The importance of establishing a chain of command

When a startup experiences growth, employees are hired and placed into roles in various departments. Soon, the task of coordinating them requires the recruitment of managers, which act as the go-between executive staff and employees.

As complexity increases, communication between the various players in a company needs coordination to avoid miscommunication and other mistakes.

Establishing a chain of command avoids these problems. Here a few reasons why establishing a hierarchy should be a vital part of any businesses’ strategic planning.

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Employees will know who answers to who

In big and small organizations, confusion is created when employees are unaware to whom they are accountable.

When these relationships are put in writing, along with expectations between employees, management, and executives, clarity is created, resulting in communication that is more effective and efficient.

When bringing new talent into the business, make certain that a detailed copy of the chain of command is provided to them, along with the responsibilities they are expected to fulfill, and to whom they are expected to report to on a regular basis.

2) A chain of command simplifies communication

A properly designed chain of command ensures that relevant and important information gets to the correct people as efficiently as possible.

When there is a lack of understanding of who answers to who among staff, mistakes are made as a result of miscommunication that occurs in a poor command structure.

Make sure that all employees know who to talk to regarding urgent matters, ensuring serious issues arising from the chain of command will be rare occurrences.

3) A chain of command keeps information in the hands of those that need to know

In the course of operating a business, sensitive information will need to be communicated between certain key employees, managers, and executives on occasion.

If a set chain of command is not followed, the chances of revealing data ending up in the hands of unauthorized individuals within the company increases significantly.

By detailing which positions are allowed to handle specific types of information, and to whom they are allowed to disclose it, the odds of a serious breach can be greatly reduced.

4) A chain of command establishes strong leadership from the top down

Without a strong system of communication in an organization, those that work within it are left without a clear idea of what they are working for.

By establishing a well-designed chain of command, all managers and employees will know what they need to accomplish, and why it is vital that they do so.

By streamlining the process by which talent talks to each other, feedback from departments will also reach executives where it wasn’t before, improving the long term success of the organization.

Meet The Team: Michael Feite of the Eastern Pennsylvania Region

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Where did you grow up?

Huntingdon Valley, PA

Where did you study for college?

St. Joseph’s University, Philadelphia, PA

What was the first job you had out of college? What was the most important lesson you learned there that has stuck with you for your entire professional career?

Construction Manager – I learned to execute with various obstacles, conditions and expectations.

What drew you to working with A Neumann and Associates?

I could see that A. Neumann & Associates has a superior customer offering in an underserved industry. Due to the complexity and time involved in the business sale process, there are few companies that have the skills and resources to execute Mid-Market Mergers and Acquisitions like A. Neumann & Associates.

What counties and states do you represent?

Eastern PA

What do you feel makes your region unique compared to others? (tax benefits, special laws, etc)

There is a healthy mix of wealth and diversity. This makes for a strong market of sellers and buyers. Without both transactions, don’t get done.

What do you find is the biggest challenge in the Eastern PA region compared to others?

The biggest challenges we see are businesses that are not as profitable due to higher overhead costs. A lot of businesses are constrained by location or labor that otherwise would make them more profitable somewhere else. This translates into a lower business valuation due to market conditions or an unwillingness to take on such a task at the end of the business life cycle.

What do you find is the biggest advantage working in the Eastern PA region compared to others?

The advantage I have in the Eastern Pennsylvania regin, is there are not any companies that have the marketing muscle, deal process, confidentiality or high level of expertise needed. Business Sellers who are looking for an efficient, confidential and successful business sale transaction come to A. Neumann & Associates.

What do you think is the most underrated opportunity in the Eastern Pennsylvania region?

There are plenty of lucrative businesses that will never sell due to their poor planning or over reliance on one or two individuals. If these businesses would take the time to work on their exit plan there would be a larger market of businesses that would be transferred.

What is the most rewarding experience you’ve had working in the Eastern PA region?

It is helping business owners who have the same end goal, to exit their businesses at maximum profit. What we do is extremely challenging and being able to see that through to the finish line is very rewarding.

Best advice for someone considering selling a business in Pennsylvania?

Spend the year or two of time it takes before you sell your business and position your business to be attractive at the price you need it to be. Then do your tax planning in advance as we too often see this to be an alarming deferred activity that causes a seller to balk at selling their business when they should.

Best advice for someone considering buying a business in Pennsylvania?

Buy a business you can then sell when it is your time to exit. If it is a complex deal on the way in you can be sure it will be a complex deal on the way out.

Bad habits that could be harming business

There are actions that business owners and business managers perform that could be affecting their company negatively. However, these habits are hard to recognize, as they and their peers have often accepted them as common practice.

Below are five behaviors in the workplace that either add no value to a company, or subtract from it.

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1) Taking on too many tasks

The startup phase of a business requires an entrepreneur to wear many hats, but as the company grows, attempting to do too much can hurt growth.

After hiring employees, look for opportunities to delegate lower value tasks to them, so more important matters can be focused on with the attention they deserve.

2) Monopolizing the decision-making process

Another bad habit that many entrepreneurs possess is their desire for complete control over the day to day operations of their company.

As a business gets bigger, the amount of decision points increase significantly, causing the speed of work to slow down due to the need for each one to be approved by the founder.

Hiring the right employees and training them appropriately will make it easier to offload smaller responsibilities, which will keep work flow moving at an optimal rate.

3) Reacting to problems instead of anticipating them

While many successful business owners excel at executing their own tasts, some do so without thinking about the future. This can lead to problems that would have been easily avoided if time had been set aside to anticipate them.

Failure to do this can put companies in a sudden defensive posture when they could have been in a position to see trouble coming. The latter situation allows companies to adapt quickly, making it advantageous to plan for these scenarios.

4) Indulging in activities that don’t add value

The information age has transformed business, allowing for exponential increases in productivity. It has also introduced opportunities for distraction that never existed a generation ago.

The presence of social media and e-mail, while necessary for the completion of certain tasks, makes it easy to get drawn into activities that add no value to the company.

By limiting access to these applications to a few times per day, their drag on productive work will be kept to a minimum.

5) Dwelling in fear instead of moving past it

Some degree of risk-taking is necessary in business, and along with this reality comes fear. How an entrepreneur deals with this emotion plays a large part in determining their success in the long term.

If they dwell in it, the decision paralysis that results will reduce productivity significantly. If they examine the root of their fear and act appropriately, they will be able to carry on with what needs to be done to grow their business in spite of the risks involved.

Lending Options for Small Businesses

Securing funding for a small businesses is a process that consumes a great deal of time and patience. However, there are many options available for entrepreneurs to fund their companies these days, making it easier for individuals to proceed with their business plans.

Below, we will discus several ways for business owners to secure the financing they need.

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1) Banks and other lending institutions

The first place that many entrepreneurs turn to when it comes to business financing are banks or other private lenders.

In recent years, requirements for lending have tightened; as such, approach financial institutions with a meticulously prepared business plan, and review minimum requirements that they have for approving loans prior to filling out paperwork. Make certain that all conditions are satisfied before proceeding with an in-person meeting.

2) Government loans and grants

Obtaining funding for a small businesses via traditional providers can be difficult. However, some lending institutions work with the federal government to offer SBA loans and grants to entrepreneurs that have trouble qualifying for traditional financing.

With the Small Business Administration guaranteeing loans issued through this program, the chances of being approved through this channel are greater for business people that are experiencing funding issues.

3) Online lending sites

Banks and other lending institutions have long been a hard sell when it comes to providing loans for small business. In recent years though, online lenders have entered the marketplace, increasing competition.

Loan acceptance terms for these providers are more liberal than those of established financial institutions, and loan applications for many sites take up less time than applying for financing through a bank. There are concerns about the liquidity of some providers though, so performing due diligence before proceeding is advised.

4) Crowdfunding campaigns

Emerging in the past five years, crowdfunding campaigns have allowed small business entrepreneurs to approach the general public with their business propositions.

Crowdfunding involves petitioning individual investors with a proposal, usually through a website such as Kickstarter or Indiegogo. In return, entrepreneurs provide investors with rewards that scale with the level of their commitment.

For business people that are seeking equity or debt financing, sites like Fundable provide small business owners with the funding needed to fuel growth, making it the best crowdfunding site for this type of financial need.

5) Vendor credit lines

Keeping inventory at an acceptable level can put the bank balance of small businesses in a precarious position. Taking advantage of vendor credit lines allows companies to order the products they need while deferring payment, allowing them to preserve cash reserves.