Do Entrepreneurs Worry About Fraud?

Almost all Entrepreneurs have heard about fraud affecting business. While they might be lucky not to have experienced fraud first-hand, they can appreciate the devastating effect of malfeasance and broken trust in companies.

Entrepreneurs are often too trusting of their employees, especially ones who started at the beginning. Too much trust without built-in internal controls leads to a potential environment for fraud.

Entrepreneurs might be aware of the need for internal controls in their companies, but the size of their organization often limits proper segregation of duties.

Regardless, Entrepreneurs should be vigilant about proper checks and balances as they build their organizations. While trusting your people is a fine virtue, a solid company is built on strong systems and procedures with proper internal controls.

Even in a smaller organization, creative division of responsibilities with reviews and approvals can provide adequate controls.

Protect your company against fraud by doing the right things!

Ravi Patel

www.patelCFOservices.com

It is About Attitude

Does your employee’s attitude have anything to do with performance? Of course, it does!

Employees with positive attitudes about themselves, towards the company and their fellow employees have the capability to perform at a higher level.

So what do Entrepreneurs need to do to improve the attitudes of their employees?

It is important to have an understanding on how your employees feel about the company and their fellow employees. Using your HR department to conduct formal and informal surveys could help this effort. If affordable, it might be a good idea to have an objective, outside party conduct such surveys.

Supervisors should be sensitive to the problems faced by employees outside their work and how they might be affecting their performance. If the performance of an employees does not meet expectations, determine whether it is related to the abilities or skills of the employee or whether it is related to his/her attitude.

Entrepreneurs based on collected data should develop programs that improve employee attitudes thereby enhancing performance. It is by no means a one-time effort, but should be reassessed and revised  periodically.

Ravi Patel

www.patelCFOservices.com

 

Growing But Not Managing

Most people love growth in their business. However, managing growth could be painful especially if it is rapid. In fact, managing growth successfully requires thought and is really hard work.

Adding employees quickly might indicate your business is growing. Has the infrastructure to support the integration of these new employees in the company increased simultaneously? If not, it creates a painful situation for both management and the new employees. Unaccounted or unforeseen indirect costs, such as payroll taxes, benefits and insurance, could adversely impact cash flow. Rapid employment growth might also attract government scrutiny for compliance of labor regulations.

Fast growth in sales orders is a great thing. Do you have the ability to deliver those orders on time and maintain quality. Do you have an adequate customer service function to handle potential issues?

Rapid growth in revenues also means an increase in receivables (unless you are fortunate to have a cash-only business). Do you have sufficient working capital or access to funds to accommodate such an increase or even delays in collections?

While growth is exciting, Entrepreneurs need to manage it carefully to avoid or significantly mitigate the accompanying pains. Leadership requires Doing the Right Things!

Ravi Patel

www.patefCFOservices.com

Published in: on March 15, 2016 at 4:15 am  Leave a Comment  
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Learning to Trust Others

New Entrepreneurs like to be in “total” control. It is sometimes difficult for them to acknowledge that other people can do as good, if not a better, job than they can.  They also believe that if they share their ideas with people, someone may steal them and take advantage.

It is about trust. However, it is less about trusting other people, but more about not trusting themselves enough.

Entrepreneurs do take significant risks in the business sense – that is embark on new ideas, in an uncertain environment, with a not fully developed product or service, no ready customers, lack of adequate funding and so on. They are good at that.

When it comes to relying on other people, their risk-taking is limited. While they may trust family members, it is difficult for starting Entrepreneurs to trust outsiders. So what is the problem?

In my opinion, the issue is that Entrepreneurs do not have sufficient trust in themselves to identify, train, and coach the right people to delegate key responsibilities. Sometimes loners, people management skills are the least ones they have developed. This often creates a situation where Entrepreneurs end up performing all key tasks and stretching themselves too thin.

Entrepreneurs need to train and then trust themselves to make appropriate people decisions so they can then trust those people to do the things right. The sooner they learn to do that the faster their growth and success.

Ravi Patel

www.patelCFOservices.com

Published in: on March 1, 2016 at 3:51 am  Leave a Comment