Archives for June 2014

Succession Planning: Making a Smooth Transition

Creating a successful succession plan is critical to a smooth, effortless transition of control in a company. Many times this process takes years to complete, and in the end the transition may not be a smooth as you had thought it would be. Here are some practical ideas on how you can help impact your company’s succession planning efforts.

    1. Thinks of the planning as a process to develop a new leader. Planning does not develop someone that can follow in your foot steps and run the business the way it should be ran. It is important to focus on what you need from someone that is taking over your place in the company. What traits do you want them to have? What does their leadership look like? Can they do the same job you do and take the company into the future? The planning part needs to be in the checklist, forms, charts, meetings, and due dates that formulate the expectations of a new leader. Don’t fall into the planning trap and never get around to the actual execution of the plan.
    2. Measure outcomes, not process. This is putting emphasis on the important. You need to have clear cut goals and defined rewards for meeting the goals. Leadership development is not the end game because you can develop thousands of leader and not find the right person to fit the top job. Make it a priority to establish and measure goals. Tracking the progress will help the planning process and set you on to your next steps in the process. Track data during the process so when the time comes again to venture through this process you have formulated answers to question that may arise.
    3. Remember to keep it simple. It is not rocket science. Having increasing complex assessments and criteria as part of the succession plan is impractical and unreasonable. These test should be built into the leadership training program as opposed to creating hoops to jump through. This is just the precursor to the actual development, so save the additional hoops for when they pass the initial criteria.
    4. Keep things realistic. Just because they look good on paper does not mean that they will be able to perform up to expectations. It is important to pick someone based on performance and not unrealistic development expectations. Don’t jerk people around and communicate the needs and wants of the company clearly and without basis to find the perfect person to complete the succession plan.

Building a Useful Budget

With any company, a budget is the bread and butter of running a successful business. The only problem is budgets are difficult to plan and maintain in the best of times. There is always unexpected events, cash flow problems, etc. that can cause a collapse in the budget. Being able to formulate a successful budget the will take you through the years is an important tool to have in your arsenal that keeps your business successful and running smoothly.

Budgets are the most important part of your business. They set specific spending limits on your business to ensure you reach your profit goals established for the year.  It is a month-to-month road map that guides you though the year. Think of a budget as providing control over your money and looking out for your best interests. If done right is can help predict peak periods so you know when to add additional stock and how to handle sale volume.

Plan to visit your budget monthly to update and see what impact this will have on your income and profit. You can see places where you could invest money into to create a better impact on the market and see where the cash flow is throughout the business.

You budget can help you adjust to unexpected changes. If a client cuts back it will affect how your company is run. You will be able to adjust and predict how long it will take for your company to recover. It can also allow you to adjust in other areas to absorb the impact.

Once you have established a good working budget your can tie incentives to how well you can stay on budget. It is important to maintain a healthy budget and set specific parameters for making a profit and meeting payroll. A solid budget can give the business guidance and help see the trends for the future.


Creating Business Sustainability

In the world of business, making a lasting impression is key to keeping your business fresh and alive. Sustainability is more than just window dressings. It is adopting sustainable practices which can lead to a company’s competitive edge, increased market share, and a boost in shareholder value. We are going to briefly touch on key strategies that can help a company improve its sustainability, and give effective tools that companies can translate into effective solutions.

One issue is corporate social responsibility. The idea behind this is that corporations can no longer act as isolated economic entities and detach themselves from society. Corporations have responsibilities to the environment, employee wellbeing, community and civil society in general. Traditional views are being swept away with the changing tide in the corporate world.

The public is clamoring for more transparency in the corporate world. Investors are wanting to know what companies are doing to create a well-rounded company that not only cares about making money, but about the people that work for it and the impact it has on the community around it. Much of this is accomplished through corporate reporting. A sustainability report touches on everything that the company is doing to create a positive environment, making cases for sustainable development, and so much more.

Another issue is how the company impacts the environment. The integrated product policy might be better called the environmental product policy because it relates to how companies impact the environment by creating environmentally-friendly products, how they reduce the impact on the environment, etc. It is important for companies to look at everything that is affected.

Business sustainability is a complicated formula that takes time and effort to get right. There are many components that go into creating a sustainability plan that will take your company into the future.


Assessing Internal control Procedures

There are different kinds of audits. The IRS can audit your financial records, but another way to audit is assesses the systems and procedures of your company. Assessing internal controls is an important component to establishing the integrity of a business. By assessing the internal controls, a business owner finds places where they can improve procedures.

When a company goes through an internal audit, there are certain procedures looked at. The first thing is how external factors, such as the environment, economy, or technology, are affecting the business. They also look at how the company has modified their internal controls in response to the external influences.

The auditor also evaluates how management assesses internal controls. Each publically traded company creates a written self-assessment document which demonstrates how well it believes the internal controls are working. This is a good exercise for non-publically traded companies. It demonstrates how well you know your internal controls. When performing a self-evaluation you should review the controls for significant accounts. You should also determine which locations, if you have multiple locations, should be evaluated. Management should also assess the design and operating effectiveness of its controls.

Once management has a chance to review, the current controls it is the auditors turn. They will review what is written and determine how well management is performing. The auditor will fill out a yes and no questionnaire that allows them to evaluate the company’s structure, who performs which employee performs each operating task so the auditor can track down the person who performs the task.

The final step is to test the controls. The auditor will design the test and decide which procedures to test. The test included five procedures which include talking to management, looking through the companies documents, observing the company’s operations, and conducting walkthroughs to trace a transaction, and finally do reperformance by redoing the company’s work though a specific transaction.

This can be a complicated process, but in the end it will make your company stronger and more efficient.