Business failure rates are huge. This is an interesting take on how not to fail: pay attention to your customers. How does this relate to ideas of maximizing shareholder value?
First of all, it is sad that 80% of trying entrepreneurs fail so quickly. It's a shame that the economy isn't strong enough to bolster these small companies and entrepreneurs in their endeavors, potentially companies that could contribute to the overall health of the American economy. However, on the harsh side, the five reasons (particularly all expect number four) should be necessary business concepts that are incredibly thought out prior to starting a business. These reasons are, to me, essentially basic and taught in foundational marketing and accounting classes -- a trying entrepreneur should not fail as a result of these reasons -- a good amount of blame falls on their shoulders for a lack of accountability in thinking through and planning a business.
To answer your question, reason number one most strongly relates to the idea of maximizing shareholder value. It should be an objective for these entrepreneurs to measure their success by engaging with shareholders; similar to reason number one the article posed, stating that companies should have deep dialogue with customers (or shareholders) as opposed to the minimal approach on Twitter.
After starting my own lawn mowing company two summers ago, I would definitely agree with Rule #1: Not really in touch with customers through deep dialogue. A big key to success is communicating with your clients. If you communicate with your customers completely it eliminates a lot of problem.
This relates to the idea of maximizing share holder value because the people running the company should always focus on customers first. If they don't, their company will fail. The goal of the entrepreneurs should be to maximize their share holder value. This means that they should do everything in their power to help their shareholders.
If anything, the article really emphasizes the need for good communication. To know your consumers and their needs, communication is needed. To be an effective leader, communication is needed. To market a company's core values, communication is needed. At the end of the day, people don't know what they don't know. So, there's no harm in telling them something they might already know.
Beyond the need for communication, I like the rule about differentiation. At this point, it is difficult to come up with something completely new. Now, it is more like reinventing the wheel to the point in which it feels new. I think innovation is significant and key to success. It actually makes me think of movies and how often there are remakes and sequels. The only way these movies become successful is by reinventing itself just enough that it's exciting and doesn't completely remind you of the original.
This article reminds me of the takeaway from managerial accounting, that the vast majority of business problems stem from communication. And, of course, even if you're an expert at communicating, you still have to have the right product in the right market. With regard to maximizing shareholder value, it should be a priority for an entrepenuer to meaningfully connect their shareholders to see what direction they have in mind for the future of the business. Knowing the direction your shareholders want the company to go can be very useful, and staying in touch with them allows you to squash any problems before they get to big.
First of all, it is sad that 80% of trying entrepreneurs fail so quickly. It's a shame that the economy isn't strong enough to bolster these small companies and entrepreneurs in their endeavors, potentially companies that could contribute to the overall health of the American economy. However, on the harsh side, the five reasons (particularly all expect number four) should be necessary business concepts that are incredibly thought out prior to starting a business. These reasons are, to me, essentially basic and taught in foundational marketing and accounting classes -- a trying entrepreneur should not fail as a result of these reasons -- a good amount of blame falls on their shoulders for a lack of accountability in thinking through and planning a business.
ReplyDeleteTo answer your question, reason number one most strongly relates to the idea of maximizing shareholder value. It should be an objective for these entrepreneurs to measure their success by engaging with shareholders; similar to reason number one the article posed, stating that companies should have deep dialogue with customers (or shareholders) as opposed to the minimal approach on Twitter.
After starting my own lawn mowing company two summers ago, I would definitely agree with Rule #1: Not really in touch with customers through deep dialogue. A big key to success is communicating with your clients. If you communicate with your customers completely it eliminates a lot of problem.
ReplyDeleteThis relates to the idea of maximizing share holder value because the people running the company should always focus on customers first. If they don't, their company will fail. The goal of the entrepreneurs should be to maximize their share holder value. This means that they should do everything in their power to help their shareholders.
If anything, the article really emphasizes the need for good communication. To know your consumers and their needs, communication is needed. To be an effective leader, communication is needed. To market a company's core values, communication is needed. At the end of the day, people don't know what they don't know. So, there's no harm in telling them something they might already know.
ReplyDeleteBeyond the need for communication, I like the rule about differentiation. At this point, it is difficult to come up with something completely new. Now, it is more like reinventing the wheel to the point in which it feels new. I think innovation is significant and key to success. It actually makes me think of movies and how often there are remakes and sequels. The only way these movies become successful is by reinventing itself just enough that it's exciting and doesn't completely remind you of the original.
This article reminds me of the takeaway from managerial accounting, that the vast majority of business problems stem from communication. And, of course, even if you're an expert at communicating, you still have to have the right product in the right market. With regard to maximizing shareholder value, it should be a priority for an entrepenuer to meaningfully connect their shareholders to see what direction they have in mind for the future of the business. Knowing the direction your shareholders want the company to go can be very useful, and staying in touch with them allows you to squash any problems before they get to big.
ReplyDelete