Are you feeling overwhelmed by the pressures of managing your organisation?
CREDIT: This is an edited version of an article that originally appeared on Robert Half
With the right information, and an educated approach, managing your organisation doesn’t have to feel so hectic and stressful! In this post, we’ll offer some simple but important tips that will help you to:
define short and long-term goals, and anticipate and address problems by creating a business plan;
improve cost-effectiveness through the use of budgets;
safeguard the business through internal control procedures.
Read on to discover three tips for improving your business management and positioning your company for growth and success.
Create a business plan
As someone once said, ‘If you fail to prepare, you are preparing to fail’ and yet, in a research report published in 2018, a striking four-out-of-five organisations surveyed had no formal business plan. Furthermore, the same report found that only one-in-three organisations surveyed regularly spent time refining their growth strategy, even though 98% of participants felt their business had growth potential.
What is a business plan – and do you need one?
A business plan is a written document created to detail all aspects of an organisation on a comprehensive level. The goal is to establish and examine the organisation’s objectives and the best strategies for achieving them. To put it more simply, it is an outline of the path you intend your organisation to take, and how you intend to follow that path.
However, creating a thorough, meaningful and actionable business plan can be difficult and time-consuming. Writing the plan requires significant research, and it can take time and attention away from other needs. Consequently, some entrepreneurs prioritise simply getting the organisation started and choose to maintain flexibility when it comes to the company’s subsequent development.
Every organisation is different, of course, and this approach may work for some. Broadly speaking, though, a business plan is still one of the most effective ways to establish a strong foundation for your organisation – one that pays off by bringing many vital benefits; for example, the process of researching and writing a business plan can sometimes reveal potential problems. Even the simple exercise of outlining your business’s strengths, weaknesses, opportunities, and threats (the ever-popular SWOT analysis) can be enlightening.
Many banks and investors require a written business plan before lending or investing. Furthermore, a carefully thought-out business plan can also help define short and long-term goals for the organisation and methods for measuring the level of success in reaching them. What’s more, by carefully examining each aspect of an organisation at its beginning, one can structure that organisation to create the maximum level of tax advantage for the owners.
Finally, and just as importantly, your business plan provides a means for measuring your organisation against others in the industry and identifying areas of improvement. By including the milestones you want to reach, you can maintain accountability to your long-term strategy and keep your company on track.
Use careful budgeting
If this sounds like a no-brainer, it may surprise you to learn how many organisations are not diligent about budgeting. In fact, a 2018 survey revealed that 61%, or nearly two-thirds, of businesses, did not create an official, documented, budget at all that year. Although this was most prevalent in organisations with ten or fewer employees, 21% of larger organisations still reported operating without a formal budget.
In almost any imaginable case, skipping the budget is ill-advised. The key to managing most organisations is balancing revenue and cost-effectiveness. Without a clear-eyed understanding of how this balance applies to your organisation, you are likely to create unnecessary challenges, and endanger the organisation’s financial health.
Moreover, without a budget, you have no perspective on your organisation’s financial decision-making, no ability to measure your performance over time, and no way to ensure your company can meet its financial obligations. With a budget, on the other hand, you can monitor and reduce your costs, ensure your resources are appropriately allocated, and assess whether or not your company met its goals.
How do you get started creating a business budget? The life cycle of a budget breaks down into four phases:
Preparation.
Approval.
Execution.
Evaluation.
A good business plan can help prepare your budget; after all, if you’ve already set realistic goals and priorities, it will make it easier to allocate available funds. You should also study industry forecasts and analysis, as well as any financial data or statements your organisation has generated.
During the execution of your budget, be attentive to whether or not your estimates are accurate and whether you need to make any changes. If revenues are lower than you anticipated, you discover something new about your customer base, or if something unexpected occurs, you may need to make adjustments. Think of your budget as a living document which you can modify as needed. Evaluate your budget regularly during and after execution, and apply any lessons you learn to your next budget.
Establish internal control procedures
Internal control procedures are there to safeguard the assets of an organisation; without them, dishonest employees or owners can misappropriate cash, property or supplies with little effort. However, with a few simple rules and systems in place, you can safeguard your business and improve operational efficiency. Here are some examples of policies you might consider:
Separation of duties.
Small organisations often operate with a small staff which can lead to the same individual conducting multiple duties; this, in turn, can allow that individual to conceal theft very easily. Separating those duties by having different people perform them can assist in detecting the misappropriation of assets
Some examples of duties that you should have different people perform include:
Receiving, recording and depositing customer payments.
Sourcing, approving, ordering and receiving supplies or merchandise.
Inputting, approving for payment and paying vendor bills and payroll.
Balancing and inputting transactions into bank accounts.
Counting cash and inventory on hand at the beginning and end of the day.
What if your business is not able to hire sufficient staff to properly separate duties such as these? In that case, the increased involvement of owners and management in daily operations can also be effective.
Environment of detection
Creating an ‘environment of detection’ is the process of alerting all employees and owners that systems are in place to detect fraud and theft and that you will prosecute such acts if perpetrated. You can accomplish this through training, one-on-one conversations and establishing a hotline that employees and owners can use to report suspected theft.
Background checks
Backgrounds checks can do more than just screen prospective employees for criminal history; many background checks also include credit histories and these can help uncover any financial conditions which might motivate an employee to steal from a business.
Guiding an organisation to success takes dedication and hard work, and nobody is born with excellent business management skills already ingrained – there are plenty of pitfalls along the way and many potential mistakes – but with the right information and guidance you can approach business management with confidence…and lower levels of stress!
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