The Responsibility of Leadership

If you are in a management or leadership role which involves leading, motivating and inspiring other people, then you are one of the privileged ones. The opportunity to lead others is one that is not given to too many people.

However, the leadership of others comes with a great deal of responsibility. As a leader, its no longer just about you .

What kind of a Leader are you? What kind of a leader would you like to be?

In my experience, the whole culture of the organization is established by the Leader. Like it or not, every staff member looks closely at how the Leadership team operates and then models that behavior. For the sake of the organization, you better hope that the behavior of the leadership team is worth replication. Too often the leadership team is not willing to take a good look in the mirror and analyse their own short comings, yet they are too quick to point out the faults to their team.

Think about your own approach to work, and see what example you are setting for others. The current generation of employees is not easily impressed by the “do as I say” approach. During the course of my work, I have had the opportunity of working with many CEOs, Entrepreneurs and Managers as their Advisor and Consultant.  In our discussions I am often told about the staffing issues, the lack of responsibility amongst the staff, the lack of professionalism and ownership. Often when I get more involved with an Organisation, it becomes apparent that the staff are simply following the lead of the senior management team. The leaders are not setting the right example and nor are they providing the right leadership for the team.

In order to become an effective leader, its important to take a good look at your own self, identify your own weaknesses and to set the right example for your team.

Think about the following for a few minutes:

Do you feel you demonstrate strong values, ethical standards and personal integrity?
Do you possess empathy and self-awareness?
Do you nurture positive internal and external relationships and professional networks?
Do you empower people?
Is teaching, coaching and mentoring people a high priority for you?
Are you contributing to the development of a new generation of leaders in your organization?
Do you treat mistakes made by your staff as coaching opportunities?
Do you establish and support high quality work standards?
Are you able to handle stressful situations at work and resolve conflicts between team members effectively?
Do you have an entrepreneurial mind set?
Do you look for creative solutions to solve difficult problems within the organization?
Do you consider yourself to be customer focused?
Do you deliver value to stakeholders?

Leadership of others is a privilege and one that should not be taken lightly, as you have the opportunity to add immense value to the professional lives of others. Long after these people have left you, they are likely to remember with great fondness all the good things that they were able to learn

Key Performance Indicators

Key Performance Indicators (KPI’s) are the measures through which your business can assess its performance – essentially a set of key results which provide you with valuable information about how your business is performing.

Regardless of the type of business you are operating, you can be sure of one thing. Competition will increase dramatically in the coming years. You need to improve your management practices, if you are going to remain successful or perhaps even your survival may depend on how well you manage your business and how innovative you are.

KPI’s are both financial and non financial, although everyone tends to focus on the financial ones a lot more.

The KPI’s vary from industry to industry and business to business – what is relevant for a retail business may not be important for a professional services firm and vice versa.

There are a number of generic KPI’s that have almost universal applicability and we will discuss those in some detail.  Of course you would know what is appropriate for your business – what are the key measures in your business which can let you know how well you are doing?

Financial KPI’s are generally obtained from historical financial information such as Management accounts.  These accounts are then analysed to “glean the meaning” – that is what are the numbers telling you?

Some of the more commonly used KPI’s are:

• Gross Profit Ratio
• Net Profit Ratio to sales
• Conribution Margin of Product Lines
• Receivables Turnover – that is how long it takes to collect your accounts receivable
• Stock Turnover – The number of times in a year the stock is turned over
• Wages to sales ratio
• Average sale per customer
• Earnings per employee

The number of KPI’s is only limited by your imagination – the key is to work out what is relevant to your business. Are you collecting any of this information? If you are, do you analyse it and take action on it?

For example, if you are taking 60 days to collect your accounts receivable – is that acceptable?  What is the historical trend? What is the norm in your industry?

If you conclude that your Company’s performance needs to improve, then you will need to develop an action plan to improve the situation.

Remember the KPI’s are most useful as a tool for better management of your business.  Once you have developed your main KPI’s, I suggest you establish regular system for reviewing them – make them part of your monthly reports.

Non Financial KPI’s

If you ask Accountants about KPI’s you would not get past the financial ones – but behind the numbers there are lots of stories.  There are customers, potential customers, staff serving the customers, products and services – all of these end up in the financial statements in some shape or form.

But there are a lot of things that are critical to the success of your business – yet they may not be apparent from the financial information – at least not easily.

• How many phone calls do your staff receive from potential customers each day?
• How many potential customers are converted into sales?
• How many of your customers are repeat customers?
• Where do your customers come from?
• What is the most effective form of advertising for your business?
• How many complaints are received?
• Have your customers been WOWED by your business?
• How long does it take to turnaround a customer’s order?

These are just some of the non financial KPI’s that may be of critical importance in your business.

Do you collect any of this information?  If the answer is no – how do you know what is really happening in your business?

If the business is small enough and you are actively involved in it then you may know this stuff from being around everyday and talking to customers, observing your staff, dealing with complaints and so on.

On the other hand if you are not involved on a day to day basis, this information becomes more critical.

There is a well known saying that goes ‘you can manage what you can measure’.  I guess it is very true.

If you do not have hard facts and data with which to manage your business then at best you will be making decisions based on gut instinct and hence reducing the possibility of making the best decision and therefore compromising your chances of your success.

If life in business was all about collecting data and doing financial analysis then all the statisticians and Accountants would be extremely successful and have a huge head start on the rest of the world.

The data and analysis are only a means to an end – once you have worked out what is relevant and benchmarked it then you are ready to move on to managing your business.

For example, study the relationship between the KPI’s and your profit line – work out the profit drivers in your business.  Focus your energies on things you can change and control and you should see an immediate improvement.

Let’s look at some examples:

• You have discovered that your average sale per customer is AED 500.  If this would be increased to AED 550 without too much effort – what is likely to happen to your profit?

• You have worked out that your business receives 100 calls a day from potential customers but only 30 end up doing business with your company?  That is a success rate of 30%.

What can be done to improve this?  Perhaps, your staff members need more training, or maybe your advertising is resulting in wrong types of customers ringing in.  It could also be that your pricing structure does not compare favourably with your competitors.

• You have just analysed your stock turnover and it is way too high, why is this?  You may be holding too much stock, or perhaps you have bought the wrong stock lines, maybe your sales have fallen below budget.

When used effectively the KPI’s can help to make your business more profitable and enable you to make more informed decisions.  As you measure your scores you can more easily manage your performance. This is exactly what you need to do to make your business more successful. So get started  right NOW.

Succession Planning in Family Businesses

All over the world, we see examples of successful businesses which are family owned. Often starting from humble beginnings these businesses grow into large family empires.

Here in the UAE region, even more than in other parts of the world, the economic activity is dominated by family owned groups which are involved in all sectors across the board.

Sadly, due to a lack of planning, communication break downs, and insufficient preparation for succession, family businesses more often than not run into problems at some stage. The biggest issues arise when it is time for a generational change. This rarely takes place in an organised manner or as part of a well thought out succession plan.

As a result, we see families torn apart over business issues. What is interesting is that all the concerned parties feel emotionally hurt and are so convinced that they were in the right, that eventually family relationships along with the business relationships end up collapsing. The sad part is that a lot of these problems could be prevented through planning ahead. How often is the CEO changed in publicly listed companies, without even a slight hiccup in the company’s performance?

Family owned businesses need to learn from these companies and plan ahead for succession.

Unfortunately, in family businesses these issues are not given the importance that they deserve until it is too late, and when the unexpected happens such as the severe illness or the death of the Business Leader, there is total confusion about what happens next.

Developing a succession plan is not something you can do in a hurry. You need to allow plenty of time to develop the strategy, train the successor and make sure he or she is upto the task, before you can ever hope to make an orderly transition form one generation to another.

Family businesses are different from other organisations, often the business leader is not only the controlling shareholder but the CEO as well. So when the time for transition comes, it is both an ownership and management succession. This makes it twice as challenging.

If your ultimate aim is to hand over the business to the next generation, you need to invest time and effort in successor development. In addition to the educational qualifications, the potential successors need to know the business inside out. They need to have a thorough understanding of all functional areas and a good knowledge of the industry. In some family businesses, they adopt a practice of sending the younger generation to work in other companies first and learning the ropes that way.

If you are involved with a family business, consider these questions:

• When will the succession take place? Who will be the CEO?
• Will the CEO be from the family or can outsiders be considered?
• What will be the role of the retiring CEO/ Family elder?

• Will the next generation be up to the challenge?
• How do you want the shareholding to be passed to the next generation?
• Will any member of the business not wanting to actively work in the business still be able to hold shares?
• Do you want the transfer of shares to be in accordance with the inheritance laws?

These are just some of the questions that need to be thought about. There are a lot more to issues to consider as well.

If family members are involved in the business it is important that these issues are dealt with in a business-like manner – do not hesitate to get specialist advice and help. These are sensitive and emotional issues and getting outside help can make them a lot less painful to deal with. Professional help in this instance could come from your accountant, lawyer or even a psychologist – or perhaps all of the above.

To successfully develop and then implement a Succession Plan, there needs to be a clear understanding about who is responsible for which areas. Once the roles and responsibilities are agreed upon, it is important to communicate them to the other members of the family and your key employees. In summary, you need to:

• DISCUSS
• AGREE
• DOCUMENT
• COMMUNICATE

Many well established businesses go to the extent of developing a family constitution which documents everything. It is an excellent idea to do so, as it ensures that families do not end up splitting and hating each other over business issues. That is too high a price to pay, I am sure you will agree.

“NO” – How to Say it

In addition to all the advice, ideas and tools that I provide you with each newsletter to succeed in your business life, there is one more tool that must be added to your kit. In theory, this is a rather simple concept; but quite difficult in practice. It is the art of saying “No”. Like it or not most of us have difficulty in saying No.

You may be wondering why you need to learn this concept but believe me it will be worthwhile. Let’s start by practicing it – say it out loud, yell and scream it if you like – “NO! NO! NO!” Let’s talk about why it is so important to be able to say “No” and, more importantly, to whom we are planning to say “No”.

The first group of people we must say “No” to are the prospective clients that are not from your target market. That is, once you know exactly what your target market is, you need to concentrate all your efforts towards that group.

Do you have to do business with everyone who asks you to work with them? The answer to that question depends on a number of things. Firstly, it depends on the nature of your business. If you are running a retail outlet, the situation is quite different from running a professional services firm.

Let’s focus on professional service firms a little longer, but remember some of the principles may apply to other sectors, while others do not.

If you have clearly defined business goals, objectives and a target market then, unless prospective clients fit into that segment, you are better off letting them go elsewhere; in fact, encourage them to do so. By trying to do business with them you will be doing a disservice to your organisation. The chances are that, if these prospective clients are not from your chosen market segment you will lack the expertise and systems to help them, so you will not reach the ‘going for gold’ level of customer service that we talked about in an earlier article.

What about difficult clients – must you deal with them? Firstly you need to determine and confirm that it is the client who is the problem and not your organisation. If it is the client and he or she causes you too much stress or difficulty then saying “No” is a must, not just an option.

I recall a handful of instances where some clients, despite being good clients from a fee-paying point of view, caused a certain level of anxiety in our firm – the blood pressure of the entire office rose whenever they called. We tried everything to please them but nothing was good enough. This led to serious soul-searching. Given the high level of satisfaction among our other clients we took the decision to ‘sack’ these difficult clients. Saying “No” to them was not done in a nasty or rude manner, but by way of a polite letter stating that “We are unable to help you”. The clients moved on, as did we.

I am not encouraging arrogance towards, or a lack of appreciation of, the clients who give you business, rather I am suggesting that you need to be selective about whom you deal with, particularly in a professional environment. Choosing your clients carefully allows you to deliver the best possible service to those you are well-equipped to deal with. As a result, you will receive more referrals and be able to build your business.

One of the joys of being the boss is that you don’t have to deal with people you cannot work with effectively – after all, life is too short. As David Maister, a leading author, says, the advantage of being a successful professional is being able to say “No” to idiots.

Having acquired this skill of saying “No” to people, let’s see where else you could use it:

• ‹Saying “No” to all the telemarketing people who keep calling you and insist on trying to sell you their various products or services you have absolutely no use for. This is very important. One simple “No, thanks” can save you from having unwanted insurance, and credit cards with big limits, among other things.
• If you are the leader of an organisation, learn also to say “No” to your staff; “No” to any unreasonable demands, special favours, unrealistic salary increases, and the like. As the employer you must always treat your staff with respect and be loyal to them, but you don’t have to say “Yes” to unreasonable demands and requests. None of us are indispensable, even though at times we like to think we are.
• Saying “No” is necessary to ensure that, despite the challenges and the buzz that your business life provides, you find a balance between all aspects of your life.

Human beings are a complex lot – you must have heard people say that it is your attitude and response to situations that is important. I think that while there are events and circumstances we have no control over, there are lots of things, such as how we feel and react to events, that are totally dependent on us. Look at things and events positively and pick yourself up when you are down – say “No” to feeling down and say “Yes” to enthusiasm and going for gold – not just in your business but in all of your life.

In business life you will suffer many setbacks, difficulties and challenges, not to mention rejections and disappointments. If you treat these as learning opportunities and simply pick yourself up and go on, you will be more successful than you can imagine. Don’t let these things get you down, for every night is followed by daylight.

Remember your life is in your own hands, only you can make things happen.

The success or failure will often be the result of your efforts; so say “No” to failure and celebrate success and what it brings your way. Say “No” to:

• ‹    Feeling down
• ‹    Rejection and disappointment
• ‹    Failure – celebrate success
• ‹    Clients who do not fit your target market
• ‹    Difficult people
• ‹    Unreasonable demands from staff
• ‹    Blaming others – take responsibility for your own actions
• ‹    Overwork and too much stress
• ‹    People trying to sell you things you don’t want
• ‹    Quick fixes and solutions

Your positive attitude and approach will set you on course for success.

Making Numbers Talk

If you want to grow and expand your business, or just survive in these difficult times, you have no choice but to maintain a good accounting system. Anything less will just not do.

In my many interactions with various business owners, I am often amazed to discover that many of them are still maintaining their accounts in a way that they should be maintained.

A good accounting system can help you in making your business more profitable and efficient.  With the help of these systems, you should be able to:

• Get an up to date and accurate picture of your trading results and financial position at any time
• Scrutinise your margins and expenses
• Analyse sales patterns, look at customer sales
• Identify your  most profitable clients and projects
• Track your receivables and payables’
• Chase your debts

You get the idea – a good accounting system can help you in the management of your business.  In fact, if you don’t have such an effective system in place – you are letting money walk out the door.

WHAT SYSTEM?

The latest computerised systems such as Peach Tree and QuickBooks are extremely powerful and will allow most small business owners to improve their record keeping and management. Larger businesses need to look at other options.

We can either choose to complicate things or keep them simple.

So when it comes to reporting for SME’s, the system is important, but the people driving it are far more important.

Accounting staff need to be trained, supervised and guided. If you are the owner of the business, it is your responsibility to ensure the accounting team and the systems deliver what you need on time, every time.

I have prepared a proforma report that should be prepared by your Accounting team and reviewed by yourself.

Of course, the report should be modified to suit your business and circumstances – but it’s a good place to start.

WEEKLY / FORTNIGHTLY REPORTING

The Q Report

Period Ended:____________________

Bank Balance                                                                   $ ___________________

(Attach a copy of the Bank Reconciliation)

Accounts Payable Balance                                              $ ___________________

(Attach a Payables Reconciliation Report)

Accounts Receivable Balance                                         $ ___________________

(Attach a Receivables Reconciliation Report)

Major Payments Due in the Coming Week / Fortnight

	Item	$
	Total	$
	Funds Available	$
	Surplus / Shortfall of Funds Available	$

MAJOR ISSUES / CONCERNS AND ACTION PLAN

For Example

Overdue accounts receivables and action plan

• ____________________________________
• ____________________________________
• ____________________________________
• ____________________________________

Accounts payable and overdue and action plan

• ____________________________________
• ____________________________________
• ____________________________________
• ____________________________________

As you will notice the weekly / fortnightly report provides you with a quick snap shot of where the business is up to and gives you a framework to keep on top of the finances.

This is critical.

A lot of focus must be on the cash flow – without enough cash, the businesses do not survive.  One of my sayings is “Cash in must be more than cash out or you will be on your way out” – simple but true.

In addition to the weekly reporting you need to use the system to produce monthly reports to see how the trading results are going.

On a monthly basis you need to:

• Review the Profit & Loss Statement;
• Compare the actual results with the budgets;
• Look at the financial position – by reviewing the Balance Sheet;
• Examine how long it took to collect your debts;
• Were you paying your suppliers on time?
• Look at the Profit / Loss for the period – Did you achieve your budget?
• Set the goals and targets for the coming month;
• Monitor Key Performance Indicators

I could keep going on and on, but by now you will have the idea.

Once you have a good understanding of these things and you see the difference it makes to your business, you too will be hanging out for the monthly reports like the financial whiz kids who get so much joy from preparing this information.

So, what are you waiting for – get to work on the finances right away!

Capital For Your Business

Undoubtedly one of the main reasons businesses fail is that they are under-capitalised, that is, there is not enough capital invested in the business to survive, when things go bad.

Lack of capital often arises when you may have borrowed too much money to start the business so that if, or, more likely, when things slow down or you fail to reach your sales targets, the monthly payments to the bank become harder and harder to make. This situation can lead to the downward spiral that inevitably results in the business failing.

Under-capitalisation can also occur if inexperienced owners, buoyed by the fact their business is doing well, increase their borrowings for non-productive assets such as expensive cars or holiday homes or simply extract funds from the business in order to maintain and fund their extravagant life styles. Unfortunately, far too many examples of this have been seen in recent times across the globe.

How can the Banks allow this to happen over and over? Well, the banks have never understood the nature of SMEs. However, when the times were good they are happy to keep lending them money against their properties and encouraging them to buy new cars and other such things regularly.

But as an owner of a business, you must realise that borrowing money is easy; paying it back is not.

Debt funding, if used effectively, has an important role to play in business. All good businesses need a mix of loans (debt) and the owner’s own capital. Funding your business by creating a debt (that is, taking out a loan) will help to increase your profits and, if the debt funding is structured carefully will help you to fast track the expansion of your business.

The thing to be careful about is finding the right balance between debt funding and your own capital.

Some key points to note are:

• Always match the type of finance with the asset you need to purchase; for example, do not use your overdraft to fund purchases of capital equipment, because overdraft rates are too expensive for this type of purchase.
• Monitor your overdraft level regularly. Restructure your ‘hard core’ overdraft into a long-term facility, doing this will save you interest.
• Arrange a line of credit for unexpected emergencies.
• Don’t carry a high overdraft limit all the time, because you will end up using it.
• Have a debt-reduction plan in place. Imagine how much extra money you would have if you paid all your loans off!
• Don’t fall into the trap of thinking “I have worked very hard, and now I deserve a new BMW” – or worse, a Porsche! Non-productive assets can put pressure on cash flow in slow times, jeopardising your business.
• Don’t rely on the banks to tell you whether you have the capacity to repay the loans. You know your business best, so work it out yourself.
• Always have a ‘worst-case scenario’ prepared. How would you get out of the situation if the need arose?

Venture Capital

Apart from the vanilla variety of funding that is ‘debt’ (borrowing from the bank), it is also possible to raise equity by selling a share of your business to another party, either a partner or perhaps a venture capitalist.

The venture capital industry in the Region has grown in recent years and funds are now much more easily accessible than in the past. Venture capitalists are usually more interested in rapidly growing businesses that have reached a reasonable size than in little mum-and-dad businesses.

But make no mistake – these investors are not fairy godmothers or angels wanting to make your wishes come true. They are hard-nosed business people who are only interested in one thing –money! How much money will they make out of the deal? Does your business have the potential and the capability to reach the next level? Unlike the debt funds (loans) provided by the banks, venture capitalists do not charge you interest on their investment; instead they require a share of the profits (dividends) and a capital gain on the way out.

They are also concerned about their exit strategy – how will they get out? Venture capital providers receive hundreds of business plans and proposals each year, they know exactly what they are looking for.

Venture capital providers will often require a seat on the board and will want to have a say in your management – as a business owner, you may find this difficult to accept if you have not prepared yourself for this level of intervention.

There are other options too.

Partnerships

If the business is small enough a simpler option could be to seek an equity partner, either active or passive. Such a partner could, for instance, be another person like yourself who wants to start a business, but rather than set up a new business they want to invest in an established one with a healthy track record of profits and sales.

For the smaller business, there are also business angels (passive investors) who are often keen to invest on a smaller scale in mum-and-dad-type businesses. These investors are often retired business people with a keen desire to invest in growing businesses.

Having described the types of partners you could invite into your business, I now need to add that my simple rule for partnerships is to avoid them if at all possible. If there is no alternative, make sure all agreements are well documented, including roles and responsibilities, financial obligations and exit clauses.

At the end of the day it comes down to you to manage your business’s finances carefully and conservatively. My suggestion is to tread with caution when it comes to borrowing money. Things don’t always go to plan in your own business, so always have funds in reserve – put a little aside for a rainy day.

Business Planning for Business Success



Almost everyone advising on business, talks about the importance of a business plan and the need to prepare one at the outset and for each subsequent year. I am no different. They say that if you fail to plan, you are essentially planning to fail.

As 2009 comes to end, you need to start thinking about your business plan for the 2010 year and embark on the planning process.

Business Planning is a lot more than a budget or a financial forecast. It is a wholistech process which encourages you to look at your business objectively and establish your goals and objectives for the coming year and beyond. As you document these goals and objectives, you are also forced to think about and develop the strategies to achieve these goals.

A common approach to preparing the plan is the ‘now, where, how’ approach.

This requires consideration of three main questions:

1. Now – where is the business now?
2. Where – where do you want the business to be in the short and medium term?
3. How – how are you going to get there?

The following headings provide an outline of a business plan for small to medium enterprises:

1. Market analysis
2. Competitor/SWOT (strengths, weaknesses, opportunities and threats) analysis
3. Defined goals and objectives, business and personal
4. Marketing plan
5. Organisational and management issues
6. Financial plan
7. Production plan
8. Pricing and distribution Strategies

There are some other important points to keep in mind.

1. The process of preparing the plan is often as important and useful as the final document.
2. The plan is a working document and should be referred to regularly.
3. The planning process continues through the entire life of the business and is not a one-off event.

The business plan for an SME does not need to be an encyclopaedia or a work of art. Nor is it a template that guarantees the success of the business.

The whole process is about making you think about the issues and the challenges and the opportunities you will face once you start the business, so that you develop strategies to deal with the risks and capitalise on the opportunities.

It may be appropriate at various stages to seek expert assistance from accountants, lawyers, business consultants and other specialists. The extent of this assistance will depend on the size and type of business, your own background and experience and your financial constraints.

Prior to starting our business in Dubai, I have been involved with running my own firm for many years in Australia and Pakistan. In case you are wondering, if I prepared a business plan for my business on a regular basis; the answer is yes!

For every one of my 15-plus years in business I prepared a plan and set goals and targets for the financial year – this is the only way I could keep myself focussed and it was a key factor in motivating my team.

It was also a way of measuring our success as a firm from year to year.

Business planning or planning in general is not only for big corporations and multinationals – it is just as important if not more so for SMEs; after all, we do not have the resources or the reserves to survive if things don’t go as they should.

I may also add that a plan being carried around in your head is not a ‘real plan’. A plan must be in writing. And because of the overlap of personal and business issues in the life of owners of SMEs, it is likely that the plan will also cover a lot of personal goals and objectives – and that is how it should be.

So whether you have been in business for ten years or are still thinking about it – the time to prepare a plan is now.

Understanding Your Market

If you are going to be successful in your own business or devise a successful strategy for your employer, you must understand the market that you are operating in or, to put it another way, you need to know your customer base really well. Who are you trying to do business with? Is it everyone who walks past? Young people? Older people? Professionals? Or a combination of these or any other groups?

In many cases, I find that everyone knows the buzz words or the language of business, the problem however often comes down to implementation, “They can talk the talk, but they don’t walk the walk”

If you look at the potential market for any product or service it is generally very large. You need to break the market down into smaller chunks or, in marketing terms, segments. This enables you to effectively target your designated or the target market.

Marketing has many aspects to it, however, I want to focus on and emphasize the need to fully understand your market. Everyone talks about market segments and finding your ‘niche’ – a niche is a small part of the market which may be under‑serviced or have a particular need that your business can fill. While everyone else is fighting in a crowded market, successful businesses find a particular niche and work on providing the goods and services that group wants.

The key point is to know which part of the market you are going to focus on. Before you can decide that, you need to work out what you are really good at. After all, aiming your products and services at a particular segment is all fine, but does your product have the features, attributes or qualities that the particular market segment wants.

What is it that your Organisation is really good at? What makes you different from the others? Or in more technical terms, what is your competitive advantage?

 

Your Competitive Advantage?

Here are a few points to consider which will help you work out your competitive advantage:

• Are you planning to compete on price or will you provide a quality product or service? Can you produce the same product or service at a lower cost than others?
• Do you propose to provide personalized service or a fast no‑frills service?
• Will you be building relationships with your customers or just satisfying a consumer need?
• What is different about your product or service its features or quality?
• How does your product or service compare with that of your competitors?
• Is there enough demand for your product or service?

The idea is to work out these things so that you do not waste your time or energy in the wrong areas. Once you are clear about your answers, your service delivery and marketing initiatives and the entire focus of your business should be on your target market and meeting its needs.

For example, if you are running a fast food business, as opposed to a restaurant, the focus of your business and its way of doing things needs to be radically different from that of the restaurant – even though, in broad terms, you are both in the food business.

Smaller businesses often have difficulty competing on price with larger organisations. Think about a little family‑owned grocery store trying to compete with a big chain of supermarkets – it is just not possible to beat them on price. So you better come up with another strategy.

My advice for the smaller businesses is to fight the battle on your own terms – play to your strengths. The large corporations cannot provide the personalised service, convenience, commitment and the adaptability of smaller businesses. In your own business it matters if your regular customers do not come to the shop for one week – and you better make sure that they do. For large corporations, customers are a mere statistic and they will not be missed until such time as enough of them stay away for it to affect the business data when it’s collated and reviewed. Perhaps then some action may be taken.

 

You must have noticed that at times, despite all their resources, even large organisations get confused about their competitive advantage and end up chasing the wrong segment of the market. After it becomes obvious that there is a problem, changes are made swiftly and the organisation repositions itself.

In smaller businesses you do not have the luxury of millions in reserve. “What reserves?” I hear you say. It is critical that you regularly focus on your market niche and keep abreast of any changes and developments that may affect you – and act pre‑emptively if possible.

It is important that you find a market niche to operate in. Once that is clear and you understand your market and can cater to it effectively, suddenly everything else falls into place; all of a sudden your business activities can be much more productive and fruitful.

For all its resources the big business cannot compete with smaller businesses when they compete on their own terms and play to their own strengths.

Think about it and take action now!

Managing Stress

Stress is an inevitable part of life, and one’s ability to cope with it effectively depends on one’s mental health & physical fitness. In today’s busy and hectic lives, most of us are too caught up to take the time out to manage our stress levels through exercise, rest and relaxation. This is rather unfortunate, as stress if left unmanaged can manifest itself in the shape of physical and emotional problems. Stress, they say is the silent killer.

 

How are you coping with the stress of your daily life, the pressures at work and at home?

Take the Quiz below and assess your level of stress….

 

Self Measurement of Stress Level

The table below lists the amount of stress involved in various life events. To estimate your risk of a health change in future, add up the scores of the events listed in the table that have occurred in the last year.

S.No	EVENT	SCORE
1	Death of spouse	100
2	Divorce	73
3	Marital Separation	65
4	Jail Sentence	63
5	Death of close family member	63
6	Personal injury or illness	53
7	Marriage	50
8	Sacking or redundancy	47
9	Marital reconciliation	45
10	Retirement	45
11	Change in health of family member	44
12	Pregnancy	40
13	Sex Difficulty	39
14	Gain of a new family member	39
15	Business readjustment	39
16	Change in financial state	38
17	Death of a closed friend	37
18	Change to a different line of work	36
19	More or fewer arguments with spouse	35
20	High mortgage or loan	31
21	Foreclosure of mortgage or loan	30
22	Change in responsibilities at work	29
23	Son or daughter leaving home	29
24	Trouble with in-laws	29
25	Outstanding personal achievement	28
26	Spouse beginning or stopping work	26
27	Beginning or ending of school or college	26
28	Change in living condition	25
29	Change in personal habits	24
30	Trouble with boss	23
31	Change in working hours or conditions	20
32	Change in residence	20
33	Change in school or college	20
34	Change in recreation	19
35	Change in mosque activities	19
36	Change in social activities	18
37	Moderate mortgage or loan	17
38	Change in sleeping habits	16
39	More or fewer family get together	15
40	Change in eating habits	15
41	Holiday	13
42	Eid	12
43	Minor violations of the law	11

 

Calculate your score and if:

Total score below 80:

Your stress level is AVERAGE OR BELOW AVERAGE

Total score between 80 – 150:

You are under too much stress and should look at ways of reducing it

Total score above 180:

Dangerous level of stress which can lead to serious illness in the future. Consult your physician at the earliest.

Increasing Mental Resilience

Learning to modify your behavior. The following suggestions will help you to deal with stress more effectively.

1. Live in the present

Concentrate on things as they are now. Try not to dwell on the past or think about future events, over which you have no control.

2. Talk things over

Discuss problems with friends and relations, but do listen to their opinions or advice rather than merely burdening them with your difficulties.

3. Act positively

Once you have made a decision about a problem, act promptly and positively rather than doing nothing.

4. Don’t take problems to bed with you

Try not to think about your troubles or about work less than two hours before going to bed. Allow yourself time to unwind first, perhaps by going for a walk or reading a light, escapist novel.

5. Keep busy

Don’t brood about your problems. Engage in social activities or a hobby rather than sitting about worrying.

6. Learn to relax

Teach yourself at least one of the techniques described above.

 

Contributed By:

Dr. Suhail A. Qureshi

MBBS (PB); MCGMP(KSA); PDHM(NUST)

MBA(USA); PGD-Diab & Nutrition

Consultant Physician & Diabetologist

Succession Planning in Family Business

Small to medium sized enterprises are often characterised by one key element – the ownership and running of the business often involves the family. In fact at times several generations are involved in the business and there is always a desire on the part of the older generations to hand the business over to the next generation.

Sadly, due to a lack of planning, communication break downs, and insufficient preparation for succession, family businesses more often than not run into problems at some stage. The biggest issues arise when it is time for a generational change. This rarely takes place in an organised manner or as part of a well thought out succession plan.

As a result, we see families torn apart over business issues. What is interesting is that all the concerned parties feel emotionally hurt and are so convinced that they were in the right, that eventually family relationships along with the business relationships end up collapsing. The sad part is that a lot of these problems could be prevented through planning ahead. How often is the CEO changed in a large organisation, without even a slight hiccup in the company’s performance? Smaller organisations need to learn from the bigger ones and plan ahead for succession.

Unfortunately, in family businesses these issues are not given the importance that they deserve until it is too late, and when the unexpected happens such as the severe illness or the death of the Business Leader, there is total confusion about what happens next.

Developing a succession plan is not something you can do in a hurry. You need to allow plenty of time to develop the strategy, train the successor and make sure he or she is upto the task, before you can ever hope to make an orderly transition form one generation to another.

Family businesses are different from other organisations, often the business leader is not only the controlling shareholder but the CEO as well. So when the time for transition comes, it is both an ownership and management succession. This makes it twice as challenging.

If your ultimate aim is to hand over the business to the next generation, you need to invest time and effort in successor development. In addition to the educational qualifications, the potential successors need to know the business inside out. They need to have a thorough understanding of all functional areas and a good knowledge of the industry. In some family businesses, they adopt a practice of sending the younger generation to work in other companies first and learning the ropes that way.

If you own a family business which employs your sons or daughters, consider these questions:

• When will you hand the business over to the kids? Who will be the CEO?
• What will your role be once you retire?
• Is this the best exit strategy for you? Are there any other options?
• How will you know if it is the right time?
• Will your children be up to the challenge?
• Is this what they want or are they simply going along with your wishes?
• Will you be able to stand back and let them make their own mistakes?
• What will the terms of this transaction be? Will you just hand over the business or will they be buying it?
• What will happen to the business if you have unexpected health issues – who will run it?
• What would you want to happen in the event of your untimely death?
• How do you want the shareholding to be passed to the next generation?
• Will any member of the business not wanting to actively work in the business still be able to hold shares?
• Do you want the transfer of shares to be in accordance with the Islamic inheritance laws?

These are just some of the questions that need to be thought about. There are a lot more to issues to consider as well.

If family members are involved in the business it is important that these issues are dealt with in a business-like manner – do not hesitate to get specialist advice and help. These are sensitive and emotional issues and getting outside help can make them a lot less painful to deal with. Professional help in this instance could come from your accountant, lawyer or even a psychologist – or perhaps all of the above.

Another key point to remember is that you must be realistic about your expectations of your children. Everyone is different – as much as you may want them to be just like you, the chances are that they too will have their own way of dealing with things or running the business.

To successfully develop and then implement a Succession Plan, there needs to be a clear understanding about who is responsible for which areas. Once the roles and responsibilities are agreed upon, it is important to communicate them to the other members of the family and your key employees. In summary, you need to:

• Discuss
• Agree
• Document
• Communicate

Many well established businesses go to the extent of developing a family constitution which documents everything. It is an excellent idea to do so, as it ensures that families do not end up splitting and hating each other over business issues. That is too high a price, I am sure you will agree.