Starting a Business – Page 8 – Management Library

May 15, 2013January 28, 2022

When a director knows what isn’t in the papers – a dilemma

Male executive going over business files

Winsome is a director of a large listed company. She has a strong track record in M&A advisory work and is now embarking on a non-executive career. She is finding the ‘hands off’ aspects of the role quite challenging as she is instinctively and by training a detail focused manager. She has been mentoring one of the young analysts at the company and recently helped him by reviewing a report that he was asked to prepare for the board.

The report concerned an acquisition that had been thoroughly analysed and was a compelling proposition due to a strong strategic fit and an advantageous price. The only negatives were:

1- The long standing employees who would have very high redundancy and retirement costs.

2- One of the international operations which uses agents and shows a historical tendency for large ‘round-number’ sums to be paid to these agents before tenders are awarded. This operation is only 3% of revenue and 2% of profit but the analyst is concerned that the forecast growth of the operation may not eventuate if the payments cease. He is aware that the board has a ‘zero tolerance’ policy for bribes and facilitation payments.

Winsome is concerned because the report covered these issues and called for the board to discuss and decide on a course of action. She has now received her ‘official’ version of the report in her board papers and all references to the suspicious payments have been edited out. Her mentee, when questioned, informed her that the CEO insisted on the edits as it was a small issue with a small part of the target company and the board was only to focus on the big picture.

Winsome is worried that if she says anything she will get her mentee into trouble but also that if she doesn’t say something the board could approve an acquisition that would later cause embarrassment and possibly worse. What should she do?

Many readers of this blog will be familiar with my newsletter The Director’s Dilemma. This newsletter features a real life case study with expert responses containing advice for the protagonist. Many readers of this blog are practicing experts and have valuable advice to offer so, again, we are posting an unpublished case study and inviting YOU to respond.

If you would like to publish your advice on this topic in a global company directors’ newsletter please respond to the dilemma above with approximately 250 words of advice for Winsome. Back issues of the newsletter are available at http://www.mclellan.com.au/newsletter.html where you can check out the format and quality.

The newsletters will be compiled into a book. If your advice relates to a legal jurisdiction, the readers will be sophisticated enough to extract the underlying principles and seek detailed legal advice in their own jurisdiction. The first volume of newsletters is published and available at http://www.amazon.com/Dilemmas-Practical-Studies-Company-Directors/dp/1449921965/ref=sr_1_1?ie=UTF8&qid=1321912637&sr=8-1

What would you advise?

Julie Garland-McLellan has been internationally acclaimed as a leading expert on board governance. See her website atwww.mclellan.com.auor visit her author page athttp://www.amazon.com/Julie-Garland-McLellan/e/B003A3KPUO

May 13, 2013March 28, 2023

Crowdfunding Update

Many entrepreneurs were excited last year when Congress legalized the use of crowdfunding for equity investments. This law, passed as part of the Jumpstart Our Business Startups Act (JOBS), would allow a business owner to raise up to $2 million over the Internet from individuals who invest a maximum of $10,000 per person. Too good to be true? Continue reading “Crowdfunding Update”

May 5, 2013January 28, 2022

Should the MD have a vote? – a dilemma

Victor is a director on a medium sized listed company board. The Chairman has been ill for several months and is not going to get better. He has announced that he wishes to retire. The Managing Director is keen that one of the directors, who had a strong track record as an executive within the industry and is very knowledgeable about the operations, be appointed as the successor to the current Chairman.

The board is divided as half the directors support another candidate who chairs the Audit and Risk committee and has a lot of credibility with the two institutional investors. Both candidates have voiced a desire to take the role. The current Chairman feels he is not entitled to vote as he will not be a member of the board under his successor. Neither candidate will vote. If the MD votes then his preferred candidate will be elected by one vote. If the MD does not vote then the board is split 50:50.

To complicate matters the opposing candidates have begun arguing about whether the MD has a conflict of interest and is entitled to vote. The MD is upset as he feels that he is a director and, under the constitution, entitled to vote. Others disagree as he is a close friend of his preferred candidate.

How can Victor help his colleagues to resolve their current impasse?

If you would like to publish your advice on this topic in a global company directors’ newsletter please respond to the dilemma above with approximately 250 words of advice for Peter. Back issues of the newsletter are available at http://www.mclellan.com.au/newsletter.html where you can check out the format and quality.

What would you advise?

April 30, 2013March 27, 2023

Simple Steps to Small Business Savings

(Guest post from Brittany Evans)

It’s amazing how much small purchases can add up when they are being done by an office. That’s because of the volumes involved. For example, a house may have five or 10 lamps inside, but an office can easily have 50-100 bulbs running during operating hours.

Therefore, it’s important to pay attention to these sorts of things so they don’t become stealthy profit killers. Here are a few ways you can lower your operating overhead without compromising operations:

Use a Thermostat With a Timer

To maintain productivity and health, the office thermostat should always be set to comfortable levels during working hours — but you shouldn’t bother heating or cooling an empty building.

If your company is always closed at night or on the weekend, set the thermostat to shut down the climate control during those hours. Make sure to have everything come online about an hour before people arrive for the next workday so no one has to be uncomfortable when the shift starts.

Get Rid of Energy Vampires

If you’re using standard incandescent lighting, switch to compact fluorescent bulbs or LED lights. Fixtures that already use fluorescent tubing should be checked to make sure that bulbs and ballasts are working properly.

If either component begins to fail, it loses efficiency and fails to provide the proper lighting. Flickering fluorescent tubes will also cause lower productivity among workers who are sensitive to the flashing effect.

Go Paperless

Buy supplies online. To ensure that you have purchase protection, get a business credit card at American Express. Online stores often have much better rates than their physical counterparts. Don’t avoid small businesses either — these often have the best deals of all.

Eliminate Disposable Cups

Make everyone bring their own mug to work. This will eliminate both the expense of the cups and the need to make someone do all the dishes. If someone wants to let his mug go until it looks like it’s tar coated, it won’t affect anyone but him.

Carry the Right Amount of Insurance

If your policy is too low, you can find yourself on the hook for unexpected costs — but most businesses don’t need a policy that covers everything, either. Pick a level of coverage that will take care of anything you couldn’t afford to pay for yourself, but no more.

Also, make sure you’re covered against specialized, local disasters like floods or hurricanes. Remember, hurricane insurance usually doesn’t cover water damage — if you’re in a hurricane zone, buy flood insurance too.

Buy Nonperishable Supplies in Bulk Whenever Possible

It’s almost always cheaper to buy a big package instead of a small one, and the savings are even greater if you can get a truly huge package. For items like toilet paper, ear plugs or other things your company will always use, buying small units is just throwing money away. Use a business credit card to make it easy to buy wholesale quantities and keep track of the purchases.

By taking common-sense steps like these, you can save your company a surprising amount of money every month. Other tips include always seeking bids for contracted work and reviewing contracts for ongoing services on an annual basis. Even if you’re satisfied with your current providers, having competitive information handy can allow you to negotiate a better deal.

April 23, 2013March 28, 2023

Video Business Plans

A person about to watch a video on their phone

Most business plans appear on paper or on a pdf, but a growing number are on video, or include a video component. Often that’s done in the form of a YouTube video, which you can use to promote your new business in ways that are not possible via paper or email. And even if your plan shows up as a more traditional hard copy document, be sure to include in its marketing section information on how you’ll use video to promote your business and attract customers. Continue reading “Video Business Plans”

April 17, 2013January 28, 2022

Why Do You Need a Plan?

Developing strategy takes time and resources. It requires the time and commitment of some of the most highly paid and highly experienced people in your organization. So if your team is not willing to invest the necessary time, I recommend that you don’t do it. Poor planning is often worse than not planning at all.

So why do you need a strategy? Why take time for planning? There are many reasons. But Leadership Strategies’ Drivers Model focuses on five in particular.

1. To set direction and priorities

First and foremost, you need a strategy because it sets the direction and establishes priorities for your organization.

Your strategy defines your organization’s view of success and outlines the priority activities you must complete to make this view your reality. The strategy will help your people know what they should be working on, and what they should be working on first.

Without a clearly defined and articulated strategy, you may very well find that your priority initiatives – the ones that will drive the highest success – are being given secondary treatment.

2. To get everyone on the same page

If you find that you have departments working to achieve different aims, or going in different directions, you need a strategy.

Once you define your strategic direction, you can get operations, sales, marketing, administration, manufacturing and all other departments moving together to achieve the goals of the organization.

3. To simplify decision-making

If your leadership team is having trouble saying “no” to new ideas or potential initiatives, you need a strategy. Why? Because, as mentioned earlier, your strategy will have clearly outlined the priority activities you must complete to achieve success. Once you are clear on your priorities, it makes it much easier to say no to those potential initiatives that will pull you off focus.

4. To drive alignment

Many organizations have hard-working people putting their best efforts into areas that have little to no impact on strategic success. They are essentially majoring in the minors – because their activities are not aligned with the priorities.

Your strategy serves as the vehicle for answering the question, “How can we better align all of our resources to maximize our strategic success?”

5. To communicate the message

Many leaders walk around with a virtual strategy locked in their heads – they know where their organization needs to be and the key activities that will get it there. Unfortunately, the strategy is not down on paper and hasn’t been communicated thoroughly. As a result, few people are acting on it.

When your staff, your suppliers, and even your customers know where you are going, there are even greater opportunities for people to help you maximize your success in getting there.

Once you recognize the need to plan, you now have the role of becoming the catalyst for facilitating the buy-in and commitment of your leadership team and the rest of the organization.

________________________

Certified Master Facilitator Michael Wilkinson is the CEO and Managing Director of Leadership Strategies, Inc., The Facilitation Company and author of the new The Secrets of Facilitation 2nd Edition, The Secrets to Masterful Meetings, and The Executive Guide to Facilitating Strategy. Leadership Strategies is a global leader in facilitation services, providing companies with dynamic professional facilitators who lead executive teams and task forces in areas like strategic planning, issue resolution, process improvement and others. The company is also a leading provider of facilitation training in the United States.

April 14, 2013January 28, 2022

Five Challenges Your Company Will Face When Using Virtualization to Store Data

(Guest post from Dawn Altnam Follow her on Twitter! @DawnAltnam )

Some analysts would argue that virtualization is either having, or getting ready to have its big moment in the data storage world. Companies in large numbers are starting to see the clear advantages of implementing sophisticated and basic virtualization technology into their data storage solutions.

Even with all the tools that virtualization provides – IT simplification, boosted computing power and increased server management efficiency – there are some key challenges that will keep virtualization from advancing into the next phase of technological advancement. In this post, we’ll uncover five of the biggest challenges facing virtualization for businesses in the years ahead.

The Top Five Challenges Facing Data Virtualization

1. Meeting the Demand of Virtualization Technology –

The hard reality of virtualized server management is that the environment itself is highly dynamic. This is a complicated technology, which will require an advanced IT team to be able to understand and manage the virtualization system. Since the technology is always evolving, individuals maintaining the systems must stay informed on developments and breakthroughs in the industry.

2. The Hard Reality of Server Management –

According to a recent white paper published by Morgan Stanley, contrary to popular belief, virtual server management isn’t any more timesaving than a physical server. In most cases, a company is dealing with several virtual servers at once, which can put a heavy burden on the IT staff.

3. Infrastructure Issues –

There are several selling points that make a virtual server environment attractive. Developing a virtual server is fairly easy, and deploying applications within this environment is even easier. The problem is that most organizations don’t have the proper infrastructure in place to keep up with the demands of the constantly evolving virtualized environment that runs their servers.

4. Economics –

It’s hard to argue with the fact that virtualization has significantly lowered IT costs associated with server management in recent years. The problem is that as much money as virtualization saves companies, there’s the reality that hypervisor and virtualization costs take up a large chunk of the IT budget on the datacenter level.

5. Virtualization Procrastination –

Finally, there are many companies that continue to drag their feet when it comes to virtualization adoption. A large chunk of these virtualization procrastinators are perpetually stuck in the test and development stage, and they never really make that next step to implement.

These companies are often afraid to make the switch because they feel that virtualization hasn’t “arrived” on the security and stability front. What they don’t realize is that virtualization adoption is more sophisticated and stable than ever.

While these are significant hurdles for many companies to get over, these are not debilitating for the virtualization industry as a whole. Companies can upgrade their infrastructure in a way that scales to meet the demand of their dynamic virtualized server solutions.

They can also overcome economical barriers by rearranging their IT budget in a way that balances out costs. More importantly, they can leap right out of the test and dev phase, and fully adopt virtualization as their server management solution of choice.

About the author: Dawn Altnam lives and works in the Midwest, and she enjoys following the business tech world. After furthering her education, she has spent some time researching her interests and blogging of her discoveries often. Follow her on Twitter! @DawnAltnam

April 10, 2013March 28, 2023

Typical Revenue Models

Every business has to attract revenues from selling products and services, and every business plan has to describe how that will happen. Trying to figure out how to do that for your business idea?

One way to approach that problem is to look at common models other companies have used, and see which ones fit best. It’s all too common for a business to get latched on too strongly on one revenue model, too early, so take a look at a bunch of them before you decide. And be ready to go back to this list and make some changes if after your first few months or a year you discover things didn’t quite turn out as had planned. Continue reading “Typical Revenue Models”

April 7, 2013January 28, 2022

Association boards and conflicts of interest – a dilemma

Ursula is a director on of an industry association. Although they use terms such as ‘Councillor’ and ‘council’ it is constituted as a board and the members have the same duties and responsibilities as directors under the corporations act. All directors are nominated by companies within the industry and serving on ‘The Council’ is seen as an indication that a person has been identified as a future leader within their organisation and within the industry.

Councillors use the Council to promote their own profiles and enhance their networks.

Ursula is concerned at another aspect of their behaviour; using information that comes to the Council to benefit their own organisations. Information about proposed regulatory changes has leaked allowing first movers to gain an advantage; Ursula suspects her colleagues are involved.

Now the Council is deciding on a package of grant funding that will benefit the smaller participants in the industry as well as attract start-ups. Although this is clearly in the interests of the industry the councillors all come from larger, well established, companies and oppose the program as it will create competition for them. At the last meeting the Chairman remarked “I don’t see why we should be helping upstarts to eat our lunch.” Another board member responded “My boss will certainly not thank me if this gets approved.”

Staff at the government department are mystified as to why a good grant package is taking so long to get industry sponsorship and is continually bogged down in discussions. They have asked Ursula for her opinion on the best way to expedite it.

How should Ursula respond to this request?

Many readers of this blog will be familiar with my newsletter The Director’s Dilemma. This newsletter features a real life case study with expert responses containing advice for the protagonist. Many readers of this blog are practicing experts and have valuable advice to offer so, again, we are posting an unpublished case study and inviting YOU to respond.

What would you advise?

Julie Garland-McLellan has been internationally acclaimed as a leading expert on board governance. See her website atwww.mclellan.com.auor visit her author page at http://www.amazon.com/Julie-Garland-McLellan/e/B003A3KPUO

April 2, 2013March 28, 2023

Lessons from Michael Porter’s Monitor failure

It’s been widely reported that the company co-founded by Michael Porter, the famous Harvard Business School professor who wrote The Book on business strategy, was forced into bankruptcy protection.

We’ve written several blogs about Michael Porter’s insights. How could a business started by the guru of five-force analysis, possibly one of the most widely-adopted competitive strategy in the world, possibly fail? Continue reading “Lessons from Michael Porter’s Monitor failure”