|
Accounting InformationBottleneck-oriented Business Management
by:
Stephan Szugat
Simple and effective Business Management
In every enterprise there are, at every time, one or more bottlenecks, which have influence to the commercial situation. Bottleneck-oriented business management has the intention to early track the bottlenecks and to move out them, to allow an optimum of commercial development. To cognize at any time, what a business lacks of and to be able to add the missing things, is now a deciding competition advantage. Bottlenecks can be, e.g.:
low sales income
high due or due accounts assets
low liquidity (Cash on Hand, etc.)
high figure of liabilities
low number of customers
too many a new customers
too high capacity utilization
defective administration or management
and a lot more.
These example show that bottlenecks not only concern negative circumstances, but as well can apply to positive commercial development. If an enterprise takes up many a new customers, this results in new orders, which lead to different circumstances, like a possible excess in capacity utilization. In case the excess of capacity utilization stays for a longer time, this may result in a lower worker
motivation, because of a slump in working atmosphere inside
the company, which then could lead to less qualtiy of the activity performed.
Due to a TIMELY news system many a companies take care of reaching the desired commercial development. However, a regular analysis of expenses or the annual reports are not enough to control a business today. In the today's dynamic markets these evaluations are too statical, too more bound on the past commercial development, which had been achieved. As well cost accounting only shows what has happened in the past. The actual direction in which a business is running could not be seen.
Imagine a business to be a car. If you sat down in a car, do you like to obtain information from the instruments from the last year or month? Probably not. You would-be like to have actual information simply about fuel tank content, agent
temperature and a lot more. Bottleneck-oriented business management should exactly bring the most important and actual information simply about a business to you, including so-called early warning signals (Screenshot abenetis ERS-Diagram).
Data bound to the past for early-warning-systems?
A working early-warning-system necessarily data which are not bound to the past, like from cost accounting or year-/month-end-closeings. It necessarily data from so-called early indicators, which has to be gathered from some areas of an enterprise. Of course, figures from the finance and accounting department belong into an early-warning-system, but they only have a subordinated role, because they are bound to the past.
Nowadays the news must show the present situation of a business. In many a businesses the expenditure of time for the news rose considerably, due to the today's flood of information. Aggravatingly additional to this, is the selection of the actually relevant business ratios, which allow an appropriate summary
of the actual business situation. Too often reports are prepared, which are not perceived by anybody, due to the lack of necessary statements simply about the business development.
There are already established business-ratio-systems, that enterprises only need to take over. Get back into the car again, imagine you have only one instrument in front of you, which shows the value "35". What makes this signify? It is not recognizable how many a fuel exists, how the Temperature of the agent
is or how fast the car is driving, etc.
At this example you could recognize the little quality
of only one business ratio. It shows the importance to use the right business ratios, which must have a connection to each different and which have a some temporal origin. Nevertheless, many a business quantitative relation
systems are mostly based on data which originate from the past.
This turns often to the problem, that immediate information are not available, to indicate the actual situation of a business. However, there is still the alternative, to reduce the period of the past. How would-be it be with one week instead of analysing business data every 4 weeks? This would-be lead to the fact that you could act a few weeks earlier, if thing
should run a little bit inclinedly.
Only really few data are necessary to obtain an informative evaluation. This once more is comparably with a car. If you are drive with your car, you only obtain a small, well-chosen number of information and nevertheless, have an actual image of the situation. This is as well possible for businesses, as well!
As a driver
we obtain only one fraction of the data which is nonheritable
by the system of the car, and simply these fraction of information is enough for us to reach the desired destination. Once
traveling commonly we are well prepared, but the principle of the preparations is often neglected in business operation. As it is with traveling, the final goal has to be clearly explicit by the business management. This could be done by having planing data available. Only by target/actual comparison divergences of the commercial development wish be recognized.
Unfortunately, many a small businesses renounce to use plan data. Besides, it is not about, to cut plan data into the smallest pieces, but only to get a rough picture, what the business is going to achieve. It is dead possible to run a business on the basis of the figures from the previous year, however, to use these figures, the past commercial development should be taken into consideration. So the figures from the previous year should be improved to fit with the new goals. And finished are the planning data and the basis for an operational risk management are laid. Still if it is most important to cognize the actual bottlenecks in business operation.
Recognize problems and act!
One of the most important factors in business management is the early recognition of problems and potentials. There are bottlenecks in every business, which could have serious results. Medium of exchange difficulties could lead to bankruptcy for example. Therefore symptoms must be recognized early, in order to turn a possible crisis away and to secure the futurity of your business. As well to use accessible potentials, regular analyses should be done. Nowadays products and services could not be sold-out
forever, because product cycles become shorter and shorter due to market dynamism. The recognition and development of potentials is exceptionally important, to avoid losing the already achieved basis of a business.
Just simply about the author:
Stephan Szugat is founder of abenetis a web-based service simply about Business Management Solutions focusing on the core necessarily of business management. This includes operational and strategic analysis especially Early-Recognition-Systems, Knowledge-Management and different Services for small and mid-sized businesses. He has approx. 15 years experience in the Finance and Accounting Area from companies of some size and from various industries. http://www.abenetis.com
Circulated by Article Emporium
| |
