How Do You Judge Success?

When Entrepreneurs start and build businesses, their definition of success is most often that of  “making lots of money.” When they reach their desired level of this definition of success, then what? What about the process of reaching there?

Success is not only about making money or attaining wealth. Long term success should be judged by the degree to which you are enjoying health, love of family,  friendships, balance in life, and internal peace.

Evaluate your self-improvement, the number of people you have mentored, the lives in which you have made a difference, and the communities that you have benefitted to gauge your true level of success.

Making lots of money of course, does help in reaching the road to success.

Ravi Patel

www.patelCFOservices.com

Advertisements

Creating Music in Business

There are several similarities between creating melodious music and Entrepreneurs developing a fine-tuned business.

Creating a melody requires the correct musical notes. While a spectrum of notes is available to all, picking the right notes to create a musical piece is critical. One or more wrong notes and the resulting music is noticeably out of tune.  Similarly in business, an Entrepreneur has access to various resources – markets, clients, management team, employees, facilities, investors, suppliers, advisors and so on. Creating the right blend of these resources, just like selecting the appropriate notes, will allow the development of a beautifully functioning business. A wrong choice or decision here and there ruins the musical piece or a well-oiled business machine.

Playing only the correct musical notes does not make a melody; the notes have to be played to the appropriate beat. The business activities of a growing organization have to be running at the right pace. You cannot have some parts of the company forging ahead while others are lagging. Moving towards the goal at a managed pace leads to success.

Entrepreneurs do not have to be musicians, but applying lessons of music might help them in successfully growing their businesses.

Ravi Patel

www.patelCFOservices.com

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

Is Rapid Growth Always Good?

Entrepreneurs are mostly focused on growing their companies and would like nothing more than rapid growth. Compared to the alternatives, managing growth is a nice “problem” to have.

However, is rapid growth always good for Entrepreneurs? Not necessarily.

Being ready for and managing rapid growth requires tremendous preparation and infrastructure. In addition to unique product and services and a solid management team, items such as adequate facilities, reliable IT infrastructure, communication systems, developed business processes, working capital lines of credit, access to growth capital, a group of professional advisors (lawyers, accountants, etc.), an industry advisory group or Board, and so on must be in place.

Most Entrepreneurs have a few of these things in place as they expand, but reach a crisis point when certain required elements are not readily available or in place.

While rapid growth is desirable, Entrepreneurs must ensure that they have in place the requirements to manage such growth . Otherwise, rapid growth may not be good for them.

Ravi Patel

www.patelcfoservices.com

Promoting from Within or Not

As Entrepreneurs build up their management teams while they grow their companies, they are often posed with a dilemma – should open positions be filled from within the organization or should they hire from outside? This is a critical issue.

The immediate needs of the organization have to be balanced with motivating, developing and rewarding high-potential individuals internally. 

My general philosophy is to identify, train and develop loyal, internal people for the long-term management team of the organization. This is what I call Entrepreneurs  “Doing the Right Things.”

However, when the company is growing, all the necessary skills to build the company might not be available internally. In these cases, knowledgable and experienced executives should be hired from outside to fill the void.

This dilemma can only decided on a case by case basis depending upon the specific situation.Formulating an optimal balance between internal promotions and external resources is the blueprint for long-term human capital management for Entrepreneurs.

Ravi Patel

www.patelCFOservices.com

Let your People Make Mistakes

In the early stages of entrepreneurial companies, Entrepreneurs often exercise strong control where virtually all decisions are made by them. Entrepreneurs are not yet ready to delegate responsibility and trust their people with decision-making authority. Entrepreneurs do not want their people to make mistakes.

That is no way to develop your people and grow the company. Entrepreneurs have to be willing to allow their people to learn how to make good decisions on their own. This may result in a few mistakes, but let those be learning experiences rather than creating an environment of fear to make decisions.

Entrepreneurs must let their people make mistakes and learn from those situations. There is nothing wrong in having checks and balances to prevent unchecked major mistakes hurting the organization.

Managing a growing company is akin to watching a child learn to walk. Parents allow their children to fall so that they can get up and learn to walk. Entrepreneurs need to do the same.

Do the Right Things!

Ravi Patel

www.patelCFOservices.com

Informing Clients of Bad News

All Entrepreneurs at one time or another are faced with situations where they might have to share some bad news with clients. What do you do?

If you are faced with a situation where you cannot deliver a product/service to a client per the original scope, there is a quality problem, a delay in performance, cost overruns, and so on; if or when do you communicate this news to the client?

  1. Inform them right away that you are facing a problem situation and the company is actively working on a plan for correction
  2. Communicate the problem situation and the corrective action plan after it has been developed
  3. Do not communicate this to the client until they find out. At that time inform them that you were aware of the problem and were working on the solution.
  4. Never inform the client hoping it will go away. If it surfaces, blame someone else in your company.

The Entrepreneur’s consistent philosophy in addressing the above situation with either one of these or other scenarios determines the long-term relationship with clients and success of the company.

What do you do when faced with such a situation? Do the Right Things!

Ravi Patel

www.patelcfoservices.com

Strive for Excellence, But Not for …..

Striving for excellence in everything is a noble goal.

However, if one becomes too focused on perfection on trivial things or items, the benefits may outweigh the time and resources devoted to achieving excellence.

Entrepreneurs need to be aware that they cannot ask themselves and their organizations to strive for excellence in everything. Focus on a few goals and aim for excellence on those, but de-prioritize lower-level projects and accomplish them well. The resources of your organization should be allocated judiciously on higher priority goals requiring excellence.

It is okay to be excellent on major items, but good on minor ones.

Ravi Patel

www.patelCFOservices.com

When to Have Too Many Cooks ….

“Too many cooks spoil the broth” is a common saying that many people have heard.

Is there a time to have too many cooks involved in a project in an Entrepreneurial company? Absolutely.

For any major project, such as new product/service development, IT hardware/software selection or implementation, or building expansion, it is critical to have input from multiple sources to come up with the best specification for the new project. This type of diligence up front ensures that most ideas are considered and there is no critical issue of “second-guessing’ later on. The specification should not be a hodgepodge of ideas, but a solid framework that takes into account (though not necessarily includes) different viewpoints.

Once the project specification is defined, there should be minimal changes and the project management should be delegated to responsible staff without micromanaging by “too many cooks.”

Entrepreneurs need to know when to have too many cooks involved in a project, and when not to.

Ravi Patel

www.patelCFOservices.com

Is your IT Infrastructure an Asset?

As Entrepreneurs grow their companies, their IT infrastructure needs to at least keep up, if not lead.

When the young company starts out, it is normal that the IT systems are built with a boot-strap budget. Entrepreneurs at that time need IT to effectively utilize human resources and keep both costs to a minimum.

As the company grows, the IT infrastructure needs to become a core asset to facilitate rapid growth and effectively network locations and employees. Technology adoption should be part of the growth and productivity strategy, not a reaction to increased workload and complexity of operations.

Entrepreneurs need to evaluate whether their IT infrastructure is an asset or a liability. If it is not the former, fix it otherwise it may crimp your growth plans.

Ravi Patel

www.patelCFOservices.com