Whilst how best to control a business is a complex issue and people write papers or even whole books on the topic, this post explores some of the main characteristics of a business that is in control.
The final measure of success is that the business can consistently trade profitably. You cannot get around the fact that money matters when running a business.
Customers find it easy to do business. Financial transactions are quick and efficient. Preferably they happen at the point of sale or even in advance. If that is impossible, then the business in control has tight control of the accounts receivable ledger collecting monies owing in a timely manner.
The accounting system is all important. All transactions are reconciled with the bank every day. To some businesses that sounds like an impossibility but with the latest online software available there is no excuse not to achieve this ideal.
The thriving business has information systems that ensure data is entered only once. Businesses can benefit from using tablets or smart phones to allow sales/delivery people to collect money on the fly or enter information when it comes to hand.
A good business has excellent, streamlined systems in place. With up-to-date data available, management can be well informed about what is happening. They constantly monitor key variables – sales, margins, inventory, accounts receivable, customer satisfaction to name a few.
A business in control has a plan. It may take different forms but you must have a budget as a minimum. Management performs better when there are targets or goal posts in place. There needs to be a carefully thought out path to travel.
Whoever is managing the business has time to work “on” the business. To look at results, set targets, jump on problems early whilst they are small. Motivate the team. Be sensitive to changes in market conditions. Be ready and able to respond to change constantly as that is the nature of business.
A business in control divides its activities into profit centres so that all facits of the business contribute to its overall success. Those that do not are removed or remodelled.
There you are. Simple isn’t it!!
Whatch this space for more insights into how you can run a better business financially.