These issues can hold enterprises back and will have a negative impact on the value of the business. Once issues are identified, it’s critical to implement a strategy to minimise or eradicate their impact.
Identifying the issues means being able to analyse the current business situation based on timely and accurate information. Using this information, summarised into meaningful management tools is essential and can include:
- Systems and procedures
- Financial and non financial key performance indicators (KPI’s)
- Cash flow
- Business planning
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Breaking it down...
It goes without saying that successful businesses have robust systems and controls over their flow of information and physical assets. Efficiency may be enhanced when systems and procedures including monitoring, are fine tuned to be able to improve the operation of the business.
Not only is it necessary to capture and monitor relevant financial Key Performance Indicators, for the well being of a business it may be necessary to monitor other non-financial aspects of the business, such as:
- Sales per customer
- Client satisfaction
- Staff turnover
to name a few.
No matter how profitable your business is, it needs to have positive cashflow to operate. Especially in phases of rapid expansion it is necessary to closely predict and monitor the business cash flow requirements at different times. This can simply be done by preparing projected cash flows and assessing the position regularly.
Budgets are a great tool to predict the outcomes you expect on your business and what the potential impacts on your profitability may be given different business inputs.
A business plan is a static holistic document that can be as detailed or as summarised as you wish. It can be a great asset to document your vision of your business, detailing things like products, regions, marketing, staffing in as much detail as you require. It will be an important guide to help you budget and prepare detailed cash flows.