As we wind down another year, I thought it would be useful to share some best practices I have observed over the years by leaders who tend to end every year on a high note:
Leadership isn’t easy or everyone could do it. Some talented people make it look easy, but we often don’t see all the hard work that goes on behind the scenes to make it look this way. Most leaders struggle at some point and have to learn some difficult lessons along the way. Experience can be the best teacher if you are open to learning. I’ve observed the following 25 ways (in no particular order) that leaders tend to get themselves in trouble:
Here are a few basic truths to help ensure your success: It all starts with simple math. The formula is actually pretty straightforward: Revenue – Expenses = Profit. You need to sell enough of something and price it properly so that it exceeds your costs of doing business. Knowingly taking work at a loss is […]
How an organization makes decisions greatly affects whether or not it will have sustained levels of success. Any company can get lucky every once in awhile, but relying on ad hoc judgments is not a good strategy. One of the most important things a leader does is make decisions. He/she must also create a culture that knows how to make sound judgments without relying too much on any one individual. In essence, you want to foster an environment where you, your management team, and other key employees use decision making filters to increase the likelihood of making the right choices.
70 years ago today our country was attacked at Pearl Harbor and the world was never the same. America, which hadn’t been subject to another country attacking our territory since The War of 1812, had to deal the terrible wave of war that would end up sweeping the globe and literally becoming a world war. While our political and military leaders had tried to prepare for this inevitability, we were still caught off guard and it took us about 2 years to get our footing and begin to turn the battle to our favor. We had to significantly scale up our industrial military industrial capacity and recruit millions of soldiers to sign up and join the fight which was taking places in multiple locations throughout the world. If you think about what was accomplished logistically in a relatively short period of time, it is quite impressive. Thank goodness we were up to the challenge.
…the ultimate goal of any business should be to have high quality employees who are focused on providing value-added services to a loyal and growing client base in an efficient and profitable manner.
Targeting the right prospects requires thought and effort. Every business needs to know when to say no. It’s easy to say yes (or at least we think it is). Bad or mediocre clients lead to bad or medicore outcomes – it is that simple. The math doesn’t get better on its own. You need to have the expectation of a reasonable return on investment and manage to certain margin thresholds. There should also be some sense of operational synergy and a belief that you can deliver what’s expected within the expected time frame.
Every company should be run profitably. A portion of this profit should then be saved for future emergencies or needs. This should become the standard approach to managing your organization’s finances.
…if you prune a tree too much it will die. It also requires proper fertilization and conditions conducive to growth. The same thing outcome invariably happens to companies.
There is a great benefit to working with a wide variety of clients for a number of years. You start to recognize patterns; seeing what works and what gets organizations in trouble.
I often get asked for a checklist of management improvement ideas. While the following list isn’t exhaustive, I believe it is a good start for anyone who would like to audit their existing business situation:
We’ve all heard the saying that “…you shouldn’t put all your eggs in one basket.” The same thing could be said about betting everything on one major product/service line or depending too much on a small group of clients. Just as diversification is essential to managing financial investment risk, business leaders need to hedge their bets and manage their financial vulnerabilities.
It’s amazing how many people can’t do basic math when it comes to their business or their lives. Revenues minus expenses equals profit. Profit only becomes cash once it is collected.