Dealing With Crisis Situations

 

Everyone occasionally faces a crisis situation or perceived irregularities in their business. Entrepreneurs are no exception. How they deal with the crisis and potential negative perceptions separates calm, professional leaders from all others.

Some suggestions for Entrepreneurs:

  • Never overreact to situations where there is employee dissatisfaction, customer, or vendor complaints. Analyze the situation calmly before taking proper corrective action, instead of taking hurried actions due to external pressure.
  • If you do have a serious situation, do not create a smokescreen and divert attention away from it to hide the real problem.
  • Do not focus on the small or minor issues in managing your companies; focus on the larger or macro issues for greater impact. Let your management team manage the details.
  • If you need to make a statement or message regarding any irregularities in your company, do it for significant issues not trivial ones. If you mostly emphasize minor matters, your employees are going to be dismissive of such gestures.
  • Be sensitive to the message that you send with your actions. For example, if you are being austere or are having cost reduction programs, do not have bonuses or spending that is contrary to the current environment in your company. Having incentives is not inappropriate, but make sure that they are related to the right objectives and are perceived positively.
  • When you are borrowing a lot of money, do not spend it on bonuses or management extravagance.

While the above sound obvious, sometimes we tend to lose sight of reality and the negative perceptions that are created.

Ravi Patel

www.patelCFOservices.com

 

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Be Thankful!

Entrepreneurs have a lot to be thankful for!

First and foremost are our country and the free market system that allow Entrepreneurs the opportunity to create and grow businesses and prosper.

Employees are the backbone of companies and Entrepreneurs should be thankful for the dedication, loyalty and hard work put forth by their people to make businesses successful.

No business can sustain itself without customers and clients. Be thankful to your sources of revenue for putting their trust in you to provide services and products.

Entrepreneurs should also appreciate their suppliers and service providers who continue to supply essential goods and services to sustain their businesses.

Shareholders and financiers who have invested in your abilities to grow the business and provide a return on their capital should be high on the list of people to whom Entrepreneurs are grateful.

Do not forget to appreciate your gratitude to your business advisors who provide a sounding board for you to share ideas and seek advice.

Lastly, the community that you operate your businesses in should be appreciated also.

So on this Thanksgiving, I encourage Entrepreneurs to express their gratitude to the above stakeholders in your companies.

Ravi Patel

www.patelCFOservices.com

Published in: on November 21, 2017 at 4:43 am  Leave a Comment  
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Dealing with Problem Customers

Do you have customers that constantly cause problems? How do you deal with them? Should you let them go?

One might ask what kind of question is that? Why would someone think of getting rid of their customers? Seems irrational!

While the common saying “the customer is always right” might be used as a management philosophy, it is not necessarily true that all customers are always good for your business.

Entrepreneurs might have to stand up and exercise their leadership by letting some problem customers go.

Chronic complainers, without legitimate reasons, are very difficult to service and cause undue headaches for your employees. Unless the customer has genuine reasons to be dissatisfied, it is not in the best interest of management to service clients that constantly create irrational demands on your staff.

Entrepreneurs need to develop an excellent reputation for service and customer relations, but if need be it is okay to fire certain problem customers.

Ravi Patel

http://www.patelCFOservices.com

Published in: on April 4, 2017 at 4:34 am  Leave a Comment  
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Dependency is Risky

When starting their businesses Entrepreneurs might depend on one or a few customers for most of their revenues. This revenue concentration scenario is understandable for the very early start-up stage of a company.

As revenues grow, the increase hopefully comes from having more customers rather than only from more business with the same clients. Diversification in the source of revenues is a critical factor in the long-term success of the company.

The risk of concentration of revenues from only a few clients or one or two big customers could be huge. If a significant portion of the revenues are derived from, say one customer, it could be devastating for the company if such business was lost, reduced dramatically, or even if there were payment problems with such receivables.

Entrepreneurs, at the appropriate stage in their company’s growth, would be well advised to diversify the sources of revenues such that dependence on a few clients does not end up hurting their business. Businesses sustained by only a few customers might be following the wrong path.

Managing revenue concentration risk is a critical component of Entrepreneurs Doing the Right Things!

Ravi Patel

http://www.patelCFOservices.com

 

Thoughts for Entrepreneurs

A few management thoughts from past experiences:

  • Avoid overreacting to situations where there is employee dissatisfaction, customer or vendor complaints. Calmly analyze the situation before taking appropriate corrective action, instead of taking hasty actions due to external pressure
  • If you need to make a statement or convey a message regarding any irregularities in your company, do it for significant issues not trivial ones. If you mostly emphasize minor matters, your employees are going to dismiss such gestures.
  • Do not focus on the minor issues in managing your companies; focus on the larger or macro issues for greater impact. Let your management team manage the details.
  • If you do have a serious situation, do not create a smokescreen and divert attention away from it to hide the real problem. Be honest and you might be surprised at the support you get.
  • Be sensitive to the message that you send with your actions. If you are being austere or are having cost reduction programs, do not have bonuses or spending that is contrary to the current environment in your company. Having incentives is not inappropriate, but make sure that they are related to the right objectives and are perceived positively.

Things to ponder as you manage your companies …

Ravi Patel

http://www.patelCFOservices.com

Published in: on April 26, 2016 at 4:05 am  Leave a Comment  
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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

Letting Customers Go

Should you let your customers go?

Some might ask what kind of question is that? Why would someone think of getting rid of their customers?

While the old saying “the customer is always right” might be thrown around, it is not necessarily true that all customers are always good for your business.

Entrepreneurs might have to stand up and exercise their leadership by letting some customers go. Which customers are the ones that might be on the firing list?

Customers who are consistently not profitable for your business are not good for the long term. It is acceptable to have lower profits or losses from a customer over a short period for a potential lucrative strategic relationship. However, if the customer over a longer period continues to be a drain on your profitability, it might be time to let them drop off the list.

Chronic complainers, without legitimate reasons, are very difficult to service and cause undue headaches for your employees. Unless the customer has genuine reasons to be dissatisfied, it is not in the best interest of management to service clients that constantly create irrational demands on your staff.

Entrepreneurs need to develop an excellent reputation for service and customer relations, but if need be it is okay to fire certain problem customers.

Ravi Patel

http://www.patelCFOservices.com

Published in: on August 11, 2014 at 1:45 pm  Leave a Comment  
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