepreneurs might be able to increase revenues in the short-term by doing it themselves. However, in order for revenues to continue growing for the longer term and through other people, they need to establish and keep on improving the processes that generates such sales.

In order to do so, they first need to understand the processes, improve them as necessary and then ensure they are repeatable with no lapse in quality. Documenting the procedures, training the people and monitoring compliance are necessary to implement robust revenue-generation processes.

Do the Right Things!

Ravi Patel

www.patelCFOservices.com

 

Honoring Organizational Relationships

Entrepreneurs are often used to doing  mostly everything themselves when they start their businesses. As they grow the organization, Entrepreneurs should build a structure with people in key functional positions and clearly defined supervisor-subordinate relationships.

Due to their founding the company and established informal relationships with initially hired employees (could be friends),  Entrepreneurs sometimes bypass the established organizational relationships and direct such employees at lower levels. This also encourages these employees in turn to bypass their supervisors and deal directly with the Entrepreneur or CEO.

Emergencies and critical decisions necessitate a breakdown in the organizational hierarchy. However,  organizational structure and the established supervisor-subordinate relationships need to be maintained to facilitate people to “Do the Right Things” and build companies for long-term growth .

This does not imply that Entrepreneurs should not maintain informal, leader-follower relationships at all levels in the organization. Instead, Entrepreneurs should cultivate an environment where the key management team and supervisors are the decision makers within their sphere of responsibility instead of relying on or promoting all significant decisions to be made by the Entrepreneur or CEO by bypassing formal relationships.

Ravi Patel

www.patelCFOservices.com

Goal Sharing

What is Goalsharing? It a process whereby the objectives of the company are synchronized with individual employee goals such that in completing the personal goals, the employee is actually also contributing to achieving the company’s objectives.

Why is it important? It creates a team of committed employees all working towards the same objectives. It also creates a congruence between all employee and organization goals, rather than everyone doing their own thing.

A Goalsharing Program is composed of two parts – establishing and achieving goals, and earning rewards based on achievement.

Management normally develops and sets the overall objectives annually at the beginning of the year. Using these as targets, IPOs are established for each employee in partnership with the supervisor. Each individual IPO must be tied in some way to the corporate objectives in order for Goalsharing to be effective.

Progress towards fulfilling the IPOs should be monitored periodically, preferably monthly. It also makes sense to review accomplishment of all IPOs in a company-wide forum, at least quarterly. Celebrate successes and stay on the path of achievement.

Reward for performance is the second part of the Goalsharing Program. An ideal program, in my opinion, rewards employees not only for the achievement of company objectives, but also for successfully completing personal IPOs.

Why both? If the company wins, all employees should win. This is the first level of reward. On a second level, each employee needs to execute and be rewarded for it. It would be unfair if an employee who does not complete his or her IPOs gets the same reward as another employee who successfully does. Thus, an effective reward program is based 50% on company objectives, and 50% on individual IPOs.

As in any team, no matter what the performance of an individual player, success is first measured if the team wins. Likewise, if the company does not achieve its most important objective, make money, individual rewards are neither affordable nor appropriate.

A Goalsharing Program, in my opinion, is the best of both worlds – a win for the company and a win for the employee!

Creating Value

Entrepreneurs start businesses as they have new and unique ideas for products and services. Is this enough to make the business successful?

Success is only achieved if you create value.

Value is created when it solves someone’s need or mitigates “pain.” If your product or service does not do that, you are not creating value. One might feel good about developing a new product or service, but if it does not create value in the minds of potential customers, there is no assurance of revenues.

So, when you launch your product or service ask yourself if you are creating value for your potential customers? Are you solving an existing need or a situation causing them “pain.” If not, why should they buy your product or service?

It is possible that sometimes consumers don’t even know they have a need or pain. In that case your product or service has to be marketed such that the consumer first becomes aware of the void and then realizes that your product or service solves a problem that they were not even aware of.

Consistent success occurs only if you create value for your customers.

Ravi Patel

www.patelCFOservices.com