Archive for the Operations Category
Does this sound like you? You and a close friend have decided to go into business together. After all you get along so well what could possibly go wrong? What is the worst thing that could happen?
Many things could happen not the least of which is the friendship dissolves and one of you takes legal action against the other. Here are 7 tips of what to consider or do before you go into business with friends.
- Think long and hard about the potential loss of the friendship. Can you weather losing the friendship. Is a successful business worth this price?
- Strengths & Weaknesses Analysis: Each of you needs to create a list of what you’re good at, what you like to do, what you aren’t good at and what you hate to do. Then compare to determine where there are gaps.
- Develop a list of critical tasks, activities and functions you will need accomplished in the business.
- Divide up the responsibilities using the lists you developed under #’s 2 & 3. Make sure you equally distribute what people don’t like to do and give people the responsibilities they are good at. Anything left unassigned represents where you will need outside help.
- Develop an exit strategy. Today, before the business has a value, discuss and establish how a founding owner will be bought out. This is often referred to as a Buy/Sell Agreement. This needs to be done while cooler heads prevail and there is no emergency situation.
- Establish how the owners will be paid. How and when will money be withdrawn from the business by an owner. What constitutes a legitimate expense or cost that triggers reimbursement. It needs to be equitable and not allow any one owner to put the business in jeopardy.
- Create a “Business Prenuptial” which is a written document that sets out the what, where, when and how of your ownership with your friend. It is the culmination of the considerations under Tips #3-6. Anything that is ambiguous is an opportunity for disagreement and adverse consequences so resolve them now. Include a provision for when you will review and update the information.
In the course of completing these tasks don’t be surprised to find out you are better as friends than you could be as joint owners.
What additional tips would you suggest?
Productivity is apparently the next topic after resolutions for the first weeks of the new year. Here are suggestions I gleaned from the blogs I follow and newsletters I receive:
Kim Avery in her Working Strategically newsletter writes about “making time for a Productivity Tune-up.” In essence she challenges the reader to assess where you are today and then figure out what is not working. She recommends this be an appointment you make with yourself and that a few times a year you make the time to take stock. Her recommendations include:
- Keeping track of the commitments you make to yourself;
- Learning and practicing how to say no;
- Taking care of your health;
- Using first thing in the morning to plan your day;
- Using a system to stay organized and consistently use it.
In the blog Dumb Little Man, Leo Babauta writes a post titled “Hack Your Work: 23 Ways to Get Ahead, Work Less and Achieve More”. These are three of the “ways” he suggests that I might try:
- One goal. To remain focused, set one goal to accomplish in 2010 and then break your goal setting down into smaller goals that help achieve the year goal. Focus does lead to higher productivity.
- MITs or Most Important Tasks. Daily create a list with a minimum number of tasks which are your MITs for the day. At least one of them should support your One Goal. Then get to work. The earlier you start the more likely you will complete your MITs.
- Email once a day. Just once a day read your email and empty your in box. Save yourself from the moment to moment distractions by turning your email off at all other times. If it’s really important the person will call you.
Many of Babauta’s suggestions are easily implementable…you just need to commit to stick with them. Do read the post.
In his January 9th newsletter, Factor 21, Bob Kustka of Fusion Factor talks about how to be more productive by employing five factors:
- Decide, when to do it.
- Do it, and get it off your desk.
- Designate, if you can’t do it right away figure out when you will or
- Delegate, to someone else.
- Dump or Delete it, to eliminate clutter. In many cases you can get another copy of a document if necessary.
He tells us that “when practiced consistently, the 5 D’s will simplify your life, make you more productive, and give you more time…”. Sign-up for Bob’s newsletter to read more about productivity.
What productivity tips and methodologies work for you?
It’s a chilling statistic: 65% of people in “trusted” positions will commit some type of occupational fraud.
I was reminded of this recently when a small business owner shared their business was the victim of an embezzlement. It was only caught when the business owner noticed a suspicious e-mail. This is when most business owners institute the internal controls they haven’t had time to implement.
Given it’s the holiday season and the economy has left many cash strapped fraud can increase. Here are steps you can implement to prevent fraud:
- Separate accounting and financial control responsibilities, this means the person sending out the bills should not reconcile the bank statement.
- The CEO/business owner might do a surprise review of the bank statement before it has been opened.
- Require all disbursements, i.e. checks and electronic, to have two signatures of approval and the signatures should be manual not a stamp.
- Conduct background checks on employees including criminal checks where the position has access to company funds.
- Create a process to make it easy for employees to come forward with information on what might be suspicious activities.
- Document procedures and annually audit the procedures to see how well they are being followed.
- Engage accounting and other professionals to help institute appropriate policies and procedures that protect the company and the employees.
- Press criminal charges. Fraud is a criminal act yet many business owners fail to press charges. They are embarrassed to admit it happened to them…so the criminal moves on to their next victim company to do it all over again.
Several years ago while serving as the contract CFO of a non-profit I instituted a very specific form and procedure for moving funds. While I did not have signatory authority (by choice), it was still possible for me to move funds. This left the organization and me exposed. I created the form which required the executive director’s signature and notification of the treasurer so the funds transfers were transparent. I was protecting the institution and myself.
