FROM HERE TO TOMORROW FOR YOUR BUSINESS
The business world has always treated the naive and silly business people or those that refuse to learn from their mistakes very harshly. There is no place to hide from unrealistic expectations and an avoidance of the obvious problems and issues within your business.
In setting your objectives for the future, you must review the strengths and weakness of your business honestly. If you find any weaknesses you must have a plan to deal with them critically. Every business has potential strengths and weaknesses. Trying to maximise your strengths whilst ignoring the ramifications of weaknesses is a recipe for failure.
It is always tempting to prepare a positive result or outcome for the future designed to impress other stakeholders. Unfortunately, overly positive outcomes are fraught with problems if your objectives are not achieved. Trying to blame others or "unforeseen" events for the cause of failure, rarely lets you off the hook. There is nothing worse than having to answer to your stakeholders which have identified a problem which you failed to recognise or prioritise for resolution.
In reviewing your business's current state from a financial risk management point of view, these factors are of critical importance. There may be other factors which may apply specifically for your business.
The current financial state of your business
(i) Does your business have the financial resources to pay all bills as they become due in the short-term?
(ii) How much does your business owe your suppliers and how old are these outstanding invoices?
(iii) Does your Debtors Ledger accurately show how much cash can be expected from your customers and when will this cash be received?
(iv) Do you have access to alternative forms of finance which will not cause adverse problems for your business in the future?
Your position in the marketplace
Your business's position and standing in the marketplace is a guide on how you should be selling your goods on credit or whether you ought to be selling on credit at all.
Does your business have the appropriate payment methodologies for your customers? There are a number of payment methodologies which are expensive to install and maintain, whilst others offer no guarantee of payment security.
Marketing your business
in today's business world, every action undertaken by your business is potentially a marketing plus or negative. No longer does "marketing your business" apply to just the value of your goods and services.
Today, the actions of every manager and employee within your business is exposed to your business's stakeholders and public opinion thanks to social media. The reach of social media means the experiences of your business's stakeholders, especially those who are disenfranchised, is soon made public.
There are no secrets in business or society anymore. If your managers and employees take any action which is not to the benefit of your business and its stakeholders, your business reputation and problems are exposed to everybody.
Does your business employ the most suitable and qualified people?
Employing less qualified people may look the cheaper option upfront, but their future cost to the business can be very expensive.
Do you employ the right people under employment conditions which promote excellence and encourages ethical behaviour?
Due Diligence and Risk Management
Does your business have a proactive due diligence and risk management ethos?
In today's world, due diligence and risk management costs are a positive investment in the long-term viability of your business. Spending on due diligence and risk management resources is always cheaper in the long run than repairing the cost of disruptive events and the repairs of incompetence.
In summary, conducting reviews of your business is an essential component of surviving over the long-term. If you cannot identify the state of your business today, how can plan for tomorrow with any confidence of achieving the desired objectives? All reviews must be conducted honestly to achieve a factual result.
Business owners and managers unfortunately, do not always complete these reviews honestly because they are often crafted to produce a positive result designed to impress stakeholders. The end result in these situations may be short-term gain. In the long-term however, people who prepare reviews are usually the losers if the objectives are not achieved.