Does your business have high standards for business ethics?

Have you ever wondered how many of the successful business get caught in the public spotlight and are criticised for the lack of integrity in the organization.

Clearly culture counts and it starts at the top with senior management or the board of directors. Organizations need to understand that compliance with influences or rules created outside doesn’t drive ethics it should be the opposite, ethics driving compliance in the organization and the leadership in the organization is responsible for setting the tone.

There are different levels of ethical issues; there is workplace fraud and corruption, sometimes conducted at the highest levels of the organization, and ethical issues relating to how employee and customer relations are handled.

Checks and balances require care in how the organization structure is designed, how human resource decisions are made, and how overall business is conducted. It needs to be recognized that this is a very time consuming process and organization integrity is paramount; when difficult decisions are faced the instinct must be to default to core values.

Too often larger organizations pressure smaller business for concessions they can ill afford but if they don’t concede an entire contract may be lost. This happens even if the original pricing were agreed between the parties when the contract was signed. Where is the pride in living up to one’s word? What values are at the core of that behaviour?

 Ethics are derived from values and they make integrity a way of life in the organization. Honesty, respect, and responsibility can be pillars on which to build. It is essential that these values are shared throughout the organization through constant dialogue and through practice in decision making.

Corporate governance is used to promote business ethics and social responsibility. It also creates the framework for guidelines used by all individuals who are part of the organization. Fairness is one of the very basic business ethics concepts as it covers how the organization treats people in its commercial dealings.

The vast majority of businesses are ethical and at least have informal standards expressed through the behaviour of the CEO and senior managers. Anyone working in an organization that seems to behave in an overtly unethical way and chooses to stay or ignore the behaviour is part of the problem.

                                                                                                                                                                                                                                                                                                                                                                                   

Business Value Tip

Business Owners Who Do It All!

Some businesses can’t survive without the owners trying to do everything themselves  and there are no key employees in place to help manage the operations.  Buyers for businesses like these may be concerned if they themselves can’t replace the skills and experience of the owner.  As a result, these businesses may have very little value to anyone else.  Business owners who don’t delegate need to make a strong effort to have experienced key people in place before they ever try to sell their companies.

Tip compliments of Bill Sivell, VR Windsor

Business Values

Operating a business with 5 C’s

There are many values involved across the spectrum of business management but here are a few thoughts to consider in your operation.

Core competency – businesses in the never ending search for growth often stray outside of their core competencies. I suggest you concentrate on what your strengths allow you to do. Too often I have seen the eagerness to expand lead to an acquisition of a business that the entrepreneur knows little about. This can lead to huge wastes of resources, both time and money, trying to integrate a business that does not fit.

Culture – operating in today’s world of integration and worldwide business requires sensitivity to not only establishing a well understood and communicated business culture but an awareness of how our workforce composition understands, interprets, and reacts to management decisions. It may be important to appoint an individual to interact with employees and communicate company policy. This can help minimize offending an employee unnecessarily. Employees too need to look at the broad picture and not expect individual rights to override the common practice of the business.

Competition – understanding the strengths and weaknesses of your competition is a major key to success. Know when to act, react, and take advantage of the market place is paramount to improving results. Stay flexible and be ready to move when opportunity is there.

Capacity – managing the limit of the organizations resources helps maintain a balance between meeting demands of the marketplace and ensuring there are no bottlenecks to any surge in need for additional product or service. Lack of planning can affect financial performance and impede meeting customer needs. Accurate forecast not only of demand but availability of production capacity and resources are the mainstays of strong performance.

Cash – must conclude with “king of the C’s….. cash. Good cash management is a Core and foundation of any business.  Cash flow management is paramount and every CEO should be aware no less than monthly of this key reporting tool.  Good cash management can provide the flexibility to move in the marketplace to capitalize on opportunity. Poor cash management can put unnecessary strain on resources and stress on management.

There are other topics to be covered but these are some of the C’s worth Caring about.

Successful Business Planning

Creating a road map for a business may be a key to growth and success but how many entrepreneurs do it right. Here are suggestions for developing a solid plan.

1.     Shorten the planning horizon. With the speed of change today the 5 year plan has become obsolete. Shorten the timeline to 3 years. You can have great vision and well developed strategy but unless you can connect the dots between where you are today and where you want be you will fail.

2.     Manage what you can measure. Knowledge is power. Monitor the right information and your plan will have a greater chance of succeeding.

3.     Increase planning frequency. When the 2-3 year plan is complete, management meetings should be held at least quarterly to review where you are and what to do next. Quarterly meetings with the right decision makers will enable the organization to assess progress and realign targets to meet new business conditions.

4.     Write the plan yourself. This is an element of business entrepreneurs love to delegate to a consultant. A plan is better understood if it is created within the organization. The elements contained within the plan vary depending on the size and complexity of the organization. Only when there truly is a lack of the skillset for developing plans should the process be delegated to an outsider like a consultant.

5.     Share the process. Entrepreneurs who keep their plans close to their chest, not revealing them to anyone, do so at their own peril. Making other managers part of the process provides the opportunity to hold them accountable and they all share ownership of the plan.

6.     Be realistic. Plans that are overly optimistic or too safe are both wrong. Optimistic plans project revenues and a resulting spending scenario that may not be achieved. Deficits will result. Plans that are too conservative may result in limitations on spending because revenues are not expected. This may result in lost opportunities. Every effort to achieve realism should be undertaken and frequent reviews help keep the business on track.

7.     Share the plan. Once completed the plan should be shared with the management group so everyone understands expectations and the yardstick for success. The organization should, where possible, tie performance bonuses to result attained in the plan.

When employees feel a sense of ownership about the future you may be amazed what they will be willing to do for the organization to help ensure success.

Business Start-up

Starting a business – better think it through

A lot has been written on this topic but it is worth a few reminders as I often see the same mistakes repeated too often. Let’s look at some of the keys to a successful launch for a new business.

As a preliminary step, assess whether you as an individual are suited for entrepreneurship. Regardless of the merits of the business concept you must be prepared to deal with the risks and rewards of being your own boss and also responsible for those you may employ. If you assess that you are willing and capable of operating a business continue and carefully evaluate some of these factors.

1.     Start with a plan. Review the market potential of the idea. What is the competitive set? Should I start a new business or is there a business for sale that suits my needs?

2.     Will the business be profitable? I am often surprised by the lack of understanding of basic fundamentals ignored by some entrepreneurs. You must clearly understand the costs that will be incurred in setting up the business and provide a significant contingency fund to cover the unexpected. There are always surprises and setbacks that raise the costs of starting.

3.     If you are giving up a full time job make sure you are properly funded. It has been stated so frequently but under capitalization continues to be the most common yet often ignored reason for business failure. You may wish to start the new business part time to reduce your risks and allow the business to grow more slowly. The down side to part time activity is that you have less time develop the business or provide adequate customer service.

4.      Make sure you have a strong management team. Surround yourself with strong, qualified people. If you are using outside financing banks or other lenders will want to know “who is looking after the money”.

5.     Stay on top of the finances. You will sleep better if you have a handle on your bottom line. It’s nice to see sales flowing in but managing cash flow is critical and the key number is on the bottom line not volume at the top.

6.     Expect your competition to react aggressively if you are a new entry into the marketplace. Often the best defense from a competitor is an aggressive price competition. How will you react and your staying power may determine whether you survive.

7.     Take advantage of professional advice. Your accountant, lawyer, banker and others like the Business Development Bank can be very valuable and readily available assets. Don’t be too proud to ask for help. No one person has a monopoly on all the good ideas in business.

This just scratches the surface of issues to be faced but perhaps provides some food for thought. It’s a place to start this often challenging but potentially very rewarding road.