|
Bankruptcy 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 crucial competition advantage. Bottlenecks can be, e.g.:
low sales return
high due or delinquent accounts assets
low liquidity (Cash on Hand, etc.)
high figure of liabilities
low number of customers
too galore 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 besides can apply to positive commercial development. If an enterprise takes up galore new customers, this results in new orders, which lead to another 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 coverage system galore 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 adjusted on the past commercial development, which had been achieved. Besides 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, fluid 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 adjusted to the past for early-warning-systems?
A working early-warning-system inevitably data which are not adjusted to the past, like from cost accounting or year-/month-end-closeings. It inevitably 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 adjusted to the past.
Nowadays the coverage must show the present situation of a business. In galore businesses the expenditure of time for the coverage rose considerably, due to the today's flood of information. Aggravatingly accessorial 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 proved 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 galore fuel exists, how the Temperature of the fluid 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 another and which have a some temporal origin. Nevertheless, galore business magnitude 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 needful to obtain an informative evaluation. This once again 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 besides possible for businesses, as well!
As a automobilist we obtain only one fraction of the data which is noninheritable by the system of the car, and simply these fraction of information is enough for us to reach the desired destination. Once
traveling normally 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 declared 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, galore 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 perfectly 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. Monetary 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. Besides to use accessible potentials, regular analyses should be done. Nowadays products and services could not be oversubscribed 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 inevitably of business management. This includes operational and strategic analysis especially Early-Recognition-Systems, Knowledge-Management and another 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
| |
