Avoiding Managerial Mistakes
CFOs may be experts when it comes to finances, but handling subordinates is more challenging. Here are some of the common people errors managers make:
- Ambiguous instructions: saying they want jobs done "as soon as possible" instead of being more specific—for example, "by 5 p.m."
- Incomplete instructions: failing to explain the reason for an assignment.
- Overly detailed instructions: providing so much extraneous information that the subordinate is confused.
- Bad timing: barking out a request at quitting time.
- Unavailability: failing to make themselves available for questions after giving an assignment.
Minimizing Business Risk
Conventional wisdom says it's less risky to buy a going business than to launch a new business. Don't believe it; it just isn't so. For proof, check the bankruptcy court dockets in any state.
The real lesson to be learned is why conventional wisdom is wrong. Consider the following:
- By buying an ongoing enterprise, you miss the opportunity to learn from your mistakes. Business problems and emergencies may not be fun, but they provide you with critical experience you cannot learn from reading a textbook or from watching someone else run a business.
- Unless the purchase contract calls for the former owner to stay financially involved in the business—and his or her payout is linked to a business's future success—you'll suddenly find yourself with no experienced person to fall back on for guidance.
- In most cases, both parties are so focused on getting the deal done that there may be no one to play devil's advocate and ask whether the deal should be done in the first place.
Be Careful During Bank Mergers
Be on guard if your bank merges. Consolidations are complex, and mistakes are common, so double-check bank statements and be on the lookout for errors.
Also, since the two banks probably had different fees and account features, you may have to revaluate whether the new, bigger institution will serve you as well as your former bank.
Getting Customers to Return—and Stay
No one has to tell you it's much cheaper to sell to an existing customer than to acquire a new one. So how can you ensure that a customer will return?
A low price strategy is one way, but it's expensive and rarely works as a sustained marketing strategy because price-conscious customers eventually find someone selling the product for a penny or two less.
So what to do?
Begin by identifying your most valued customers based on how much they buy, the frequency of their purchases and your profit margins on their purchases. Also identify customers who can refer you to new prospects—information that can provide you with a host of marketing options. Then get your marketing staff to brainstorm the possibilities. Here are a few suggestions to prime their creativity:
- Offer special discounts or privileges to preferred customers.
- Schedule a special sale during periods when a customer normally does not buy.
- Generate referrals. For example, Toys "R" Us uses a kids' registry that works along the lines of a bridal registry.
|An Invitation |
The JofA publishes a monthly collection of Golden Business Ideas and invites readers to contribute their favorites (for attribution, if you like).
Send your ideas to Senior Editor Stanley Zarowin via either e-mail ( firstname.lastname@example.org ) or regular mail at the Journal of Accountancy, Harborside Financial Center, 201 Plaza Three, Jersey City, NJ 07311-3881.