Category Archives for "Scalability & Valuation"

How Your First Board of Directors Shapes Your Company

Congrats! You’ve developed your business, and your organization has extended. It’s a great opportunity to gather a top managerial staff to help ensure, administer and deal with all you’ve manufactured.

The uplifting news: You’re sufficiently fruitful to require a board of director (BOD).

The awful news: You’ll never again be totally your own supervisor. Picking the general population who will serve on your BOD is basic – particularly on the off chance that you don’t need them to fire you.

Why create a BOD ?

BODs exist to speak to the enthusiasm of all shareholders. On the off chance that you keep up 51 percent of your organization’s value, then the board really replies to you. In the event that you took venture capital, weakened offers or even opened up to the world, then odd are you answer to the BOD. The shareholder dependably is the supervisor. The BOD fills in as the shareholders’ illustrative and has specialist to execute their will, which could incorporate supplanting you.

The BOD administers organization operations. The substance acts as a group of ordinarily of at least five individuals who have learning about your industry, markets and rivalry. BODs regularly are separated into a few subgroups, or boards, each with an attention on a key part of your business:

  • Audit Committee: A minimum of two members qualified to read and interpret financial statements
  • Corporate Governance Committee: Ensures the company is following all government regulations and corporate laws (and if you are public, listing regulations)
  • Nominating Committee: Identifies candidates to fill BOD and senior-management roles

Your full BOD will meet quarterly, however colleagues can meet as required. At the point when the full board accumulates, its essential employment is to impart. Individuals will get a monetary announcement, hear covers legitimate or administrative issues and find out about progress from every board of trustees.

These essential announcing exercises keep the board educated so individuals can consult with top administration about the organization’s condition and standpoint. Since legitimate matters may rotate around these talks, full and finish records must be caught and safeguarded. It’s fundamental for your general or outside insight to go to and give logical comprehension to any lawful issues that emerge.

The CEO’s dilemma

Your BOD individuals ought to know your industry, and there are times they’ll second-figure the vital choices that you and your official group make. The transient cravings of shareholders can be contrary to the long haul vision of the CEO, particularly an establishing CEO. At the point when the two interests wander too extraordinarily, clashes emerge amongst BOD and CEO. For the most part, CEOs who push too far or too quick lose ground and frequently are supplanted.

This is the CEO’s situation when choosing board individuals. Stacking the board with adoring sycophants decreases the point of view the BOD can offer the CEO. Pioneers advantage when many eyes watch from the top. Yet, a BOD effectively influenced by the whimsical way of financial specialists and their craving for here and now benefit can expel genuinely visionary CEOs and pulverize world-evolving missions.

The objective, then, is to select people who comprehend and share the CEO’s vision yet generally play out the due steadiness of unbiased board individuals. The two extremes ought not be in struggle. On the off chance that contention emerges, one of three inadequacies normally is to be faulted: The pioneer’s vision isn’t right, the board individuals are poor fits or the shareholders don’t have the correct speculation skyline for your organization.

-ENTREPRENEUR.COM

 

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Malaysian Franchise Act Simplifies Entrance To Market

Kuala Lumpur, Malaysia – Any U.S. company seeking to sell franchises in Malaysia must write a letter requesting approval from the Registrar of Franchise Ministry of Entrepreneur Development, Malaysia, according to Mahadi Mohd Ibrahim, ministry undersecretary.

The letter must include a statement of the company’s intent to sell a franchise in Malaysia, as well as information on the products, the company and the prospective franchisee. The ministry will reply within seven days after receiving the letter. No request has been rejected since the act was passed.

“This is a significant development for franchise companies that want to tap the Malaysian market,” said Marcel Portmann, International Franchise Association (IFA) vice president of emerging markets and global development. “IFA began discussions in 1999 with Malaysian officials on behalf of our members for simplification of the registration process, and those efforts have paid off with positive results.”

Prior to clarification of the act, U.S. companies wishing to sell franchises in Malaysia were required to submit a disclosure document, the franchise agreement, the operation manual, the training manual, the company’s latest audited financial statements and auditor’s report, and any additional information required by the registrar.

“The registration process was extremely complex and deterred franchise companies from exploring the Malaysian market,” Portmann said. “Now there is a whole section of the global market open to IFA members.” –IFA Insider

-ENTREPRENEUR.COM

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Being CEO: Gift and Curse

A CEO’s pride can be either a company’s greatest asset or greatest weakness. So how does company ensure it functions as the former and not the latter?

Many small and private of Japanese companies, the CEO or the company owner want to gather all the information and making decisions on his own. He wants total power and control on every situation. In the beginning of business, the management method can be effective and CEOs tend to say, ” If you want something done, do it yourself.” However as the company grow in size and complexity, this method has loose its effectiveness.

A CEO cannot observe every thing that they see and make decision based on what they see. More accurately, in a complicated situation, CEO should be saying, “If you want something done, fine a trusted and skill person, has experience and want to do it. I am only one candidate.”

Open sourcing might be the most efficient and cost effective way to help CEOs curb their egos and ensure that they leverage the best talent at their disposal.

EGO

Now, lets talk about ego. If you having ego, it is not bad at all actually. Ego initiate one’s drive to invent products and that is usually how business start. Ego can encourages achievement. It drive people to try new things and also overcome setbacks. CEO with strong ego mostly are decisive and courageous and often have clarity of direction and focus.

But executives might not have the expertise or experience to make the highest-quality and best decisions. For example, their particular backgrounds might not give them the ability to evaluate certain proposals effectively. They may not be in a position to gather enough or appropriate information to decide on specific issues. And if they’re too proud to admit this, then they may not seek the advice they need. And because they hide information and do things without consulting others, they could lose trust in people—and people lose trust in them! A loss of trust could lead to other losses as well, like missed opportunities from front-line, open discussions. This leads to front-line disengagement.

WARNING SIGNS

There are 4 warning signs can expose an executive that has destructive ego that keeping organization from opening up.

1. Make improper comparisons

Some people likes to compare their ideas to others. If the comparison is purposely to learn, it can be worthwhile. But, comparing in a competitive manner, or doing so in order to bolster one’s own ego, might not be. Comparing ideas competitively might cause a CEO to miss opportunities that customers are signaling. When the desire to have the “winning” idea gets too strong, one might set inappropriate goals, set goals that are too lofty, or even set goals that are too “safe” . Leader should compare their present self with an image of themselves in future, rather than comparing themselves with other people and most important thing is, let the best ideas win.

2. Being Defensive

Leaders should defend their ideas and opinions with sound reasoning, and accept other ideas presented with similarly good reasoning. They needn’t defend themselves personally. In open organizations, debate should focus on ideas, not people, but having an ego that’s too strong might prevent someone from doing that.

You’ll know you’re too defensive when your pride or reputation is your number first consideration when you’re making an argument, not solving the problem with the best solution. If you are giving single-solution directives rather than encouraging options, you’re being too defensive.

Even though hearing opinions that differ from yours can be difficult, the truth is always better than statements exaggerated, understated, or just plain incorrect.

3. Being the center of attention

As a leader, being the center of attention, they risk blocking out information and ideas from others. Open discussion and collective intelligence outperform the brightest individual nearly every time. With time and experience, confidence grows. The more we know, the more confident we become. When our confidence increases to the point where we think there is little more to learn, we close the door to listening and learning. We become less open.

3. Craving acceptance

Leaders need to remember that people who resist or reject their ideas are only rejecting those ideas, not leaders as people. Everyone should have the right and opportunity to attack your ideas—while at the same time praising you as a person.

Leadership is best reserved for those who don’t crave acceptance from others. When we must have the acceptance of other people, we tend to “play it safe,” hold back, and take fewer risks. And this, in turn, makes us weaker leaders.

How to become more open ?

Step 1: Emotional maturity

The first step toward curbing a destructive ego is achieving emotional maturity because if its successfully achieved, it will open the mind and increase the ability of a person to listen and learn. This maturity allows us to temporarily suspend our opinions and encourage discussion and debate in the best interest of the business, not only ourselves.

CEOs must understand that they know a lot—but not everything. They must be willing to look objectively at situations and find ways to confirm an organization’s situation. This involves finding a difficult balance: When should I ask questions and get information? When should I decide and execute on a decision? When should I stop and listen? When should I talk? To create more open workplaces, we must do what we can to help leaders find this balance and remind them that they don’t know everything.

Step 2: Curiosity

When we created an open minded atmosphere, we need a certain curiosity to actuallt explore others’ ideas. Leading with questions can prevent us from holding tightly to our own ideas and our beliefs. If we are truly curious, our satisfaction with the status quo is actually quite temporary. We soon want to learn, to advance further. We are never finished. We must convince our leaders that they should hold back their opinions while they explore other important possibilities.

Step 3: Determination

Determination that helps you to close the gap between what we think is right and what is really right. But over-determination can lead us to act in blind faith. We must convince leaders that times do change. Insist that your leaders continually confirm that their strategies and beliefs are still most effective and true in the current environment.

Conclusion

You need to become more open. After a leader effectively keeps her or his ego in check, where does he or she begin delegating decisions and problem solving? To find the answer to that question, one must simply explore where value is created. Having maturity, curiosity and determination, our newly-open CEO should be willing to open up that decision-making process and give decision making power and trust to those individuals, whether within the company or outside. The leader’s role should be to support those people and groups, and to create an environment in which they can come up with the solutions that best suit their immediate situations, and the company as a whole—not an environment that lets the CEOs ego spiral out of control.

 

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Business valuation becoming vital in financial reporting

 

Mr Tham said the new programme for chartered valuers and appraisers will boost quality and consistency.

Business valuation is becoming a more vital part of corporate accounting and driving the need to enhance the skills and standards around this speciality.

An ongoing focus on this front is now bearing fruit through initiatives such as a new programme being launched this week to nurture chartered valuers and appraisers, KPMG managing partner Tham Sai Choy told The Straits Times.

Business valuation is an aspect of accounting and auditing that establishes the value of an asset. This is becoming an increasingly significant part of financial reporting, said Mr Tham, who is also a board member of the Singapore Accountancy Commission.

“A recent survey by us found that some 80 per cent of the balance sheets now comprise estimates of fair value. The more objective, cost-based accounting of my generation is giving way to the more complex world of financial instruments, multiple currencies and cross-border businesses,” he noted.

“It is also a relatively new trend where we see more companies seeking growth through mergers and acquisitions. And this finds its way into financial reporting, where we have to break down the asset into multiple lines of different valuation to account for things ranging from buildings to brand and intellectual property.”

A third area that requires better valuation services is litigation, particularly in bankruptcy cases and shareholder disputes.

The financial industry has so far relied on services scattered across providers offering different types of valuations.

“So it’s quite unsustainable. It doesn’t help that some of the rules are still ambiguous, and there is often a lack of understanding on how (valuations) should be used. The industry and international standard setters are still working on enhancing these rules,” Mr Tham added.

The complexity of business valuation has come to the fore in recent months as public scrutiny centres on the fair value model of companies such as Noble Group.

In response to the challenge, the industry has long hoped to create a common set of competencies and standards for valuation. The launch of the Chartered Valuer and Appraiser Programme is part of the answer to that call, Mr Tham said.

The programme, by the Institute of Valuers and Appraisers of Singapore, will offer structured training and national certification to those in the valuation services, in a bid to improve consistency and quality.

Nanyang Technological University Business School will conduct the training courses, which will begin in August. KPMG is one the programme’s industry partners.

The programme is part of the industry’s multi-year push to build a leading accountancy hub for Asia-Pacific by 2020. As early as 2010, the Committee to Develop the Accountancy Sector (CDAS) – set up by the Ministry of Finance – noted in its report that Singapore should develop a centre of excellence in business valuation, internal audit, risk management and tax.

Another key industry initiative arising from the CDAS recommendations was the launch of the Singapore Qualification Programme in 2013, which also provides training and certification, allowing participants to be recognized as chartered accountants.

Mr Tham stressed that these industry programmes are not launched to raise the job barrier for existing professionals.

-STRAITS TIMES

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