Basic Business Cents: A focus on business accounting is time well spent
Additional elements of a good strategic plan are financial, products/services, structure, and operating requirements.
As much as we would like to spend time to make things or perform good service for our customers, we will probably not be around long if we don't keep on top of our financial situation.
This does not require a degree in accounting, just a realization of its importance and a dedication of time to the subject. Good software is available to help and training in that software is available from a number of sources.
A good approach is to project revenue and expenses by major categories by month for the running year ahead. The same thing needs to be done for cash flow. For a small operation, this can be done simply on a spreadsheet.
Some questions to be addressed on financials are:
What are the expectations for revenue growth by year?
What are the expectations for profitability by year?
What other financial expectations do you owners have over the next five years?
Do you have sufficient capital to carry out your plans? If not, how do you plan to raise it?
Products/Services are usually clear in mind but just in case, following are some questions to consider:
What are examples of clearly successful and unsuccessful products and services?
What factors account for this difference between successful and unsuccessful products and services?
What is your primary product/service?
What is the primary function of your product/service?
What are three unique benefits of your product/services?
What led you to develop your product/service?
What are the top objections to buying your product/service?
How is the pricing of your product/service compared to your competition?
Like the vision, mission, and principles of management (values), the structure of the organization should be revisited to ensure consensus and understanding of the proper structure for the business for the immediate future.
Some questions to ponder are:
Is the organization structured in the best possible way?
Are the right people in place to carry out the plans?
Is the leadership capable of leading the organization to achieve its plans?
Is the right organizational structure in place to achieve the plans?
Have the key processes of the organization been identified and mapped?
Are successful efforts underway to improve and innovate these key processes?
Finally, some basic questions on the operating requirements need to be addressed to stimulate our thinking on how to make our business more successful.
What are the four most essential requirements for successful performance for any organization in our business?
How well do you perform on these four essential requirements?
How do you measure "that" (i.e. quality)? What are the key indicators?
What would be the ideal number?
Where are you now? Why?
What is stopping you from reaching the ideal number?
What other issues affect this number?
What other characteristics must your organization master to be successful?
In addition to your current services, are there any additional areas that you should consider expanding into?
Challenging ourselves to answer the questions in this and previous articles, pausing to ask why and how do I know after each, is sometimes painful but productive in ensuring the business will continue to survive and prosper into the future.
Louis Schultz, managing director of Process Management LLC, has assisted organizations worldwide with performance improvement. He currently assists area business owners as a SCORE counselor. E-mail him with questions or comments at email@example.com.