How to Overcome Common Entrepreneurial Problems - Part 3

In the final part of this article, we shall look at dealing with ethical and regulatory challenges and also succession planning. As stated earlier, when you have a good idea of the nature and cause of the problems, you are better positioned to effectively and efficiently address the problems.

Ethical and regulatory problems are common. Some of these problems are caused by the entrepreneurs themselves. For example, reluctance and intentional noncompliance to statutory and regulatory matters. In noncompliance you may achieve short-term goals such as hiding your enterprise and its revenues and investments, evading taxes both local and national etc. In the long run however, the price you eventually pay for these may be extremely high, even to the extent of leading to enterprise failure. You should establish systems and procedures that help and guide your enterprise towards compliance.

To solve such problems, seek expert opinion on these issues and try your best to comply. Regulatory compliance differs with location and nature of business. You can obtain useful information from business consultants, mentors and coaches, trade journals, government departments etc. Many governments today have trade offices and specialized institutions that provide advice and assistance to entrepreneurs at different levels. While networking, associate with enterprises and colleagues that are doing it right otherwise peer influence may also make you follow the wrong lane. Where compliance costs are high for your enterprise, you can reach an agreement with the authorities to implement the requirements in stages and hence making it more comfortable for your cash flows.

You can lobby for better government support regarding ethical and statutory enterprise issues. This can be more effective if you are organized in associations, unions, business clusters etc, than when you are alone. Feel free as an entrepreneur, or as a group, to approach the authorities regarding regulatory issues pertaining to business. Ethical matters are also very important for you an entrepreneur. Try finding out and documenting the short- term and long-term direct and indirect costs of unethical behaviors. If you really understand these you will endeavor to stick to ethics. Ethical problems tend to be contingent - it's only when things have turned very bad that you start regretting and yet it may be too late. We have seen enterprises shut down due to unethical practices, haven't we? Forewarned is forearmed.

Poor succession planning is the main reason why many enterprises, especially the micro and small and also some medium scale ones, do not exist beyond their founders. As an entrepreneur, you need to put emphasis on succession planning. Don't you desire to leave a legacy after your demise? Won't your children, dependants and other people be happy to know that you have left behind a sustainable and continuing business? Unless you are the type of person who desires to die with everything around you, this issue is a must for any entrepreneur. I do hope you agree with me, don't you?

Succession planning can follow several approaches. For medium and large enterprises with seasoned and skilled managers this aspect can be easier if due importance is laid on it. In such cases, internally groomed or externally sourced executives can provide good replacement to the CEO or founder. In fact the CEO can groom candidates for this role over some years. For smaller enterprises you can use the second-in-command approach, where you identify and develop someone, possibly your right hand man, to take over overall control when you retire from the enterprise. You can then handover your roles to such a person in phases, ensuring that the person grasps properly each phase before proceeding to the next phase. Such candidates may sometimes even be related to the founder of the enterprise. However, you should not forget what we stated earlier, that it is not advisable to engage unqualified and incompetent relatives in the enterprise. If you want success you need to hire right.

The legal status of the enterprise to some extent also influences continuity or succession planning. In a sole proprietorship situation, you the entrepreneur can single-handedly determine your successor. In limited companies where other directors and shareholders exist, this decision usually rests on a team of people. For public limited entities the dynamics are even more complex and the original owners may eventually lose control, subject to some factors. There are also cases where an entrepreneur may decide to sell off the enterprise. In such cases he may not have much interest in what happens to the enterprise afterwards. This sale can be made to employees, competitors, friends etc. It is advisable for you to obtain expert advice whenever you desire to dispose off your business.
 

Reference: Clayton_WL_Mwaka