Business Sense

Financial statements are critical as they accurately reflect the business’ performance and financial position. The knowledge the financial statements provide offers past and current performance benchmarks that inform decision-making. Financial statements help a business’ owner(s) and management to make minor adjustments and/or determine the business’ future direction to include expansion, financing, and even marketing by providing data indicating which aspects of company operations deliver the simplest return on investment. By publishing financial statements, management can also communicate with interested outside parties, like stakeholders, investors, journalists and industry analysts about its business accomplishments.

Cash flow can be an even more important measure of your business’s health and eventual success than your revenue or profit. Why? Because without cash, you can’t pay your bills or your employees. You can’t purchase inventory, you can’t pay rent, and you definitely can’t afford to invest in your business’s future. Most importantly, without a positive inflow of cash, you literally can’t sustain day-today business operations. You need money in the bank to make purchases that keep your business afloat and help you avoid unnecessary debt. Said simply, when you have positive cash flow, you’re making enough money to cover your bills and even reinvest in your business, expanding operations and hiring new employees.

Business controls are the intelligent processes, procedures, and safeguards that protect your company from uninformed or inappropriate decisions or actions by any team member. As you grow your business, you want your management team as well as your employees to have both the knowledge and the authority to complete tasks without running everything past you. Business controls enable employees to exercise their judgment and use their discretion if you have empowered them with the ground rules, feedback, and systems they need to do their best work. As a specialized subset of your business, business controls and SOPs facilitate and support your employees’ performance, ensure product quality and consistency while eliminating inefficiencies and waste, and reinforce a culture of continuous improvement and growth across your organization.

A business establishes internal controls, or financial procedures and processes, as a measure against wrongdoing and as a tool to promote accountability, protect the company’s interests and ensure the integrity of financial data. Strong internal controls can improve operational effectiveness and efficiencies while also ensuring accurate financial reporting during internal or external audits. It’s important to remember that internal controls are unique to every business and designed according to the company’s size and structure. Internal controls not only address risks to the company but also reduce incurrences of unnecessary cost or effort that wastes resources of any type.

A strong finance team that consists of a CFO, controller, accountant and bookkeeper can grow your business in ways you’ve never imagined. Of course, the actual number of employees on the finance team is dependent on the needs and profitability of your business. While you may know the direction you want your business to go in the future, a finance team has the expertise to break that long-term vision down into practical steps with a realistic timeline, and to assist you in developing the systems critical for internal controls, whether inventory, purchasing or process quality. The most important approach to addressing your business’ financial needs is to have self-awareness and transparency to determine if you’re investing appropriately in this crucial part of your business.

In all types of business, large and small, the People, Process, and Tools (P-P-T) framework is used to improve the business’ position in the face of market competition and to remain relevant over time. Everything, from leadership to digital transformation, organizational talent, and management practices, needs to be combined for effective development. The concept of PPT or the Golden Triangle works with existing practices to ensure stronger and better business results. People and processes, along with technology, are the key elements for the overall improvement and sustainability of your business. As you build the systems focusing on these three areas, you can expect to see better outcomes in every department. Your aim should be to build agile work forces that are flexible, adaptable, and responsive to the dynamics of your industry and the realities of your environment. Businesses today need an inclusive approach to satisfy their customer’s requirements.

KPIs and metrics enable a business owner to keep business objectives at the forefront in decision-making and to more fully understand the business’ performance, track results and make course corrections as necessary to ensure long-lasting impact and success. KPIs encourage a culture of accountability and serve as the foundation for employee performance evaluations. A KPI may reveal that a perceived “poor performer” may have some favorable stats and deliver good results. And, poorly performing employees can’t dispute when data-driven and objectively based KPI stats demonstrate the absence of results. As importantly, if the majority of your employees are having difficulty achieving the KPIs that have been set, it may be time to reevaluate your business’ goals to understand why exactly those targets are not being hit. KPIs thus foster an environment of continuous learning, enabling you to set realistic goals for your business growth and how you want to measure its success.

RASCI is a chart (i.e. model or framework) that is used to help identify all the roles and responsibilities of each stakeholder on a project. A RASCI Chart clearly defines who is working on a specific subtask of a project. As an organization grows, or new projects are undertaken by a team of people, the work is often divided. Using a RASCI approach clarifies the individual role of team members on a project and enables the tasks to be done efficiently. RASCI Charts provide clarity around “who does what”, “who can help with this task”, and “who’s responsible for this task” on a wide range of business functions.