Avoiding Problems

Albert Einstein said “A clever person solves a problem. A wise person avoids it.”

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

But, 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 for Entrepreneurs than solving them. Do the Right Things!

Ravi Patel

www.patelCFOservices.com

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Should You Tout Your Business Processes for Marketing?

 

As Entrepreneurs build the foundation for growth for their businesses, robust business processes in all functional areas are essential. It would be difficult to scale your business without such processes.

Once you build robust processes and they are working well as intended, should you tout them as a marketing tool to differentiate you from competitors?

Outsiders might not care about your robust business processes, but they do care about the quality and reliability of your services. Plan your marketing strategy accordingly.

Efficient business processes are meant to produce consistent, repeatable, reliable, continually improving  results. Focus on the results of your robust business processes to differentiate yourselves from competitors rather than the processes themselves.

Current and potential clients look for high quality and reliability from their providers, so use facts to tout those differentiators!

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

A Strong Foundation For Growth

Watching a tree sway with the gusty Santa Ana winds creates a business analogy in my mind.

In order to survive the 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 an Entrepreneur needs to build a solid foundation to combat competition, market and regulatory forces and an uncertain economic environment. Without 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 built a solid foundation for growth?

Ravi Patel

www.patelCFOservices.com

People or Process Dependency

When Entrepreneurs start their business and during the initial growth stage, they rely upon a few people to know most aspects of their operations. Entrepreneurs depend upon these key people for everything and if someone is absent, it disrupts the operation as no one else is aware of the required details.

For companies to grow, it is critical to develop efficient, solid business processes. Reliance on an individual for knowledge of  the procedures to conduct business is risky.

A solid process provides 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 have more dependency on processes than individuals.

Ravi Patel

 

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

Customer Analysis

Producing accurate and timely monthly financial statements should not be the end goal for Entrepreneurs. Analyzing not only the financial statements, but also all aspects of the business is what helps Entrepreneurs better understand their operations and make optimal decisions.

One of the areas of analysis should be customers. Customer analyses related to size, profitability, diversification, quality of services, etc. should be conducted periodically. Such analyses are critical in better understanding the contribution of your top and marginal customers towards your profitability and success.

Armed with valuable analyses you can approach your customers to discuss ways to serve them better. Do the Right Things!

Ravi Patel

www.patelCFOservices.com

Financial Analysis versus Instinct

Entrepreneurs by their nature are risk takers and successful because they rely on their gut intincts to do innovative things.

As the capital needs of their businesses grow, they have to attract investors who often demand financial analyses for major projects or ventures.

There has to be a fine balance between decisions made on instinct and ones based on financial analysis. While the “entrepreneurial” spirit in decision making is important, the need for solid analysis should not be overlooked.

Entrepreneurs should optimize decision-making by achieving a proper balance between instinct and analysis.

Ravi Patel

www.patelCFOservices.com

Honest Feedback for Entrepreneurs

In order to continuously improve themselves and their business operations, Entrepreneurs need honest feedback.

While their other employees may be somewhat reluctant to do so, hiring key management personnel who can provide honest feedback may be quite valuable. Obviously there is a fine balance that senior management employees need to maintain between being perceived as criticizing their boss versus being loyal to the company.

Entrepreneurs need to surround themselves with key neutral advisors who are open to providing honest and realistic feedback to Entrepreneurs. Such advisors could be informal friends and business associates, members of a Mastermind Group, or Board of Directors.

It is of course necessary for Entrepreneurs to be ready to accept such honest feedback.

Ravi Patel

www.patelCFOservices.com

Keeping Informed of Company Operations

Although I advise Entrepreneurs to let their key managers run their departments within broad operating parameters, it does not mean that the CEOs should be unaware of what is going on.

Entrepreneurs might want to set up a periodic reporting system with their key managers so they can stay informed on the operations of their businesses. Such reporting systems might include a summary of key accomplishments, planned upcoming activities and issues that might require assistance from the CEO.

A periodic reporting system allows Entrepreneurs to keep informed without micro managing their key managers on a daily basis.

Ravi Patel

www.patelCFOservices.com