Guest-blog: Patrick Bailey – Diversification vs. focus-driven

Patrick Bailey

Adversity of any magnitude should make us stronger and fill us with life’s wisdom, however, strength in any form is born from adversity – I wrote ‘Freedom after the Sharks’ from adversity and set up a business in the double-dip of 2008 and 2009, many people have done the same and it is almost a universal theme in the lives of many of the world’s most eminent minds.

As Michelle Obama once said:
‘You should never view your challenges as a disadvantage. Instead, it’s important for you to understand that your experience facing and overcoming adversity is actually one of your biggest advantages.’

Determination, resilience, and persistence are the enabler for people to push past their adversities and prevail.
Overcoming adversity is one of our main challenges in life.
When we resolve to confront and overcome it, we become expert at dealing with it and consequently triumph over our day-to-day struggles.

Have you ever felt that your world is starting to fall apart because of how life tends to bombard you with seemingly impossible challenges?
Have you ever felt helpless and would rather spend your days feeling like a solitary zombie while the rest of the world doesn’t even care that you’re this close to almost losing your sanity?
Well, you’re not alone and the good news is, there are ways to properly deal with and overcome these obstacles.

Reality has a way of reminding us that no matter how hard you try and how good you treat people, you will always have those days, those times when you think the world is against you. During these moments, you often have the urge to either shut down or finally give up and think of the most foolish remedies available to you – both can have long-term damaging effects on you, emotionally and physically.

Today I have the pleasure of introducing another Guest Blogger, Patrick Bailey, who is a professional writer mainly in the fields of mental health, addiction, and living in recovery.

He attempts to stay on top of the latest news in the addiction and the mental health world and enjoys writing about these topics to break the stigma associated with them. His website is: www.patrickbaileys.com

Patrick is going to discuss with us today “Diversification vs. Focus-Driven”

When the Tough gets going, remember this motto: ‘Hibernation is not Survival’

There’s a prevailing rule in a bear market, and that is to play dead when the stock prices are plunging.

After all, the market almost always corrects itself. Stocks operate on a cycle — sometimes up, sometimes down — except, of course, in cases when the economy is undergoing a recession.

Hibernation is different from inactivity, however. You just park your money in treasury bills or certificates of deposits for the moment.

But is hibernation a good tactic for your business during an economic slowdown?

Diversification vs. Focus-Driven

This has been the subject of debate.

Startups that manage to grow will often hit a fork in the road where they can no longer grow with their current set up.

Now, they have to make a choice: diversify their portfolio or bolster their product while they take a more focus-driven approach.

Instead of diversifying, they just ensure that their processes and workflow are more efficient, they automate to limit disruption and enhance the customer experience to guarantee client loyalty.

However, while you may see your bottom-line increase, it could just be temporary. That’s because you are not adding products or service value to your business.

Diversification doesn’t immediately produce results either. There’s no guarantee it will ever deliver the outcome you anticipate.

When the economy is in transition, you will find many competitors fighting over the scraps. This is a high-stakes game that could spell success or the end of your business. However, the alternative is no less disastrous.

The other option is not doing anything. When you pin the future of your company entirely on the hope that the economy will get better, you have the wrong strategy.

If you do decide to diversify, here are some quick tips to cut your risks:

  1. Don’t veer away too much from your core competency. Diversification doesn’t always mean being different. That’s oversimplifying its definition. Knowing your core competence will give you insight into how other capabilities tie together. Your main goal should be to create a new product or service that is still tied to your core competency in order to bring in new customers.
  2. Don’t forget your loyal customers. In fact, you need to align your strategies by boosting the value of your core business. You then retain the same customers and offer them another product that matches another — but still related — need.
  3. Put money into your marketing efforts. Ads and promotions are typically the first things to be sacrificed by companies that are scrimping on the budget. However, you need to make people aware that you have a new product. Even in an economic slowdown, people still buy. That’s consumer resiliency. You need to funnel these customers to your company by showing them that you are the answer to their most nagging questions.
  4. Timing is everything. Still aligning your diversification with your core competencies, you need to know when to change tack and when to sit it out. Before deciding to diversify, you need to bolster your core business to make sure you don’t lose focus. When the revenues have plateaued, then it’s time to shore up your business and add value by creating another product or service.
  5. Watch out for your cash flow. Revisit your inventory and your credit policies. When the times are tough, you may need to borrow in order to infuse new capital into your endeavors. However, no bank will offer you a lifeline when you have a shot credit and lousy financial prospects.

The Best Defense is a Good Offense

There’s a saying in sports and even in war: The best defense is a good offense.

This strategy will allow you to take back control of the situation. Rather than wait for the next hammer to fall, you change your approach and bring the fight to the enemy.

This is a scary part, especially when the economic landscape is very fluid. However, there are numerous success stories of businesses that found some opportunities when they decided to go on the offensive rather than wait the economy out.

Of course, there’s no guarantee that this result in a better outcome, but it’s a lot better than playing dead while you wait for the economy to turn.

Here are some quick tips on how to go on offense from defense:

  1. Diversify. If you are putting all your eggs in one basket, chances are you will lose money if most of them crack. Businesses that rely only on one product will be badly hit during a slowdown.
  2. Think outside the box. It doesn’t even matter if you are earning less with your new business than you were with the old one. Expanding your network is the only way to learn and earn. Step out of your comfort zone and attend some industry trade shows.
  3. Reinforce relationships. This is a good way to let your clients know that you can be trusted even when the times are bleak. Don’t cut corners on the quality of your work, and don’t use the economy as an excuse for missing deliveries. In the same vein, get in touch with your suppliers to reassure them that work will continue (although the volume likely will be down).
  4. Cut fat. Sometimes the only way to take flight is if your business isn’t as heavy. This is a good opportunity to revisit your operations and trim the fat. You will find that your employees won’t be inflexible when you institute changes. They know that the market is very challenging, and they will be more apt to help.
  5. Form an advisory board. It seems paradoxical to suggest this when the item above tells you to cut fat. But if done correctly, the board can become a rich repository of ideas with which you can follow-through as you go about diversifying your products and services.
  6. Automation and analytics. Automating your workflow can boost your efficiency. Big data analytics are already being used by companies in order to improve customer experience. Analytics will give you insight into the minds and behaviors of your clients. This, in turn, will help you come up with a product that truly addresses their needs.
  7. Ask for help. If you are a member of any industry associations, this is the right time to touch base. The government also has some assistance to offer — in terms of technology transfer or financial assistance — to help you keep your head above water.

Lastly, you need to understand that there’s life beyond your business. Too often, you see CEOs with failed marriages and broken families because they prioritized their careers at the expense of spouses and children.

You hear of executives becoming addicted to the drug fentanyl, heroin, or alcohol to help them cope. They equate the failure of the business to their value as an individual.

However, there are more important things in life than being a successful CEO.

Life is all about challenges. Life will push you down if you refuse to push back. It doesn’t matter how many times you stumble. What’s important is how many times you get back up.

Take advantage of the economic slowdown to take stock of what’s important to you.
Bond with the kids, rekindle the romance with your spouse, visit your parents and siblings.
You just might realize that it doesn’t matter if you see yourself as a failure; you will be a hero in your kids’ eyes.

You can contact Patrick Bailey:

Email: bailey patrick780 @gmail.com (remove spaces)
Blog: http://patrickbaileys.com
Twitter: https://twitter.com/Pat_Bailey80
LinkedIn: www.linkedin.com/in/patrick-bailey-writer

Guest-blog: Roger Phare – The Jekyll, Hyde and The Executive Director

Roger Phare

As an executive director, how do you powerfully lead your organisation through complex challenges? How do you align your organisation, staff, and board around impact and achieve financial sustainability? As daunting as these questions can seem, they are fundamental executive leadership responsibilities.

In spite of its institutional power, the position of an Executive Director remains an immensely demanding one, and not one that any qualified and capable man or woman will agree to lightly.

We welcome back Roger Phare as our guest blogger who is an accomplished Global Executive Director, equipped with a commanding track record over the past 37 years of bringing sound judgement and a strong commercial perspective to IT businesses, from ‘Mainframe to Mobile’. Roger have been fortunate to have been part of the commercial computing lifespan. With a market driven approach, which he has strategically supported, a number of organisations, both at significant Board, Executive and Regional Directorship and responsibilities. An expert in corporate governance and compliance and risk management; enjoying challenging the status quo and providing independent advice to Boards whilst maintaining sound judgment, impartiality and with integrity.

Roger is going to talk to us about ‘Jekyll, Hyde Associates and the Executive Director’

Thank you Geoff, today I would like to discuss the role of the Executive Director, which can arguably be the most individually challenging and changeable of all Board roles. Not that the responsibilities are any greater or less than Non- Executive counterparts, yet the concept of disassociating the “day job” with the Board role can be tricky and take some fortitude. The Executive director must possess or develop the ability to perform separate roles with separate mindsets; a veritable Dr Jeckyll and Mr Hyde (and maybe other) set of personas.

The majority of companies start from small beginnings. Friends, family or work colleagues decide to set up in business and likely form a limited liability company. Almost invariably they become shareholders, directors and employees overnight. Generally there will be a leader; a chief executive who, more often than not, will also be elected chairman of the board. The other board members are often generalists, providing input based upon their work role experience.

Confusion can set in as the company grows and more employees are taken on board. This is where the understanding of role demarcation is vital. I recall being an executive director on the board of a growing company some years ago when one of my colleagues, who was head of the technical department as well as an executive director/shareholder, threatened to fire the receptionist for an indiscretion.
The receptionist did not report to this individual but his view was that as a major shareholder and director he had the over-riding power and right to make such decisions. He clearly had confused the roles, effectively merging all three responsibilities into one.

In the board room the need to disassociate the individual roles becomes even more apparent. Recalling that a director’s duty is to represent the medium and long-term interests of the shareholders, the double or triple role can be a major challenge. Let’s say that within a growing goods and services company the head of development, one of the founders and a minority shareholder, also sits on the board as an executive director. As a manager doing his day-to-day job, he has put up a business case to employ a number of new staff members within the development team.

At a board meeting, the annual item regarding profit distribution by way of dividends is discussed. The head of development sees this as an ideal forum to lobby for the approval of the business case. This is not say the overall decision will necessarily be wrong; it is that he has unwittingly brought his managerial role into the boardroom.

Once a company goes public, then the appetite for executive director’s wanes considerably. Most Commonwealth countries operate a unitary system, indicating a balanced mix of executive and non-executive directors. Yet over the past twenty years there has been a push for greater board member independence, with a move towards more non-executive directors. The executive directors are often consigned to the roles of chief executive and possibly head of finance.

Yet are we about to see the return of the executive director on public boards? There is no doubt that the need for up to date subject matter knowledge of industry trends is as much a requirement as expertise around governance and compliance. The need for this has started show itself in the rise of the advisory board; yet this can never replace true in-house expertise.

Perhaps we are about to witness the return of our Henry’s and Edward’s; but this time around improved peer mentoring and coaching maybe the answer.

You can contact Roger Phare via LinkedIn. Roger Phare on LinkedIn or by email: roger phare @ gmail .com (remove all spaces)

Goal setting for Start-Up Businesses – tips and things to consider

Tips for start-ups GHSDepending on the type of business you set-up, you could experience a number of challenges along the way and not just in customer late payments. How you handle those problems may show how you will manage issues that come up when the business is up and running. If you to do proper research, strategy and planning when setting up your business, you will likely avoid some common pitfalls.

Delays

When setting up your business, you may come across people or organisations that delay your progress. Some delays are manageable while others are completely out of your control. For instance if you learn that you need a special permit to run the business late in the planning process, you may have to push back your plans until the government agency reviews and approves your application. Always have a backup plan ready in case of these issues, such as a later date to open the doors of your business.

Financial Challenges

Lack of proper funding is a common reason businesses fail. A snag in the process of securing financing for your new company could halt your plans altogether. For this reason it is wise to take steps to seek and apply for financing early in the start-up process. Cash reserves to run your business and fund the first year of operations of your business may not let you to sustain day to day cash flow until the business can generate any real revenue. So make sure you get your personal financial matters in order and start saving well in advance of attempting to start your own business. Lenders and investors commonly look at the financial status and character of the business owner when evaluating the company for financing.

Poor Organization

Issues regarding your organisation may also plague a prospective business owner. This issue is far-reaching because lack of organisational skills can negatively affect every step of the business setup process. Poor organisation may also affect the way other parties perceive your business concept in general. You can avoid problems related to lack of organization by consulting a business mentor, buying programs to help you organize and hiring help to help you with the process.

Some risks to consider when setting up a business:

1. Select a business structure that limits personal liability. Change your business structure from a sole proprietorship where you are personally liable for business operations to a corporation or limited liability company where you have limited liability.

2. Transfer risk to insurance companies by insuring against major risks such as damage to your facilities, product liability, injuries to customers or suppliers and death or incapacity of company principals.

3. Perform a risk analysis by evaluating the consequences of risky activities, the likelihood of the consequences occurring and the benefits of the risky activities. Avoid risk by not carrying out activities that have severe and likely consequences and low benefits.

4. Transfer the risk of activities with severe and likely consequences but high benefits to other parties. Create a new, independent company to carry out these activities or assign them to suppliers or partners.

5. Reduce risk from product failure and warranty claims by implementing a quality assurance program. Develop a system of reporting from customer service to identify problems. Structure the quality assurance program to document production tasks and product testing. Link the problems reported by customer service to specific failures in production or testing procedures and start corrective action.

6. Reduce risk of surprises in operating results by keeping accurate records and instituting effective controls. Put in place a system that limits who can authorize specific actions and how much they can spend. Implement a reporting system that gives you key information about company performance. Evaluate the controls and reporting system by comparing actual practice and performance to the control procedures and the reported information.

7. Reduce financial risk by managing your accounts receivable to minimize outstanding balances and identify poor credit risks. Implement credit and payment standards, specifying which credit scores and payment records are acceptable. Evaluate customer payments and ask for advance payment from customers who don’t meet the standards.

8. Reduce financial risk by keeping outstanding loans and financing needs to a minimum. Control growth at a rate that the company can finance internally. If the company can’t pay off some loans, replace short-term credit with long-term, fixed-rate loans.

If you have any questions, please do ask. Here to help you succeed!