Help To Start A New Small Business

Starting a new small business comes with many risks involved. It is not easy to start a business large or small. Starting a business involves a lot of hard work. As you are about to become an owner of a small business, you must realize the challenges which do exist within many different aspects. A small business no matter the products or services offered needs to plan accordingly while achieving the goals needed to exist within the market.

You must network

This is one of the most important steps in starting a new small business. Networking means that you are expanding your network of businesses as well as friends who could end up aiding you in starting your small business. You can join the Chamber of Commerce within your area. Anyone could benefit greatly from the advice of business professionals. Join professional networking websites. These websites can make you more aware of the business world as well as opportunities, which do exist locally to your small business. Embrace your family and friends. Inform them about your new small business while seeking their advice.

Research and understand what you are getting into

A lot of planning, knowing your competition as well as a thorough study of the market is necessary in starting your small business. These are very important points you should keep in mind in starting your small business. Select the best opportunities among the many, which do exist for beginning business owners. You can create or add to an existing business idea. Prepare a business plan. Finalize the plans on what kinds of business you want to have or do currently have. Gain complete knowledge about the market as well as investment opportunities with your company while preparing this business plan. Keep in mind that strategic consultants can prepare these for you .

Family and friends

You might want to consider being funded through family and friends, financial institutions or banks. Each of these options needs some degree of authority over the money, which they lend to you for your small business.

How should I list my small business?

Choose a legal structure for your small business. Run your business as a sole proprietor or you can enter into a partnership or create a limited liability Company. Register the business, which is when you will find out the rules and regulations of commencing your business. Keep a back up for your business by opting for small business insurance.

Do not forget Accounting and bookkeeping. From the beginning, you or someone you hire should keep the books on a regular basis. This will aid you in avoiding any type of future financial difficulty. Crowe Horwath Jamaica have affordable SME packages you can explore . Contact them here

You have various options when searching for ways to finance your business. After the business plan is prepared, the next step should be arranging for the funds for your small business. Calculate how much capital will be needed while looking for the many options available. Remember you want to start a small business first look within your own personal savings. Other options to consider are banks and investors. Financial institutions and investors however will always ask for a share in the management as well as profits. You may need to also submit collateral as a backup for money given by these institutions.

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How To Manage The Problem Manager

It is not a rare occurrence to find people in the wrong job or profession. One reason could be that they just love the social attributes of the job. Some are in the job because they have not been able to get anything better. Others may be on a job because it is the “family business”, and they feel compelled to follow it. Many others begin a work history with the first job they can get and just stay in that industry forever. Your problem manager is defined as a product of one or a combination of the foregoing motives.

Left to his devices, the problem manager can significantly decrease production and staff morale, and contribute greatly to cost increase – quite the opposite of what most company objectives are about. The problem manager can make a large company an unpleasant place to work, and will almost certainly destroy a small company. He may not be quite so difficult to spot. The classical example is the individual, who has the general impression that the entire world rests on his shoulder, and will come crashing down to pieces, if he is not more efficient than he presently is. In the budding stages, he may appear as the supervisor who constantly berates and intimidates his subordinates; the team leader who constantly creates division within his team instead of harmony; the manager who condescends to talk to the individuals in his group but never listens to their inputs; the manager who considers self as better than everyone else, and makes sure that everyone else knows this; the manager, who would “get the job done even if has to do it by himself.” And in their drive to achieve their very personal goals, they ignore or overlook other people in the organisation.

There are too many managers who do not understand what management is about. Despite what many may imagine, management is not about working hard; it is about working easy. An Unofficial Handbook of Management gives the following as the chief attributes of a true manager:
* Likes not doing anything
* Has no trouble telling others what to do
* Fascinated by work – likes to sit and watch work for hours
* Likes sweating the small stuff
* Always been something of a loner
* Enjoy having people despise him just for doing his job
This perhaps looks like an extract from the CV of a loafer, but the fact, which it seeks to express, is that management is not about working hard, but assisting a team to use their individual strengths more effectively.

It may not be quite easy to use a rule of thumb to identify a problem manager without creating the impression of a corporate witch hunting exercise. But there are several ways to make a tidy investigation, which will leave no one in doubt of the objectives. Quite often all that a senior manager may need to do is talk to the junior staff. Many employees will often seek a sympathetic ear to their complaints. If they are not talking, there may exist a larger problem of their distrust of senior management – or just their fear of their supervisors. Talking to the clients of the company could reveal a lot about the strengths and weakness of the managers in a company. Still a lot more can be revealed by looking at the overhead costs of the company. Overheard increase, which is not linked, to increase in productivity in a department should alert to a problem. For the same reason, staff turnover – when one group has more people quitting (or retiring) than others; when there have been instances where several individuals from the same unit have left the company in a short period of time; when one department has higher overtime costs than the others; when the employees in a particular section have been using up all their vacation and more of their sick days than the average – there is usually a problem manager in charge.

Yet it may be a lot easier to find the problem manager than to correct him. Except the individual has suddenly inherited the family business, they are unlikely to have got where they are without being good at something. If they weren’t good at some particular facet of the company, they would quite certainly have been fired long ago. It is important therefore to be able to assess the value of the manager in question to the company and weigh it against their cost to the company. If the manager has increased productivity, by fifteen percent over the past year, stakeholders in the company may wish to overlook the fact that the turnover rate in that department is higher than average. However, if the books show that the cost of sale has increased by ten percent during the same period, because of increased training costs, payment to employment agencies, sick leave costs, and increased overtime, stakeholders will be very much concerned. It is important to quantify the impact of every manager’s performance in monetary terms – or in terms directly related to the objectives of the organisation.

The action of top management with respect to a problem manager will depend on the circumstances. Coaching or advanced training can be recommended. The individual might be transferred to a position with less responsibility for people. Again, it must be observed that many problem managers are a result of company policy. Perhaps the goals set for the individual are unreachable, which has caused their management style; and should be adjusted. Lack of motivation is one other fault in company policy, which may produce a problem manager. If management is not sensitive to the skills of employees, resulting in people being placed in positions in which their ability to perform is not stimulated, one can correctly guess the result. A dreamer should for instance be put in charge of creative tasks rather than the accounting. The detail-oriented person should be put in charge of tasks with more structure rather in strategic planning. And, an introverted loner is not likely to go very far in customer service.

Whatever the action taken, it is important to document and quantify the measurements that are used to determine how the problem manager is hurting the company. Intangible faults should not be addressed. True bottom line impacts should be demonstrated by the use of overhead expenses as well as direct costs. The same measurements should be used to quantify the benefit to the company when the action taken, resolves the problem. An honestly implemented manager reorientation policy has the ability to produce more productive satisfied managers. And when this is achieved, the big picture – achieving greater profitability, becomes much clearer.

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Activity Based Budgeting in Organizations

Activity based budgeting is not new. As early as 1990, some organizations in countries like the USA and Australia implemented this new budgeting program to replace the old and known method of budgeting, the “line item budgeting.”

Activity based budgeting is a method of budgeting in which activities that incur
costs in each function of an organization are established and relationships are defined between activities. This information is then used to decide how much resource should be allocated to each activity.

In other words, activity based budgeting is budgeting, planning and controlling by activities rather than cost elements of an organization. For users of this budgeting program, they claim that it engages everyone in thinking about how they can better create value for organization. It develops a flexible budget based on activity work load that is not as rigid as ledger of the line item budgeting that pre-identifies costs eventhough that cost may not be of use at all.

Activity-based budgeting is simply organized common sense. More specifically, activity based budgeting is a technique for enhancing the accuracy of financial forecasts and increasing management understanding. When automated, activity based budgeting can rapidly and accurately produce financial plans and models based on varying levels of volume assumptions.

Activity based budgeting also can eliminate much of the tedious work in traditional budgeting. Activity based budgeting analyzes the products or services to be produced, what activities are required to produce those products or services, and what resources need to be budgeted to perform those activities. Simply put, activity based budgeting is the reverse of the activity-based costing process to produce financial plans and budgets.

With the advent of powerful and low-cost database systems, activity based budgeting is allowing businesses to reduce costs, better utilize resources, and achieve strategic objectives.

The Australian National Audit Office has identified the advantages of activity based budgeting:

The Advantages

– Output costs are supported by a schedule of costed activities
– Opportunities to examine work processes
– Identifies non value-adding activities that can be eliminated
– Basis of a performance measurement system and direct link between strategic goals and operational realities
– Enables cost profiles to be managed
– Accurate costing data for operational management
– Costs are transparent, understandable and actionable

Disadvantages

– Activity definition may become too detailed and the model may become too complex and difficult to maintain
– Underestimation of the task of collecting activity driver data
– Implementation may be considered a financial management “fad” and there is insufficient commitment from operational managers
– Usually requires buying Activity Based Budgeting software
– Requires training of all managers including budgeting department
– Requires people to really understand what drives their budget
– Eliminates excuse that activity volume changed because it makes visible volume changes
– Requires everyone to collect or estimate activity volume

By understanding how resources are transformed into products or services, and by focusing on the cost of activities, activity based budgeting helps an organisation to obtain a greater understanding of how costs behave in their organization and which activities create significant amounts of cost. Organizations can then begin to control their costs based ontangible activities rather than relatively uninformative general ledger or cost centrereports

 

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A Guide To Performance Management

Nowadays, a great significance is being given to Performance Management, as companies incorporate them in their effective management strategies. However, a lot of people find this process a complicated one, mostly because of the many options that it offers – on the organization, a specific department/branch, a product or service, and on employees, among others.

In order to minimize this confusion, the items below will give you a general idea of what Performance Management is all about as well as the activities that are involved in this process.

What is Performance Management?

Performance management is a process that provides both the manager and the employee (the person being supervised) the chance to determine the shared goals that relates to the overall goals of the company by looking into employee performance.

Why is it important?

Performance Management establishes an outline for employees and their performance managers to assess and to come to an agreement on certain concerns and aims that are in accordance with the overall structure of the company. This enables both parties to have clear objectives that would help them in their work and in their professional growth.

Who conducts Performance Management?

Performance Management is carried out by those who oversee the performance of other people – work/team leaders, supervisors, managers, directors, or department chairs.

What are the processes involved?

Below are the phases of the Performance Management process:

1. Planning

This phase of Performance Management process includes establishing job descriptions and identifying the employee’s essential functions as well as defining the strategic plan/s of the department or the company as a whole.

Job Description

A job description is used to advertise a vacant position, which typically specifies the following:

– The specific functions, tasks, and responsibilities of the position
– The amount of time needed to act upon each function
– The qualifications needed (skills, knowledge and abilities) to perform the job
– The physical and mental requirements of the position
– Salary range for the position
– To whom the position reports

Job descriptions should be disclosed to the employee as soon as he or she is hired. Note, however, that job descriptions are listed using words that make it difficult to measure the employee’s performance. They are in contrast with competencies, which list the skills needed in performing such tasks and are described using terms that can be measured.

Strategic Plan

In effect, a strategic plan tells you three things:

– Where the company is heading in the coming year/s.
– How the company is going to get there.
– How the company will know if it is already there or not.

Included in a strategic plan are the following:

Mission statement – the primary reason why your department (or company) exists.

Goals – associated with the mission statement, they determine the results that will advance said statement/s.

Strategic initiatives – specifies definite steps that must be taken to accomplish each goal. It is a dynamic process, usually examined during periods such as one or two years.

2. Developing

This phase of Performance Management process includes developing performance standards, which offers a scale that describes how a specific job should be performed in order to meet (or exceed) expectations. They are explained to newly hired employees and are later used to evaluate work performance.

Performance standards are generally outlined with the help of the employees who actually perform the tasks or functions. There are a number of advantages with this approach:

– The standards will be suitable to the requirements of the job
– The standards will be applicable to actual work conditions
– The standards will be easily understood by the employee (and performance manager as well)
– The standards will be acknowledged (and received) by the employee and the performance manager

Standards of performance are usually in the form of ratings (1 to 5, A to E) that are used by performance managers to rate the employee’s actual level of performance.

3. Monitoring

This phase of the Performance Management process includes monitoring employee’s work performances and giving feedback about them.

As the basis of feedback, observations should be verifiable: they should involve noticeable and work-related facts, events, behaviors, actions, statements, and results. Feedback of this type is called behavioral feedback, and they help employees improve and/or sustain good performance by precisely identifying the areas that the employee needs to improve without judging his or her character or motives.

4. Rating

This phase includes conducting performance evaluations. This is the critical aspect of the Performance Management process, especially because it is important for performance managers to arrive at an unbiased assessment.

A performance appraisal form has the following features:

– Employee information
– Performance standards
– Rating scale
– Signatures
– Employee performance development recommendations
– Employee comments
– Employee’s Self-appraisal

Why conduct performance appraisals? It provides an opportunity to improve performance in the future not only for employees, but for managers as well. Performance appraisals enable managers to acquire information from employees that will help them make employee’s jobs more productive.

5. Development Planning

This phase of the Performance Management process includes establishing plans for improved employee performance and development goals. This advances the overall goal of the company and at the same time increases the quality of work by employees by:

– Encouraging constant learning and professional growth.
– Helping employees maintain the level of performance that meets (and exceeds) expectations.
– Improving job – or career-related skills and experience.

In closing, Performance Management is a process that, when executed fairly and effectively, can improve the quality of the company’s workforce, raise standards, increase job satisfaction, and develop professionalism and expertise that would benefit not only the employees but the entire organization as well.

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Business Performance Audits

An effective audit process will mean that audit teams will be taking a systematic approach to gathering and interpreting data and information. In order to maximise the value of the outcomes of the audits the management should:

  • Accept that the audit activity needs appropriate resourcing, including training of auditors, education of operational and management staff, and physical and financial funding. If any of these are inadequate, then the quality of outcomes will suffer.
  • Accept that there will be limitations to the data gathered and the outcomes produced, not least because of the influence of the quality and quantity of resources allocated to the audit activity, but also because of the varying standards of judgement and interpretation that may be applied to the outcomes;
  • Focus on trends, take appropriate corrective action on specific issues, but look for trends and patterns that indicate underlying, hidden, problems that need addressing;
  • Ensure that the auditing activity is flexible and adaptable, in order to make it compatible with the culture and structure of the organisation, rather than adopt a rigid, unchanging process which is likely to be inappropriate and producing inaccurate results;
  • Challenge the findings, the audit process will not be infallible, and should be challenged continuously to ensure that it is, itself, performing effectively;
  • Apply the highest possible standards to the interpretation of results and judgement on what action to take, this requires training, experience, expertise, awareness of the internal and external environment, and an awareness of the impact of proposed changes on the motivation and morale levels of staff and managers, and an ability to forecast the impact on the operational and strategic objectives.

    However, there are some dangers that must be avoided in order to maximise the effect of the audits. These include:
  • Overload of data and information, the result either or too many audits being scheduled in general and-or the unnecessary auditing of areas of activity that are obviously performing well. This can be avoided by targeting the audits and schedules more thoughtfully;
  • Overload of improvement recommendations, not in itself a danger, but the organisation can find it impossible to resource, in terms of budget, time, or human resources – all the improvements identified. The answer is to prioritise, focusing on those improvements that will bring greatest value to the achieving of the organisation’s objectives; Complacency, where results are apparently positive in most areas, there is a danger that management will become complacent. By adopting the kaizen continuous improvement approach to auditing, this should be avoided;
  • Over-reliance on the auditing process, by leaving the identification and correction of poor performance to the audit process, rather than the audit process at least in part confirming that positive, continuous improvement activity is taking place; Managers ignoring the relevance of audit findings which is the most damaging response. If managers do not take the audit results and recommendations seriously and refuse to implement, or only half-heartedly implement the required changes, then the value of the audit process is wasted.

    Although the auditing should be scheduled to examine all processes and activity on a regular basis, there is a need for additional emphasis to be given to auditing poor performers. These are activities, processes, functions, systems, where problems are visible or suspected, but the causes are not certain and need further investigation. In these cases management should arrange for ad hoc audits, and-or for these areas to be given priority in current or imminent auditing activity. It is not acceptable to rely on a generic auditing approach. Not dealing with visible or suspected poor performers immediately will allow poor performance to cause immediate and possibly long term damage. Inevitably, the longer the problems remain unaddressed, the more difficult it will be to take corrective action.

    There is a danger that management will see only the audit results and concentrate on the decision making as to what improvements to make, and how to implement these. However, management must remember that the audit results are drawn from the activities of people. This means employees, operational staff, managers, specialists, suppliers, customers, stakeholders. Feedback, shaped and delivered in an appropriate manner, depending on the target group, must be seen as an essential element of effective auditing and successful implementation of changes. Not informing people of the rationale, the purpose, the results, and the positive contribution made by auditing, will lead to low morale and motivation, dissatisfaction, and possibly conflict.

    It is essential that the improvements generated by the audits strengthen the organisation’s capability to compete. In order to ensure this happens, management will need to be aware that: It will often be necessary for improvement action to be prioritised. Where this is the case, then those improvements that will contribute the most value to the organisation’s competitiveness should be given higher priority. This is a responsibility of management, who will need to be appropriately skilled in this task; The business sector and general external environment is changing rapidly, and even relatively recent outcomes and improvement recommendations may no longer be appropriate due to significant external changes. This requires management to be alert to such changes and to have the ability to interpret how their organisation should best respond; After improvement changes have been implemented these will have, by default, altered the nature of activities and processes, and will need monitoring, auditing, to ensure that the effect is positive. It is highly likely that most changes made will need adjustment, especially in the early stages after implementation. This must be an integral, high profile, element of the change process.

    Business Performance Audits are critical to the success of the organisation. The specific functional, process, and activity improvements generated by the Performance Audits are important and must be visible supported by the management. However, strategic and operational priorities will be constantly changing. Senior management must also ensure that the audit activity contributes positively and supports the strategicdirection that the organisation is taking. It is the responsibility of senior management to continuously monitor the effectiveness of the auditing activity in the light of this requirement, and make appropriate changes if necessary.

    To obtain the maximum benefit from Business Performance Audits the management must view them as a critically important element of the business. Appropriate resources must be allocated to the activity itself, to the interpretation of results, and to the implementation of improvements generated. Auditing must be integrated into the continuous improvement approach of the organisation. In addition, the objectives of the auditing process must be to generate improvements that contribute positively to operational and strategic objectives. If this approach is taken by management, then the organisation will benefit greatly from the continuous improvements that an effective auditing process can deliver, enabling it to continue to perform to the best of its ability.

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Leading The Strategic Changes

Implementing new strategies, new directions, new objectives, is introducing change, major change, into the organisation. As such it is essential that the implementation is approached, managed, in a similar fashion to that adopted when major changes are being made. The implementation of the changes must be planned, implemented as smoothly as possible, and then be monitored and evaluated for progress and performance against the desired outcomes, objectives, that were the drivers of the change. The leader must ensure that all aspects of the changes, the new strategic plan, are managed successfully.

The leader is the change strategist, whose role is to lead, to champion the changes, to promote the vision, to keep the organisation travelling in the chosen direction, and to ensure that all those involved in implementing the changes, the strategies, perform to the best of their ability. There are a range of leadership styles that could be drawn on. Some would argue that certain changes need an autocratic, aggressive style of leadership, and, whilst there may be the need for an element of this approach, if used as a single style it rarely results in a positive post-change environment. This is the flaw in this approach, for, after the changes have been implemented, and the strategies are in place, the managers, specialists, operational employees, and all contributing stakeholders, must work together in a harmonious, positive, manner to make the desired progress and achieve the objectives. If the leadership style during the change has been harsh, unforgiving, and aggressive, it may take many months, even years, to re-establish a positive environment, a healthy, goals focused, teamwork driven culture. The only logical choice of leadership style in any major change is one that combines all the styles, but leans heavily to those which focus on a team approach. The leader adopts a flexible, responsive style, that is a blend of the consultative, participative, and democratic, leaving room for an occasional, sparing touch of the autocratic to be employed if absolutely necessary. This style will then be the foundation on which the new, changed, organisation is built on.

Performance at the strategic, corporate level must be monitored by the leader. Changing strategic direction, no matter how thorough the preparation and planning, entails taking the organisation into uncharted territory. The leader is the guide, the expert, the most high profile member of the team embarking on this journey, and as such must be constantly aware of how much progress is being made and, when required, able to adjust the pace of progress and degree of activity to ensure that progress is satisfactory. To be successful in this the leader must carry out monitoring and evaluation activity on a regular basis, demanding timely and accurate information with which to make the assessment. In turn, the senior management team must show that they are successfully cascading this review and evaluation process down into the operational activity areas. The leader must set evidence of achievement of this task as one of the performance appraisal criteria for the senior managers, and they in turn must apply this approach to the operational managers and teams, as discussed below.

The senior managers are the change implementers at corporate level. Their role in implementing and managing the strategies and ensuring that the objectives are met, is crucial. It is these managers that will be leading and managing the operational managers and specialists, and monitoring performance and progress made. One of their roles will be to inform and manage the operational managers, and to appraise their performance. In all of these activities the leader(s) must provide the senior managers with encouragement and the necessary support to carry out their work, but must also appraise their performance and demand improvements where necessary.

At the operational levels the middle and functional managers must assist in making the changes and then achieving the objectives. This includes in hard areas of activity such as the achievement of targets, goals, deadlines, outcomes, objectives, in managing budgets, controlling costs, maintaining quality standards, producing goods or delivering services. It also includes the effective management of soft areas of activity such as in communications, coaching, training and development, managing resistance, and providing support for those negatively affected by the changes. The leader cannot manage at this level, but should regularly ask for evidence from the senior managers that the strategic objectives have been successfully translated into operational targets, deadlines, and goals, and that operational performance is satisfactory.

In all but the smallest organisation the leader will have little regular contact with the operational employees. However, that does not mean that the leader should not be known to them, or that their feelings should not be known by the leader. The role and style adopted by the leader should ensure that the operational employees are aware of the leader, and of the style of leadership being adopted. This is achieved partly through the communication of the mission, or vision, or simply the strategic direction being taken by the organisation, partly through the cascading down of the strategic plans, becoming visible as operational objectives, and partly by the visibility of the leader in channels such as newsletters, the corporate website, and local or national media. Visibility by physical presence, for example in the leader visiting operational activity areas, could be helpful, but is not always possible and must always be carefully handled. The only realistic way for the leader to communicate the strategic plan and direction is through the operational managers, themselves responding to the messages from their more senior managers. However, the importance of the operational employees in helping to achieve the strategic objectives, through their performance at the operational activity level, cannot be overestimated. The leader must ensure that they receive the support, the training, the resources, the quality of management, that they need in order to achieve the operational objectives. Without success at this level, the strategies will fail.

Most organisations have a number of important external stakeholders. The leader must inform and liaise with these, as they are important to the success of the strategies. Shareholders must continue to support the changes, and the leader; lenders will need constant reassurance that their funds are being used wisely and repayments are not under threat; business partners will need reassurance of positive progress being made; suppliers will need reassurance that they will be paid; local authorities and other agencies will be required to provide services; the media will want to report on positive progress but will also be watching for negative news to report; families of employees will need reassurance that their providers are not at risk; and customers will continue to demand that the products or services that they purchase will meet their needs. The leader must be aware of, and respond to, all these demands.

The leader is, without doubt, the most important person in the process of implementing a change of strategicdirection. The analogy with the captain of a ship is an apt one. It is the responsibility of the captain (the leader) to ensure that the officers (the senior and middle managers), the engineers and mechanics (the specialists in finance, marketing, quality, etc), and the crew (the operational employees), are all working to the best of their abilities in maintaining all areas of the ship. With this under control, the leader can then focus on the primary role of maintaining the course that has been set and forecasting and taking corrective action against threats that may lie ahead.

One aspect of managing change, relevant here in implementing a new strategic plan, or direction, is that of celebrating success. Mechanisms should be in place, at senior management, middle and operational management, and operational employee levels, to visibly reward success. Success here could mean many things, including: achieving important milestones or targets; overcoming resistance to change; removing barriers; settling conflict; taking opportunity; defending against threats; removing or reducing weaknesses; making unexpected improvements; raising quality standards; improving the plan. Morale and motivation will be raised significantly if success is rewarded. The leader should ensure that reward for success is a high profile aspect of the way in which change is managed.

In leading the strategic activity that is required to implement the strategic plan, to change the strategicdirection of the organisation, the leader is managing, leading, a major change. The majority of the change activity will, by necessity, be technically, operationally, managed by others. With this in mind, the leader must focus on ensuring that the organisation is following the direction laid down in the strategic plan, whilst at the same time managing those who are operationally implementing the plan. It is a dual role that requires great skill and a high level of effort and energy. Effective leaders will have prepared for this by equipping the organisation with appropriate physical, financial, and human resources, and by equipping themselves with the necessary knowledge and understanding of strategic change management. With these in place, the leader will be successful in managing the change and the strategic objectives will be achieved.

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Auditing Business Performance


At one level this is a relatively simple tool, requiring the management to select a key area of business activity and to audit performance in that area, comparing to previous performance levels and, ideally, benchmarking against known best practice and performance levels. The information generated by these audits will then be used to identify unsatisfactory performance and enable measures to be introduced to bring about improvements.

The business areas that should be regularly audited, in any business, whether public, private, or not-for-profit, include: External Environment: well established tools and techniques are available and used to scan the external environment for information on issues, events, and trends that will impact on the strategies and performance capabilities of the organisation. The quality of this information, and the interpretations of it, is critical, as it is the foundation stone of the strategic planning activity that follows. An audit of processes, tools, and techniques, and the quality of output, is essential in ensuring that the strategic planning process is provided with high quality, relevant, valid information.

We will now examine a few of them:

Competitors: although an element of the external environment analysis activity, this deserves a separate mention. Monitoring and-or benchmarking – variations of auditing – of competitor performance is essential. Competitors are, by default, in the same business, and gaining knowledge of competitor performance levels, in as many key areas as possible, will bring benefits to any organisation in any sector.

Strategic Planning: often an area of activity that is not evaluated, because it is carried out by the senior executive levels of management, but should be. In addition to the information gathering discussed above, the level of expertise in strategic planning of the managers, the rationale and justification for the chosen strategies, the processes used to communicate the strategies throughout the organisation, the level of support and resources provided for implementation, the performance of existing and previous strategies, are all areas that should be audited in order for optimum performance to be continuously achieved.

Leadership: separate from the Strategy audit, the quality of leadership should be audited regularly. A set of competencies for leadership, at all levels in the organisation, should be drawn up, and the leadership performance measured against these. Development activity should also be based on these competencies, and on eliminating or reducing weaknesses identified by the audit.

Culture: the existing culture that blend of beliefs, values, perceptions, behaviour, that makes up the culture of the organisation should be regularly audited and compared to the culture that is desired by, the objective of, the organisation’s leaders. Particularly at times when the organisation is planning or undergoing major change, information gathered from these audits will be invaluable.

Financial: where, although there is usually a framework of management and financial accounting processes, there is a need to rigorously and regularly audit the effectiveness of these, to ensure that the budgeting and accounting activity is as productive as possible.

Suppliers: one of the most critical areas of any organisation’s activity, the start of the supply chain, supplier performance, including the performance of those in the organisation who audit supplier performance, must be audited, rigorously and regularly. Now accepted, in parallel with research & design and strategic planning, as one of the foundation stones of quality assurance, any weakness in supplier performance can damage the organisation, sometimes irreparably. Auditing ensures that optimum performance levels are maintained.

Physical Resources: the quality of and use of physical resources, such as raw materials, operational equipment, technological equipment and systems, furniture, fittings, and buildings, all need regular auditing to ensure that the most appropriate resources are purchased, installed, maintained, and used effectively.

Human Resources: this entails auditing the quality of human resources employed by the organisation, the way in which they are deployed, how well they are trained and developed, as well as what opportunities and channels exist for progression. Every aspect of human resources activity should be audited at all levels, from operational up to and including executive level.

Equality: encompassing diversity, discrimination, and equality of opportunity which are all key areas that if not audited regularly to ensure high levels of performance not only abiding by legislative requirements but also contributing positively to the culture of the organisation will lead to conflict, dissatisfaction, lower morale, lower motivation, and ultimately lower levels of performance.

Internal Customers: often ignored, the level of satisfaction of internal customers.The next department, individual, or team, that handles the next stage of production or service creation is critical. Overwhelming evidence shows that dissatisfaction of internal customers, leading to breakdowns in communication and cooperation, is one of the major causes of poor overall performance.

Distribution: of the products and-or services provided by the organisation is an essential element in making the organisation successful. Auditing this process will ensure that logistics best practices are in place, and that distribution activity is contributing positively, in terms of financial costs and corporate identity, to marketing, sales, and customer service efforts.

External Customers: auditing the satisfaction levels of external customers is a critical activity that should be carried out on a frequent basis. Customers here include all those at separate points in the distribution chain, through to buyers and end users. Information drawn from these audits will ensure that the organisation is in tune with and can respond appropriately to the needs of its most important stakeholders its external customers.

Stakeholder Relationships: stakeholders are any individual, team, external organisation, that has a legitimate interest in the performance of the organisation. This could include, depending on the sector and specific organisation: employees, unions, parents, relatives, local or national media, local authorities, emergency services, shareholders, financial institutions, funding bodies, governors, national or international governments, strategic partners, and of course, a variety of external customers. Relationships with each of these, in their own way, are critical, and should be audited regularly to ensure that they are as healthy as possible.

Quality System: deliberately listed as the last area to be regularly audited, this is an audit that should be carried out in addition to all the individual audits listed above. Whether an organisation has an externally certificated quality assurance management system, or an internal only system, there should be quality criteria set for every critical activity, event, stage, and process, from the starting point to the final point of the supply chain from the earliest stages of design and supply activity to the point where the product or service is in the hands of the final, end-user customer. Quality criteria that describe required quality levels, performance levels, and outputs, are essential to the success of any organisation. The quality system, including the internal and external auditing processes, should be audited to make certain that it is performing as intended that is, assuring that the required quality standards are being met, and of course, continuously improving.

Effective auditing will bring a number of benefits to the organisation. The first group of benefits are those where obvious weaknesses or problems are identified, including: identifying where immediate improvements could be made; identifying emerging trends that may signify corrective, defensive, or offensive action is needed. The second group of benefits are more subtle, and include: identifying the actual situation, rather than what is perceived to be the case by management or specialists; increasing the pool of knowledge that individuals and teams can learn from; ensuring that the operational activity is, as intended, supporting the strategic objectives: establishing a culture that expects performance to be regularly audited and evaluated: establishes a culture that is driven by continuous improvement activity.

Unless an organisation continuously audits and evaluates its performance in all key areas, it cannot know for certain where poor performance is occurring, and it cannot take corrective action because it is not aware of the problem, or it does not have sufficient information on which to base appropriate action. Rigorous, regular auditing will provide a flow of valuable information that the organisation’s management can use to decide on operational changes that will improve performance in critical areas. Applied across the whole organisation, this will provide the strategic objectives with a stronger foundation of support, and ultimately more chance of success.

 

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Making The Sale By Proving Value


What does value mean? When addressing this fundamental question I first thought about its relationship to money which got me thinking about when money was invented and who invented it. Internet to the rescue…

What is money?

Money means different things to different people — to you it may mean coins, notes or credit cards. To some people in developing nations it may mean beads, shells, acorns or human toes. In short, money is whatever we think has value.

So who invented it?

The first written records of the use of money date from 1200BC, in the area of land now known as Southern Algeria, although then it was covered with water. Inscriptions in stones record that ‘twelve shekels’ were paid into the bank account belonging to Algar Hammurabi, in return for ‘use of his daughter’. Twelve shekels in today’s money would buy you hundreds of prostitutes, all better looking than Hammurabi’s daughter, who was, by all accounts rather dull.

More generally, before ‘money’ was introduced as a common currency, cost was determined by the effort / innovation we personally had to apply in return for other things that we needed to be supplied by others. For example, the local Blacksmith might shoe a farmer’s horse in return for a few sacks of flour. In the modern world, common currency allows us to purchase products and services from a broad range of suppliers, many of them offering similar items at sometimes similar and sometimes very different prices!

Why is this? Why does a hotdog at a pop concert or a football match cost 3 times as much as at the village fete? Why does a bunch of bananas sell for 3 times as much in Marks & Spencer as it does from a market stall? Why do 80% of consumers use BT for their domestic telephone services when the same services are available from other vendors at half the cost?

The answer lies in the ‘value propositions’ that these products and organizations offer in terms of the customer’s perception of the cost / benefit equation. The, key word, of course, is: ‘perception’ which gives us a clue regarding the importance of, not only our value propositions, but also how we communicate them to our customers.

Why is it important for a company to define its value propositions?

Any organization that has to sell things (and most do), needs to be able to communicate value to its customers if it is to optimize its long-term profitability. The sales team in particular needs to be able to articulate value to its customers to demonstrate that their cost / benefit equation is stronger than the competitions’. But what is customer benefit? It is clearly not just a long list of the company’s offerings in terms of features and advantages. It is only a benefit if the customer gains ‘pay-off’ in relation to their needs and wants. The salesperson’s job is to define these needs and wants through careful positioning, questioning and listening but to do this, the value propositions of the organization and its products / services need to be clearly defined.

So who seeks the value?

Shareholders want value in terms of profitability and ROI. The CEO and Board members usually have a weather eye on this! Departmental heads tend to look at the value that is added to the department and the achievement of their local objectives. In all cases, value is sought by the individual driven by their personal, emotional wants as much as the needs of the business. Again, sales people need to expose and develop these.

Brainstorming

There are likely to be several key people in your organization who are well placed to help build value propositions. Form a task group comprising sales people, marketing, product development, finance and any others who might be able to contribute (they can soon leave the party if they can’t).

In traditional brainstorming style, fill up flipcharts with all ideas, no matter how ‘zany’ they may be at first. (Mind Mapping software can also be a useful tool for doing this). Assuming you are in a business-to-business selling environment, start with the fundamentals of the value a customer might be seeking. The central theme is profit. How to increase sales and / or how to reduce costs. Remember you can sell more by increasing volumes or prices. You can reduce costs by paying less or increasing productivity. Consider the functions within the customers’ business that contribute towards these goals, and then consider what your value propositions are to help your customers to achieve them. Think about the negative consequences of them not having your products / services. These negative impacts can soon be converted into positive value propositions. Draw up where your product / service fits in their value chain. How much value does it add? What profits do they make as a result of your inputs? If in a ‘product’ business, don’t forget your service ‘wrapper’. Very often, in the customers’ eyes this is of more value than the product!

Once you have listed your value propositions, prioritize them into ABC’s in terms of how much competitive edge you think they represent. A’s being USP’s (unique selling point), B’s generally strong vs the competition and C’s as ‘me too’s.

Finally, alongside each proposition, consider the best possible ‘proofs’ you have to substantiate your claims. Technical bulletins, case studies, presentations, testimonials etc.

Oh, and one more thing!

Make sure the sales team develop the value propositions by adding the questions that need to be asked of specific individuals to engage needs and wants for your propositions.

Otherwise, no deal!

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Inventions, innovation and creativity.


Creativity is what sets you apart from your competitors. Competition may kill your business, but if you are creative enough you won’t ever have to fear competition. Fortunes are often born in creative minds. A simple idea can turn into a never ending stream of cash. If you innovate, there are no limits or boundaries for you. The sky is the limit.

So, it can be said that one of the most important factors a company may have is the ability to come up with fresh ideas, new concepts, sophisticated marketing techniques. People like new things. Everyone wants to create something new. People struggle to be different in today’s marketplace.

If you do a simple research you will find out that creativity is one of the things that make people become rich. Often, the more you create the more money you make. This requires effort and dedication. To see the opportunity where no one else see it.
I firmly believe that fortunes can be made. You simply have to define a problem and find a solution. Then capitalize on that solution. Problems are everywhere and the bigger the problem that you find the solution to, the bigger the chance you will make a lot of money from your idea.

You can create anything. It can be an invention, an e-book with information, art, a scientific breakthrough, etc. Just find a need and try to fill it. I guess you have heard that many times already, but it is true. The easiest way to make money is to help other people make money or help them solve their problems and receive some compensation from your efforts.

Isn’t that what capitalism is all about? To allow people to become rich by enriching other people’s lives? You don’t need to chase money nor go after wealth. When you add value to the life of others you usually receive compensation for it. The best way to add value is to come up with a creative solution that no one thought about before.

This is not always easy. Sometimes the ideas will come fast and smoothly. Other times you will have to think hard about the solution. Keep in mind that the harder the problem and the better the solution, the more money you can make from it.

At the end making money may not be that hard for you. Once you get used to it you can do it often. The business of innovation has always being one of the most profitable businesses you can participate on. Creativity is something that come from the inside. It originates within your mind.

This is certainly one of the most important factors that an entrepreneur should take into consideration. It can make a huge difference in your businesses. Remember that there is no limit to what you can create. So, you can make a lot of money by just adding value to the life of others and finding solutions to complex problems that you can find everywhere.

The decision is yours. Most people work hard all their lives because they try to imitate what others do all the time. Work on those creative skills and improve them. You will be glad you did.

It doesn’t take a genius to create something new. You don’t have to be too smart. Sometimes the ideas originate from your intentions or they just come to you. Probably you already have thoughts about how to improve something or create something new that does not exist yet. You just have to polish that idea and give it a try. You may be amazed at the results.

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Don’t Sell Your Business in the Dark – Crowe Sell-Side Due Diligence Services

Transaction services professionals from Crowe can help shed light on
all the right issues.

Sell-Side Due Diligence

You have made the decision to sell your business. This is a significant
decision with a potentially lucrative outcome. Now comes the difficult part.
Sell-side due diligence is an investment in higher valuations for the selling
shareholders. A combination of strong deal preparation and the right team of
experienced advisers can result in a significantly greater sale price. Sell-side
due diligence is a proactive approach to deal preparation at a reasonable cost
to the seller and no cost to the buyer. Providing the buyer a comprehensive
due diligence report prior to commencing negotiations helps to increase the
buyer’s confidence level in the results. It also allows for up-front consideration
of issues that can be considerably more costly if discovered later in
the process.
Selling a business is a difficult and time-consuming process. Many sellers,
especially in the middle market, may underestimate the amount of time and
effort that goes into finding and selecting a buyer, negotiating agreements,
performing various types of due diligence, and ultimately closing the
transaction. In addition, sellers often don’t fully understand how their
company’s financial results can affect the transaction or the transaction
issues that often result in reductions to the buyer’s offer price.
Buyers in today’s market are experienced and sophisticated. They are
experts at executing transactions and are surrounded by skilled advisers.
By contrast, sellers often have limited experience in selling a business.
Unless they have experienced advisors to help them prepare and negotiate
effectively, they can miss out on significant deal value.

It is important for the seller to be prepared and establish credibility with the
buyer up front. Buyers do not like surprises such as accounting issues and/
or misstated earnings, and will react adversely if these are first discovered
during buy-side due diligence. In addition, buyers tend to see less risk, and
thus pay higher prices for companies, when they are more comfortable with
the quality of the financial reporting and results. Therefore,t it is critical for a
seller to do its own front-end due diligence to be as prepared as possible for
an expected transaction.

Get copy of  Crowe-Sell-Side-Due-Diligence-Brochure here 

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