Verify What You Trust

As Entrepreneurs start building a solid leadership team for growth, they have to rely on and trust their key management personnel. But is that enough to ensure superior performance and growth?

While trusting the leadership to do the right thing, the Entrepreneur must also oversee the building of management reporting systems that independently verify the progress made by the company in established metrics. Such systems should have checks and balances to ensure that verification can be relied upon.

Trust is essential, but verification is paramount for long-term success. This is similar to a previous post on whether you should depend on people or processes. Trust is people based; verification is process based.

Entrepreneurs, trust your people but do have verification systems in place.

Ravi Patel

Advertisements
Published in: on July 23, 2019 at 4:27 am  Leave a Comment  
Tags: , , , , , ,

Don’t Create Confusion in Your Business Process

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

Validate Your Idea Before Full Development

Soon after Entrepreneurs have ideas, they tend to forge ahead on product or service development at full speed. Is this always a wise course of action? Bias for action is a commendable attitude, but it needs to tempered with reality.

It is essential to obtain validation from potential customers or users before proceeding too far down the path of product or service development.

Regardless of how brilliant the idea, it is ultimately the customer that will decide if it going to be accepted. If the customer does not buy the product or service, there is no long-term value in the idea. Asking potential users about the idea and its potential features is a great way to validate its further development. Customers might even have thoughts and features that the Entrepreneur might not have considered.

There is always the argument that for a revolutionary idea the potential customer might not even be aware of the need, and it is the task of the developer to educate the users. There is merit in this argument; however, it doesn’t hurt to obtain some initial validation of the feasibility of the idea from potential customers.

A solid product or service development process should require some form of meaningful validation from potential users prior to going too far down the path of detailed design. Do the Right Things!

Ravi Patel

Enhancing Key Business Processes

Do you know the key business processes in your company? What are you doing to monitor the performance in these processes? Do you have systems to review these key business processes periodically and improve them?

As Entrepreneurs grow their companies, the emphasis should not only be on generating revenues, but it should also include improving the processes that deliver those revenues.

Total Quality Management emphasizes documenting your critical business processes; developing key metrics; measuring and posting these metrics; and continually improving the processes.

Entrepreneurs will then benefit from the enhanced quality and efficiency of their business processes.

Ravi Patel

Create a Strong Foundation

Watching a tree sway with the gusty winds brings forth a business analogy.

To survive strong winds, a tall, growing tree needs to have a strong foundation (deep roots) combined with the flexibility to sway with the gusts instead of being rigid.

Similarly Entrepreneurs need to build a solid foundation to combat competition, market and regulatory forces and changing economic environment. Absent a solid foundation a business might not be able to grow significantly. It would be akin to building a castle on sand.

What are some of the key ingredients to build a strong foundation? It starts with a system to deliver quality products and services repeatedly and consistently. In order to do that one needs a competent and dedicated team of employees and management utilizing robust business processes and procedures. A superior customer service mentality coupled with continuous innovation and improvement adds to the mix.

Just as a tree cannot remain rigid to survive gusty winds, a company must be nimble and flexible to adapt to the changing environment and customer needs to grow the business.

With such a foundation and flexibility not only survival but also significant growth is possible. Have you created a solid foundation for growth?

Ravi Patel

How Do You Generate Revenues?

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” has lessons for Entrepreneurs.

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

Published in: on June 5, 2018 at 4:42 am  Leave a Comment  
Tags: , , ,

What Drives Your Revenues?

While it is a cliché – in order to help a hungry man for the longer term one teaches him how to fish rather than giving him fish – it is a useful learning idea for Entrepreneurs.

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.

Determining the drivers of your revenues is a critical first step in improving and enhancing the revenue stream.

Do the Right Things!

Ravi Patel

www.patelCFOservices.com

Rely on Processes

During the initial stages of growth in their new business Entrepreneurs rely upon a limited number of people to know most aspects of their operations. Entrepreneurs depend upon these key people for everything and if someone is not present, it disrupts the operation as no one else is aware of the required details.

For organizations to grow, it is critical to develop efficient, solid business processes. Reliance on an individual or very few people for knowledge of  the procedures to conduct business is quite risky and not prudent.

Solid processes provide the foundation for imparting knowledge to multiple people for understanding the procedures and if properly cross-trained, any one should be able to fill in or step up to perform the necessary tasks as required.

Information on business tasks residing with individuals not only poses a risk, but also eliminates improvements since the individuals have always been doing it the same way and see no need to change. A well-defined process on the other hand allows measurement and continuous improvement from many people to make it even better.

Entrepreneurs should rely on processes rather than individuals.

Ravi Patel

http://www.patelCFOservices.com

Testing the Market

Entrepreneurs definitely have ideas, but then they tend to forge ahead on product or service development at full speed. Is this always a wise course of action? Bias for action is a great attitude, but it needs to tempered with reality.

Testing the market by obtaining validation from potential customers or users before proceeding too far down the path of product or service development is a wiser first step.

It is ultimately the customer that will decide to accept the product or service regardless of how brilliant the idea . If the customer does not buy the product or service, there is no long-term commercial value in the idea. Asking potential users about the idea and its potential features is a great way to test the market and validate the idea’s further development. Customers might even have thoughts and features that the Entrepreneur might not have considered.

There is always the argument that for a revolutionary idea the potential customer might not even be aware of the need, and it is the task of the developer to educate the users. There is merit in this argument; however, it doesn’t hurt to obtain some initial validation of the feasibility of the idea from potential customers.

A solid product or service development process should require some form of meaningful testing of the market by obtaining validation from potential users prior to going too far down the path of detailed design. Do the Right Things!

Ravi Patel

www.patelCFOservices.com

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