Category Archives: preventing business problems

EIGHT Crucial Questions Aspiring Entrepreneurs Should Be Asking Prior to Launching

By James D. Roumeliotis

Image result for male and female entrepreneur

Potential entrepreneurs and inventors are individuals motivated primarily by the desire to create something new, the desire for autonomy, and financial independence who are equally convinced that their product or service idea possesses tremendous potential. However, without a structure in place and vital concerns to honestly deliberate, as well as confront, the prospective entrepreneur may be diving into an unfamiliar commitment prematurely.

Asking the right questions to prepare the road map ahead, along with predicting the worst-case scenarios, will place the aspiring businessperson in a superior proactive rather than in a totally capricious and reactive position.

As a serial entrepreneur stretching over 35 years and in three countries, I have developed a series of questions to asses prior to engaging in a new enterprise. The self-evaluation questions which should be addressed are as follows:

1)      Will my product or service idea be viable, and does it solve a problem?

  • Do an adequate/in-depth research of your target market(s) and your competition (if any).
  • Know your potential size of your target market(s).
  • Be familiar with your USP (Unique Selling Proposition). Can you articulate
  • Establish a business model to identify the products or services the business will sell (whether B2C, B2B or both), and among other elements to ponder such as the target market it has identified, and the expenses it anticipates.
  • If what you are planning to offer is considered disruptive and will make people’s lives easier, than your chances of acceptance and sales will be significantly higher than the average existing competition.

2)      Do I have adequate funding to launch it and keep the business going?

  • There should be sufficient start-up funds, as well as funding available to keep the business active for cash-flow purposes, as well as to grow the company. Every type of business has different funding requirements.
  • Sources of funding are bootstrapping/own funds, debt (line of credit, credit cards, traditional and alternative bank loans) and/or equity (friends, family, potential investors, etc.)

3)      Do I possess the characteristics required to deal with entrepreneurial            hardships?

  • An effective businessperson has an inquiring mind and should never stop learning. Familiarize himself or herself with the barriers and challenges an entrepreneur is often confronted with.
  • Possess tenacity and able to think clearly. Intense emotions from pressure should be restrained. Cool heads prevail and easier to undertake problems.
  • Organizational skills are critical along with an open mind and fiscal discipline.
  • Should not feel uneasy delegating tedious tasks (whether in-house or outsourced) and focusing on the core business operations.

4)      How much do I know about the industry I’m seeking to embark in?

A clear understanding of the business is imperative. The entrepreneur should be a perpetual student of the business and constantly seeking ways to innovate and improve oneself and the operations.

5)      Can I succinctly address all 4P’s of marketing (a.k.a “the marketing mix”) for the product(s) or service(s) I desire launching?

Every entrepreneur should be familiar with the marketing mix (Product, Price, Place & Promotion) and how each one applies to his or her product(s) or service(s).

6)      What are my financial projections (3 to 5 years)?

  • Achievable? Adequate? What about profit and cash flow?
  • Number of employees planning to hire (payroll costs), amount needed to spend on R&D, equipment, etc.

7)      What is my exit strategy?     

a) If things go awry.

An entrepreneur should know when to walk away if his or her business is floundering with little chance of turning it around. Perhaps sell it if someone else can salvage it. It is not a good idea to keep injecting good money after bad.

b) If the business is thriving in 5-7 years?

It may be a good time to pass on the reins to a capable family member, sell the shares to the partner(s), go public, or negotiate a buy-out from an established brand or competitor. If seeking funds from an Angel Investor or Venture Capital firm, this will need to be addressed.

8)   Do I have a circle of outside support such as a mentor/coach, attorney, accountant etc.?

A savvy businessperson surrounds himself or herself with mentors and knowledgeable advisors, who will nurture the executive to become a better and successful entrepreneur.

Ultimately

The aspiring businessperson should be honest with himself or herself of the challenges that lurk in launching and operating an enterprise — it is not all rosy and glory. Start-ups do not occur in theory. These questions, when answered wisely and truthfully, ensure the would-be entrepreneur does not get caught in a sensual dream that turns into a living nightmare.

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Preparing a Business Plan for its Applicable Audience: Bank, Investor or Other

By James D. Roumeliotis

Business Plan Image 2

Often, the initial task expected from an aspiring entrepreneur is to prepare a business plan. A comprehensive business plan, when concisely written, is a tool that conveys in detail the short and mid-term (1 to 5 years) goals and objectives comprising the projected sales strategies, the marketing, operational and financial plans. This document should include in-depth research conducted regarding the industry and the competition. Moreover, it describes the strengths, weaknesses, opportunities and threats/risks (known as a SWOT assessment) along with a financial analysis, and assumptions on growth. The average 25-50 page document also lays out a map of where your company will be and how it will get there – also known as the “vision.”

Pitch Deck vs Business Model vs Business Plan

A typical question normally asked is: which one comes first? It depends on which of the three is being requested. However, the pitch deck is generally sent early in the discussion. The business model is created for internal purposes and can be comprised within the business plan. The U.S. Small Business Administration (SBA) refers to the business model as “a company’s foundation and the business plan as its structure. The foundation, or business model, is the original idea for your business and a general description of how it functions. The structure, or business plan, elaborates on the details of your business idea.”

Artizan Fine Foods Pitch Deck Cover

A pitch deck is a presentation − a deck of between 10 to 20 pages slides that is shared to potential investors and/or used as a visual during a live presentation to either investors or other audiences. The pitch deck is an effective summary of the key items in the business plan and includes information about the business, who it serves and why, the size of the market, the unique selling proposition (USP) and how the business will win in that space. It also lays-out the details about what the entrepreneur intends on doing with the funds sought from an investor.

The pitch deck is created in a Microsoft Powerpoint format and converted to PDF prior to being sent-out via email.

Business Model Canvas Explanation

The business model, more specifically, a Business Model Canvas is a company’s plan for making a profit − a design for the successful operation of a business. It’s how you create value/make money while delivering products or services to your customers.  It’s in a form of a visual chart with nine building blocks describing, among other elements, a business’s value proposition, infrastructure, customers and finances. It can be used to understand your own business model or that of a competitor. The business model canvas was created by Alexander Osterwalder, of Strategyzer.

Business Plan Content - Sections - Image

The business plan is a non-static document (usually in MS WORD and sent in a PDF format) which describes in detail, what the business does, and how it’s going to achieve its goals and objectives. It also incorporates the business model, the financial projections, and all other details about customer interaction/engagement, customer service, operations including management capabilities.

The business plan is first and foremost used by a business as a reference guide and shared when requested by the bank for a possible loan and/or funding considered by the potential investor.

What a banker or private lender seeks

For debt financing, which is either provided by a bank or an alternative loan source, the business plan should contain a convincing reason why the money is needed and how it is going to be used in the business. Being the least risk adverse, as compared to an equity investor, a money lender’s main concern is the possibility of a business failure/bankruptcy. Its main focus is on the ability to make the loan payments and eventually repay the entire loan. As such, much emphasis is on the cash-flow analysis. Likewise, bankers are interested in the business background of the management team. The marketing plan provides information on how the business plans to cope with competition.

A lender’s additional information sought is other sources of finance the business presently has in its books along with a list of potential collateral which the bank can have readily access to (business and personal assets), in case the business is unable to repay the loan. Likewise, the borrower’s financial track record is carefully evaluated.

What an investor seeks

When writing a business plan specifically to raise capital to fund a new business or take an existing company to the next growth stage, an Investor — whether an angel investor, private equity or venture capital, seeks certain vital information and requirements. The business plan should include a detailed use of funds, a descriptive growth strategy, a list and profile of the competent management team, and credible, reasonable yet ambitious financial projections. An Investor will also look for a unique competitive advantage that enables the business to be more effective than its competitors, as well as whether the business will be making a profit and how long it may take to do so.  The business plan should also state an exit strategy since the investor needs to know how quickly he or she will achieve any gains on his or her investment.

Other specific uses of a business plan

Immigration officials (referring to U.S. & Canada) require those applying for an Entrepreneur or Investor visa to submit a business plan which states that the proposed business has the potential to create the required number of jobs (economic benefits for the country) to qualify him or her for business related immigration visa. Furthermore, the business is being invested meets the monetary requirements and is irrevocably committed (wire transfers, cancelled money orders etc.), an itemized list of goods and materials purchased for the start-up, as well as the lease agreement. The source of funds must be stated, as well as convincing information on the ability to develop and operate the business.

A Government agency may request the business plan to issue a grant. One of the components that simply must be present in the plan is to show that, as the business owner, you are investing your own money. The bureaucrat wants to know that there will be skin in the game. Additionally, what needs to be in the business plan to increase the chances of receiving a grant is how much money is sought, how the funds will be used  and how soon required (perhaps include a timeline). The plan must be written in a form which takes into account the economic benefits for a legitimate and viable business.

A Strategic Business Plan differs from other business plans as it exclusively centers around on the company’s vision and places emphasis on a particular objective. For example, to focus on a particular niche in the marketplace. What would follow is to makes sales, marketing and customer strategy more effective.

What follows is an ideal description and comparison, from the BDC (Business Development Bank of Canada), between the Business Plan and Strategic Plan.

Business Plan. Strategic plan. There’s a lot of overlap between the two, but there are also some crucial differences you should understand.

A business plan answers “what do I want to do?” questions. It includes your company’s organizational structure, marketing plan and financial projections. Its purpose is to define where you want to take your business. It’s often the founding document of a new business.

A strategic plan, on the other hand, answers “how will I do it?” questions. It includes a detailed action plan for the next few years to achieve your company’s goals.

Both should include a SWOT analysis (Strengths, Weaknesses, Opportunities, Threats) and be reviewed regularly so that they’re up to date.

In the final analysis

In essence, the business plan is a document not solely for the entrepreneur to spell out strategy and to implement it. Its purpose is also to make a pitch to a banker, potential investor, and prospective partner, or for other (rare) purposes such as immigration. As such, the information should be tailored to what is sought by the specific reader. It ought to provide clarity of thought and purpose, by clarifying strategy, introduce the Business Model, the company, its “raison d’être”, as well as the management team.  It attempts to persuade investors in raising funds, as well as honestly highlighting risks and challenges. The business plan serves as an entry point for further discussions. Besides the management team and its competencies, banks are concerned that their loan gets repaid at a defined point in time so they place emphasis on the projected cash flow statement. An equity investor prefers a business plan which is realistic yet ambitious, their focus being on growth, a return which will yield at least a 10x return on their investment along with an exit strategy in approximately five to seven years.

Key Elements of a Business Plan:

  • Explain the business model in simple terms;
  • Fit the plan to the company;
  • Be credible and informative;
  • Demonstration of knowledge of the market and competitors;
  • Stressing the risks and steps to overcome the risks;
  • Using clear and concise language.

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I deliver comprehensive Strategic Business Plans, Market & Industry Analysis, Marketing Strategies, and Business Models that get your business going and growing. Quick turnaround time and assistance with executing plan (optional). Contact me here.

In addition, I offer alternative working capital (minimum $5000 and six months in business)  based on your cash flow and receivables…not your personal credit score. Upon approval, funds deposited within 48 hours. You may fill-out this online form: https://armanikhoury.typeform.com/to/OBrv5r

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Starting a Business is a Relentless Mission: The Pitfalls of an Entrepreneur

By James D. Roumeliotis

Businessman Taking the Plunge

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Starting a business, most notably for first timers, whether as a sole proprietor/solo-preneur, in a partnership or purchasing a system called a “franchise”, appears to be something many aspire to do. You can’t blame them since they equate this undertaking to creative freedom and profit with no ceiling together with a lifestyle unmatched compared to working for someone else. However, the same number of prospective entrepreneurs may be blindsided by the undertakings required launching a business, let alone operating it successfully.

Drawbacks of launching an enterprise

Contrary to all the hype you read about the dream of starting a business which supposedly guarantees success, reality is quite the contrary. The odds are stacked against the average new entrepreneur (and seasoned ones with a reduced chance of failure due to prior experience). Ahead of embarking on the entrepreneurial path, factors to seriously consider are as follows:

  • Risk exposure especially financial: Even with proper planning to reduce the level of risk, you can’t control the outcome especially if the circumstances are unforeseen. The capital injection which any type of business requires, may not be adequate but also totally at risk. Beyond this, entrepreneurs need to consider the risk from employee disagreements, product liability, and regulatory requirements among other issues. Obtaining financing is also a challenge as banks require some revenue history and guarantees from the owner(s). Personal credit cards, savings, investments, as well as from family and friends are usually the only means of securing funding for a start-up. Borrowing against personal assets, such as a home creates risking the equity in one’s home. This is a financial commitment not all entrepreneurs are willing to make.
  • Uncertainty: Although the business may be successful at the start, external factors such as competition, downturns in the economy, or shifts in consumer demand may impede businesses growth. No amount of pre-planning can anticipate or control such external factors. Profits are not a guarantee during the initial two years either.
  • Time commitment and patience. When launching a business, chances are most, if not all tasks will be performed by the entrepreneur. Responsibilities include everything from purchasing to expenses, marketing activities, customer issues, equipment breakdowns and banking. This would entail working more than the typical 40 hours normally performed when working as an employee for someone else.  This time commitment can place a burden on family and friends and add to the stress of launching a new business venture. Moreover, the business may not be able to support a salary during the initial few months or longer.

Image result for disadvantages of starting a business

In addition, if you decide to take on a partner or two, be prepared to live with the consequences. It is a “business” marriage. In fact, you will be spending more time with this person than with your significant other. Do a thorough due diligence and make certain of the three most important factors.

  • Is he or she should be financially sound? No exceptions, otherwise, it may create issues moving forward including you having to foot the bill for the business’s financial obligations and possibly any future capital injections required.
  • That he or she is not carrying baggage: Make sure they have a good reputation. Not bringing along any legal or financial obligations (such as a bankruptcy or owe a significant amount of money to any parties).
  • Bring value-add such as a talent, strength that will make a vital contribution and compliment the work you do. You can’t possibly be good at doing everything. Ideally, each partner should contribute on an equal footing.
  • When you feel comfortable bringing the chosen partner onboard, do not waste any precious time drafting a legal partnership agreement/ (a shareholder’s agreement in a corporate structure). That is your partnership insurance policy – your business prenuptial agreement of sorts.

Why businesses fail?

New businesses, regardless of industry, have the odds stacked against when it comes to survival rates. According to the Small Business Administration (SBA), “About half of all new establishments survive five years or more and about one-third survive 10 years or more. As one would expect, the probability of survival increases with a firm’s age.Those survival rates have remained constant over time. That’s why it’s so important to understand how and where things go wrong—such information offers valuable lessons on what to avoid. There are many reasons, perhaps a combination of two or more. The following charts depict the main causes of small business start-up failure. Both, under-funded or well funded business have their reasons for failure – neither is immuned.

Business_Model_Fail_1

Business_Model_Fail_4

In the end

The advantages of staring a business are freedom, personal satisfaction and financial rewards. However, the downside is risking your funds and money obtained from other sources, the possibility that the business can fail, handling many roles with full responsibility, dealing with challenges head-on, and less quality time to spend with family and friends. With limited resources at your disposal, all these factors create stress not necessarily dealt with as an employee.

From the moment you have made the decision to go all in and plant for your start-up launch and throughout your daily operations, your full-time committed is crucial if you seek the desired results. If you fail because of internal factors alone, you have no one else to blame but yourself. At worst you will have given yourself the opportunity to test yourself as an entrepreneur and learned from that experience. Better yet, learn from other entrepreneurs’ mistakes. At the end of the day, “Failure is knowledge, knowledge is success.” – Tim Gibson

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How to Blemish Your Brand and Lose Market Share Due to Short-foresightedness: The Trouble with Major Food Brands

By James D. Roumeliotis

Nestle

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Yours truly, who took the audacious dive into the functional food and beverage business as a start-up and has presently taken it into the early stage phase, is having a field day reading about the challenges and frequent plethora of lawsuits brought about by consumers who have had enough of the deceit of the major food and beverage brands.

Once upon a time, during previous generations, renowned household brands such as Kraft, Kellogg’s, Pepsi Co. and General Mills, among many others, who once dominated the supermarket shelves along with loyalty.  Today, through their complacency and/or (as public companies) continuous pressure for quarterly sales and profit results mount, as well as through their cunning practices, we notice a backlash from food shoppers – most notably the more health conscious and finicky Millennials.

What Gives in the New Normal?

Today, consumers are more health conscious. This justifies the constant and extensive growth and popularity of the organic, non-GMO, clean label, plant based, farm-to-table and gluten-free product offerings. A large percentage of food producers of products in those categories are the small and nimble new kids on the block. They have hit hard on the established brands who are scrambling to adjust to this new reality.

Despite their vast resources and capital at their disposal, as large ships, they are not able to swiftly make the necessary reformulations or to introduce a healthier fare. As a result, the pressure from the unceasing decline of their revenues and market share are leaving them with no choice but to react, rather than be proactive.  Their path to least resistance is to acquire small health food and functional beverage brands in large numbers to compensate for their short-foresightedness.

The Permanent Health Craze

Hasty and reactive decisions, conniving strategy and foolish leadership have come back to bite them – serves them right. Use of inexpensive and toxic ingredients to engineer taste profiles and in some cases, make the products addictive, some of which include refined grains, MSG, artificial colors and flavors, high fructose corn syrup, Carrageenan and the other artificial and unfavorable which most of us have a difficult time pronouncing. Add to this GMO corn, soy and…well you get it.  More expensive and healthier options can be used but their fiscal paranoia signifies to them this will hurt their bottom line. The big brands avoid raising prices to compensate for more expensive natural ingredients despite research showing that consumers are willing to pay more for healthier choices.

Lawsuits Galore

The cause of distrust among consumers can be rationalized due to corporations misleading the public as a whole, since most of those public food producers are, first and foremost, accountable to heir shareholders. Deliberate misleading information by food producers in regard to nutritional benefits is akin to the nickel-and-diming by airlines, hotels and banks. But unlike the latter list, when it pertains to food, it is considered more critical as our health is at stake.

As a result, in the last few years, there have been frequent class action lawsuits against food and beverage companies. Everything from Non-GMO claims and the use of a better-for-you sounding ingredient such as “evaporated cane juice” rather than using the simple term “sugar” (one and the same). Such negligence and deceptive practices have made the established food brands vulnerable.

According to a Forbes August 2017 article by John O’Brien, titled “Food Companies Beware: Class Action Attorneys Aren’t Slowing Down”, it describes that  “Plaintiffs attorneys who target food and beverage companies with class action lawsuits are showing no signs of slowing down, according to analysis from international law firm Perkins Coie that also shows California’s lawyers are the most active.” Some of those lawsuits include consumers claiming they were misled into buying the product due to mislabeling.

Here is a small sample list of the shameful established food and beverage brands (click for the link to lawsuit article) with seemingly dysfunctional and old school strategies. They have become a favorite punch bag from the likes of this author along with numerous consumer groups and their hired attorneys.

Why Brand Image and Loyalty Matter

A “Brand” is a promise of something that will be delivered by a business. This promise comes in a form of quality, an experience and a certain expectation in the mind of the consumer. It includes the Unique Selling Proposition (USP). Marketing, on the other hand, is about spreading compelling messages to your target audience while branding is a combination of words and action. Marketing is extroverted and communicates quickly, while branding is introverted and a slow process if it’s to produce any real impact. Effective marketing activities are vital in developing a brand. When combined successfully, branding and marketing create and promote value, trust, loyalty and confidence in a company’s image, products and services.

According to an Edelman’s Trust Barometer, it was revealed that 77% of respondents refused to buy products from companies they distrusted. More disturbing is that 72% said they had criticized a distrusted company to a friend or colleague.

When customers are treated with honesty and delighted by a particular brand experience, they begin to bond emotionally with the brand. They become brand loyalists and advocates – buying the brand more often and recommending it to others. This behavior serves to build the brand’s reputation. This approach is priceless –even though it may take longer to take positive effect.

Brand reputation quote from Benjamin Franklin

Customers first, employees second — investors/shareholders third

In the ivory towers of public corporations, the CEO and board of directors have been programmed to put their stakeholders best interests above all else. Their mission is to do what it reasonably takes to deliver quarterly results ─ in other words, to focus on the short term rather than sow the seeds and do what is most beneficial for the future direction of the company ─ despite any short-term pains. Savvy and considerate top management know better that customers and employees are the two key drivers of corporate success.  The main principle is that if employees have a positive attitude, are passionate, well trained and competent, results will be reflected through positive customer experiences resulting in brand loyalty. Ultimately, the shareholders will reap the benefits through stock performance and generous dividend distributions.

Large well-established companies have several advantages over smaller ones mainly due to their imposing size, their brand recognition as well as for their plethora of cash and human capital. However, despite their deep pockets and plethora of resources, they are risk adverse, bureaucratic in their decision-making process and to some extent, disengaged from their customers. Moreover, if they are a public company, their initial allegiance is to their shareholders.

Start-ups and smaller businesses, on the other hand, have less money and resources at their disposal to grow or even compete in the unapologetic and competitive landscape. Yet, the small business is agile, nimble and creative and possess several advantages such as a clean slate, rather than the baggage many large corporations have been carrying over the years, as well as perceived as more trusting by consumers, further engaged with their customers, and a refreshing alternative to the established brands – provided the products offer unique and attractive characteristics.

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The Top 10 Most Read Articles in this Blog for 2015

by James D. Roumeliotis

Top 10 Articles for 2015

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As in every year, I have once again rounded up the ten most read/popular articles — this time for  2015. The following ten captured the most attention by numbers and from 154 countries in all. See them all below in descending order.  Your views are always encouraged including subject matter you think I should be covering more of.

THANK YOU for your readership and I look forward to feeding your mind with much more business practical food for thought this year which can be applied for timely results.

1 Luxury vs. Premium vs. Fashion: Clarifying the Disparity

2 Perceived Quality: Why Brands Are Intangible

3 The Art of Selling Luxury Products: Brand Story Telling & Persuasion

4 Mass Customization & Personalization: The Pinnacle of Differentiation and Brand Loyalty

5 Exceeding the Hotel Guest Experience: Anticipating and Executing Desires Flawlessly

6 Brand Awareness: the influence in consumers’ purchasing decisions

7 The Ultra Luxury Purveyors: Lessons from brands catering to the richest 1 percent

8 Identifying and Catering to the Discerning Consumer: Quality and Service Above All

9 Start-up Essentials: A Universal Roadmap for Starting a Business — Infographic

10 Product Features vs Benefits: The Brand Differentiation

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Business Vitality: Preventing Adversities Before They Occur

by James D. Roumeliotis

Businessman with telescope

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“Panic” and “chaos” are not what one should undergo in business. Unfortunately, many entrepreneurs are caught off guard more often than necessary when operating their business. In his book “The E-Myth Revisited”, dynamic author Michael Gerber states that a business person ought to work “on” his/her business, rather than “in” his/her business.

Start-ups have a leg-up if they launch and persevere on the “right track.” The appropriate definition of these two words together imply following a proper course of action. The analogy which can be applied to a business well-being is our own personal state of formidable health comprising of a healthy diet, frequent exercise and undergoing an annual physical. The objective is to be proactive, rather than reactive.

Remaining diligent and active as opposed to reactive

Entrepreneurs may be quite well versed with the products and/or services offered, but not necessarily with running their business including a bucket list of daily administrative tasks. Most notably, sales, marketing and finance/accounting undertakings. This is where honest consideration should be given in either bringing in a partner to complement the entrepreneur’s weaknesses or an external adviser and/or mentor to guide him/her. A sounding board should not be dismissed as prohibitive, thus solely for larger organizations. Seeking professional help is an important way to avoid or plan for business challenges.

Moreover, when drafting a business plan as the road-map, include a SWOT (Strengths, Weaknesses, Opportunities & Threats) matrix and “what if” scenarios — which will reveal and prepare one in avoiding the pitfalls of running a business, as well as coping with various challenges which can arise. In addition, consider plotting a business model as a prelude to the business plan. It makes you think through your business plan, which in turn communicates the business model. Both should synchronize. Make certain a short term (less than 12 months), medium term (13-30 month), as well as a long-term plan (30-60 month) have been conceived.

Savvy business people – whether new or seasoned entrepreneurs or CEOs of large corporations possess:

  • Insight and foresight;
  • Strategies and execution competence;
  • Alternative plans with an exit strategy in case situations turn awry;
  • The perception to take “calculated” risks rather than dive into the abyss;
  • Openness to third party advice;
  • Focus and consistency to achieve their goals and objectives;
  • The ability to see opportunity before their competition does and act upon it in a timely manner.

Negligence with current enterprises

Growing pains in any organization require a formidable administration to keep the business operating efficiently which includes customer front & center, profitability and more than adequate cash flow. Telltale signs of weak organizations can be traced to inept leadership. The following points highlight the deficiencies:

  • Poor customer service – slow or no customer inquiry replies – abysmal handling of sales and service complaints. Service is portrayed as a reward, not a right or benefit.
  • No Unique Selling/Value Proposition. Companies need to define and articulate their unique value proposition and deliver on it consistently. Create the platform for sustainable and competitive advantage.
  • Operational deficiencies – various ailments and no structure
  • Absence of or very little communication amongst staff and management. Divisions aren’t well-coordinated and do not function as a team.
  • No transparency. There is hardly any openness from management.
  • Unethical practices – short-term selfish objectives in search of market share. Top executives should promote social norms and principles as moral agents.
  • Lack of proper execution of decisions and with new products/services.
  • Productivity incentives should be implemented to boost results and employee morale. People must be given a reason to work hard and be efficient.
  • Creativity is practically non-existent. An absence of innovation and employee empowerment will hurt progress and stifle new ideas.
  • No clear vision/strategy – there needs to be a strategic vision that reflects a truly unmet need and has the commitment of a dedicated CEO. That means that there is a well-defined target audience with a distinct value position that is differentiated, meaningful, and deliverable.
  • A weak sales force along with an unattractive compensation plan.
  • Favoring nepotism and bias – promoting family members over other qualified employees often leads to resentment or, worse, prompts valuable non-family employees to leave the company.
  • Poor hiring practices – should hire for attitude and train for skills.
  • Slow/delayed decision-making process – too many layers – overwhelming bureaucratic structure.
  • High turnover, which leads to poor employee morale, reduced intellectual capital, lower service levels, higher operational costs and decreased productivity.
  • Management in a state of denial about their organization’s shortcomings – remaining with the dysfunctional status quo.
  • No channel strategy. Some companies focus on building a product, but don’t think through how to get it into the hands of customers. Even if your product is great, unless you can sell directly, you may be dead in the water without strong channel partners.
  • The hidden game – corporate politics – power plays by a handful of individuals for their own benefit to the detriment of their colleagues and the company.
  • Misrepresentation of brand(s) – too much hype – empty promises – not delivering on expectations – leads to dissatisfied clients who will alienate the brand.
  • Weak financial controls – cash flow dilemmas – over leveraged/under-capitalized (high debt-to-capital ratio) – not reinvesting a certain percentage of profits for future growth.
  • Absence of sound marketing program(s) and/or brand strategy. A brand is defined by how it behaves, from the products it builds to how it treats its customers, to the suppliers with whom it works.
  • Growing too fast and not staying on course as the company grows.
  • Lack or very little employee training & development.
  • Deficient in control systems – reactive rather than pro-active.
  • Lack of continuous improvements or complacent.

The way to solve an organizational problem is to swiftly confront the structural issues with a moral sense of purpose and ethics. It must also have preventive systems in place in anticipation of issues which may arise.

For its clients to receive stellar service, the enterprise must have its house in order. Besides structure and an efficient operation, employees should be trained and empowered to do their jobs efficiently.

Companies that disrespect their employees and shut-out clients get willfully isolated and have a short life span through an erosion of market share and significant loss of revenue. Thus, a company’s goal should place emphasis on serving its people properly and fairly. Higher morale generates higher profits – though occasionally other priorities hinder that objective, for example, self-serving behavior by certain executives.

Superman Businessman

Operational prevention: Implementation of systems and risk management

To preventing operational problems before they even occur requires anticipating them through operational intelligence. The purpose of risk management is to identify potential problems before they occur. To do so entails early and in-depth risk analysis through the collaboration and involvement of all parties involved in running the business. It’s where brainstorming occurs about potential problems regarding the product(s), service(s), market(s) etc. to search for and foresee issues, as well as create solutions in advance – eluding the element of surprise at some point in time. Risk management is comprised of: 1) Identifying, outlining and analyzing potential risks; 2) A course of action in handling the identified risks, as well as the implementation of risk control/elimination plans when/where necessary.

Business leadership should contemplate allowing constant flexibility to adjust strategy when necessary if the initial one isn’t effective.

There should be continuous checks and balances – especially with regards to internal financial controls through various procedures implemented to reduce errors or possible embezzlement by staff. Trust but verify ought to be the organization’s mantra and actual implementation.

Perhaps you can consider a risk analysis software such as a SAS platform whose practical use offers best practices to help the company establish a risk-aware culture through various enterprise risk models and forecasting. We note examples of aircraft pilots who diligently prepare prior to a flight – or ship captains making their plans prior to voyages at sea.

When all is said and done – avoiding pitfalls

Companies with inept leadership usually fail in the first or second year, but even established companies can stumble badly when they outgrow the capabilities of the founding team. According to statistics, as the latest available numbers from the two U.S. government statistical agencies responsible for providing data about new businesses illustrate, The Census Bureau and the Bureau of Labor Statistics, five years after new establishments were founded (1995, 2000 and 2005 respectively), 50%, 49 and 47 percent of them (correspondingly) were still in operation.

To be a successful and sustaining entrepreneur requires vision, strategy, execution and constant diligence – along with plenty of sacrifice. A new generation of young entrepreneurs think the road is smooth and a fast track to easy wealth. Obstacles and sacrifice are part of the deal. Harnessing opportunity and overcoming challenges on a daily basis to top the competition is constant work. These conditions are true no matter what the sector of business engagement or company size.

Enterprises spanning a wide array of industries, have earned distinction as “well-” or “best-” managed” by demonstrating business excellence through a meticulous and independent process that evaluates their management abilities and practices – by focusing on innovation, continuous training, brainstorming and caring for their employees’ well-being – as well as investing in meeting the needs of their clients.

Well-run companies thrive no matter what and learn from their mistakes – making certain they don’t repeat them. However, never give failures a second thought. There are no dress rehearsals in business either.

Onwards and upwards!

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