Struggling with tough times? Try leadership

UPDATE March 2020: I wrote this a decade ago in the midst of recession. Covid 19 may well take us into another downturn but the role of the leader hasn't changed.

A case for crisis management?

Taking off on a short flight 20 years ago, our plane lost part of its landing gear. There was a loud explosion; the aircraft listed violently. We knew something was wrong, although we didn’t know what. 

Within minutes, the pilot explained the next move. He would circle the airport while the debris on the tarmac was examined. Engineers with binoculars would assess the state of the undercarriage. He promised an update shortly.

The comfort of clarity

I can’t stress how comforting it was to simply be told that he was on it. He was calm and he was initiating a process. We were no longer quite so much in the dark. His next broadcast was both good news and bad news: the starboard wheels had fallen off, but everything else was working.

The plan? We would continue to our destination. We were already airborne and we had to land somewhere. It might as well be where we were going.

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Six good reasons not to start a business

And two things you’ll need if you do

Business failure is common, but exactly what is a business? In most jurisdictions, once you fill in the right form you’ve got one. If you don’t renew it next year, it’s gone. Chalk one up for failure. If you renew it, you are still in business. Does that mean its working? A functional business must do more than stay out of bankruptcy. It’s meant to provide an optimal return on the funds invested in it.

Dumb reasons

A recent US study found 75% of employed adults wanted to quit and become entrepreneurs. It’s a good thing they all have jobs, because none of the six reasons they gave were good reasons to start your own business. They were:

1. Set your own hours: you won’t, the business will. They’re likely be longer than your full time job
2. Spend more time with friends and family: your own business blurs boundaries between work and play. Business is more likely to intrude on family time rather than be left at the office.

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The simplest way to increase the value of your business

How a dollar turns into more than a dollar

Here are four simple financial objectives in any business: generate more cash, cut interest costs, reduce debt and boost value.  Your product and marketing strategies address these objectives at the revenue and expense lines. But for any company, be it highly successful or struggling, a focus on cash flow can also aggressively optimize all four targets.

The fact is boring stuff like cash flow management boosts your wealth. Every dollar you create or save is worth more than a dollar.

Before you switch off, check out a real example

A client runs a successful business. Nonetheless, last year it had in excess of $100,000 in outstanding debtors stretching out past 120 days. He is a positive person. His view: it’s probably a hassle to fix it and I can afford it. The reality: it’s not that hard to fix and the return on doing so is worth the trouble.

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Financial literacy: knowing what you know

Aligning business intuition with financial arithmetic

You've got a brilliant idea. You make an excellent presentation to the board. A director asks: "What discount rate are you using for NPV over five years on this."

You’ve got no idea what he’s talking about. Your confidence slips. So does your momentum. You say you'll get back to him.

A lack of financial literacy won’t necessarily hold you back. There’s plenty of self-made business people with no business education. The issue often arises with success. You were a great salesmen and an even better marketing director but now you are running the whole shop. There are some things you are expected to know.

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The sustainable opportunity

How saving the planet can help your business

The profit motive is not flavor of the month. It’s blamed for a lot of things, not least environmental degradation.

Business should be rightly worried about it. Public concern about the environment is growing, not receding. Business can resist the trend, but it is a market reality. What happens if we embrace it?

The word sustainability has been around for a while. It may have been hijacked by the climate change debate, but it dates to the 13^th century and derives from the French word sustenir, meaning to endure.

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