Business Eroding Problems And How To Avoid Them.
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Like most industries that reward hard work with sustainable wealth, career satisfaction, and the opportunity to positively affect the lives and welfare of others, life as a business owner/CEO is a competitive business.
Experience is invariably the most important ingredient in building a rewarding business. This article, therefore, is possibly more insightful for the young entrepreneur aspiring to purchase or take a business than it is for the more experienced in the field.
The best way to enter into business ownership while reducing as much as possible youthful errors is of course to apprentice with an experienced businessperson for a period of years until enough confidence and experience is accrued in the young entrepreneur to warrant his/her severing the chord and operating independently. Even then, retaining the experienced mentor as a mentor has invaluable benefits, if for nothing else to learn the subtle art of customer communication leading to positive revenues.
So proceeding under the watchful hand of the patriarch/matriarch business elder may reduce operational mistakes, but what about the other, not operational matters that must be dealt with. Those issues dealing mainly with positioning the business now to benefit in the future may or may not be satisfactorily addressed by the mentor, so it’s with those main business issues that we deal with here.
Business Eroding Problems
- Proceeding before Planning
New entrepreneurs may feel the need, or the desire, to change the business (if acquiring one) – possibly to bring in a new caliber of customers, increase prices to make more money, etc. Some locations, no matter how hard an owner markets or produces, may just not provide the opportunity to change the underlying characteristics of the business. It will be difficult, though not impossible, to operate a highly producing business in a location where people don’t need the product. Issues like this are revealed through planning and ascertaining from research gleaned on the location and market what is possible in a particular operation. Young entrepreneurs need to start with their goals (and dreams). Those with an entrepreneurial bent need to foster hope for why they entered their field in the first place.
But planning meets reality, and without the practical observations gleaned from diligent research, the aspiring entrepreneur may end up wasting time and money pursuing objectives that prevailing conditions may render impossible to achieve.
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- Structure Staffing To Avoid Fraud
A commonly dealt with problem among business consultants, abstaining from structuring the business to prevent fraud is a disservice not only to the CEO.owner (in lost funds, time and money spent on legal proceedings), but also to the staff (those engaging in the fraud and the others).
Segregating duties, instituting checks, policies and procedures, and doing regular internal audits of processes and financial information protects the staff because they don’t have the opportunity to be implicated in a perceived fraudulent activity when something goes missing or wrong. There are many reasons why things don’t reconcile all the time ( inputting information in the system incorrectly, incomplete reconciliations), but if your processes are set up to reduce fraud, your staff don’t even have to go though the agonizing pain of implication by association (ie: we can’t prove you didn’t do it, so possibly you did).
Without proper procedures to facilitate workflow and protect business assets, the business can crumble when the wrong staff member comes in. Everyone has hired incorrectly at some point in time, so it’s prudent to put proper procedures in place to assuage the temptation to commit fraud in the first place.
Examples exist of staff colluding with patients to engage in fraud; to prevent this, protect your assets – and your hard-working staff up front.
- Service appropriately the clients you know will come.
New business owners, whether due to impulse, lack of research, or disgruntled response to the past, over-market services and products to their customers who have either no need or want for them. Positive referrals remain the least expensive and most powerful way to build a busy, profitable business, and in today’s society customers remain most compelled and motivated to provide a positive referral of you if they have been treated well, with respect, and have had their needs – and possibly desires – satisfactorily serviced.
Paradoxically, the best time to earn a positive referral may be when things are not optimal with a customer, and you the CEO/owner need to step up to the plate to make it right. Assessing the situation and the customer, and knowing him/her well enough to understand what it will take to bring him/her to the point of satisfaction can be just as valuable in the business context as the products/services you provide.
These are just a few things to consider when entering the business entrepreneurship foray. Taken for granted is the CEO/owner’s ability to provide optimal products/services Business ownership, and the requisite negotiating, managerial, and human resource skills, are areas that all business owners need to continually practice and hone in order to stay competitive in todays business environment.
Nicholas Kilpatrick is a partner at the accounting firm of Burgess Kilpatrick in Vancouver, B.C. He specializes in business development, and has worked with business owners to increase profitability at all stages of their businesses. He can be reached at nkilpatrick@burgesskilpatrick.com or at 604-327-9234.
