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<\/a>There is a truism you should internalize: Most all big problems start off as small problems.\u00a0 We\u2019ll call this the \u201crule of excursions.\u201d\u00a0 Small deviations from the trend or norm if unchecked often become much larger over time.\u00a0 A missed cash discount by your accounting department probably means that cash flow is getting tighter.\u00a0 Are receivables collections slowing?\u00a0 If so, is it one critical customer or a trend?\u00a0 Is it time to focus more resources upon collections, credit research, or even time to \u201cfire some customers\u201d who continually break your rules or take up too much of your resources?<\/p>\nWhatever the problem, the person or board to whom you report does not want to hear about it after it has become a threat to the enterprise.\u00a0 If you are the head of sales and the pipeline is emptying or sales have slowed for any sustained period, the red flag must be raised, even if the focus is on you as a result and not upon the problem when the news is first delivered. And if you\u2019re the CEO, your board definitely does not want to hear that revenues are about to fall through the floor because bookings for the past two periods have been so far below forecast.<\/p>\n
[Email readers, c<\/span><\/em>ontinue here…]<\/span><\/em>\u00a0 An alert does not have to be too detailed or too long.\u00a0\u00a0 It should be sent to your superiors (and everyone has one or more) quickly, often with a short \u201cand we are working on finding the cause and redoubling our efforts.\u201d\u00a0 That\u2019s like a promise to self as well as to those who need to hear.\u00a0 And of course, a promise not kept is an indication of a lack understanding of the problem or of care for the solution. Can you guess the mood of the board members?\u00a0 Management must have had some or total knowledge that cash was critical.\u00a0 But not a word was said nor a discussion of alternatives suggested by the CEO or CFO, both present throughout the meeting. Well, both the CEO and CFO are now gone, and the VCs reluctantly passed the hat well before the budgeted cash-out date.\u00a0 And the terms of the new round were ominous, reflecting the anger and obvious catbird seat control the VCs had with no competition for their investment and too little progress to show from their last round.<\/p>\n Bad things happen to good people. But good managers do their utmost to make sure there are no large surprises such as that one.<\/p>\n","protected":false},"excerpt":{"rendered":" In past insights, we\u2019ve explored data gathering and dashboards for tracking the most important information to manage your company. Every good executive has a set of critical data points that best alert him or her to the changes in the … Continue reading
\nI have been a board member a number of times when either the board discovers a surprise or management delivers the news too late.\u00a0 Neither are good recipes for CEO survival.\u00a0\u00a0 Not long ago, the board of one of my companies sat through an extended meeting just eight months after receiving a significant eight figure VC cash injection, reviewing income statements, budgets, sales statistics, Internet customer trends, and more. We discussed these with management thoroughly for a total of four hours.\u00a0 Three weeks later, the Board received a communication from the CEO that the company had only weeks of cash left and immediately needed another round.<\/p>\n