To whet your appetite, here are a few strategies from our Virtual CFO team.
To manage means to control. Without proper controls a company will limp along with substandard performance and problems that seem to never get resolved.
But how do you achieve control in a business?
There are three simple concepts that make the process easy. If you understand and apply these concepts to any business problem, you will bring it under control.
Concept 1 - Control Process
The control process requires proper use of three elements -- information, trigger points and predefined actions.
Let's use the thermostat in a house as a model. Sensors monitor the temperature (information). When that temperature reaches certain limits (trigger points) a furnace or air conditioner will switch on (predefined action) and the temperature will be maintained within predefined bounds.
In business we apply the same logic. To establish control over any function we need three things:
Concept 2 - Focus
The second concept is focus. You need to pick a specific business activity to work on. If you attempt to bring every aspect of your operation under control at the same time, nothing will get done. The error most managers make is in this area. They try to bring sweeping changes that lack focus and are therefore certain to fail.
Concept 3 - Follow-Through
Once you have focus and have the elements of the control process, you must follow through. Improving controls requires new processes and procedures and it is always hard to implement changes. You simply must follow through to establish a change that will last.
Let's take a simple example to see how to put these controls in place.
Let's suppose accounts receivable are growing and we feel that aspect of our business is out of control. What do we do?
This simple system will quickly bring receivables back into control.
Using the same method, you can gain control over any aspect of your business.