|
flevyblog
The Flevy Blog covers Business Strategies, Business Theories, & Business Stories.
|
Editor's Note: Take a look at our featured best practice, Activity Based Costing (29-slide PowerPoint presentation). Activity Based Costing (ABC) analysis is a methodology for assigning costs to those activities that truly drive these costs. It is tangibly more accurate than traditional costing methods. Traditional costing methods overlook product-specific R&D, advertising, distribution/channel, and [read more]
* * * *
A business is an exciting way of making a living, expressing your creativity and ultimately leaving your mark on the world. However, with the Bureau of Labor Statistics reporting that 70% of businesses fail in five years, they are not a simple undertaking. One of the most frequently cited causes for business failure is a lack of cash flow. However, if you ask financial commentator Al Zdenek, that’s just as symptom. The cause? Ineffective business planning.
A well run business can suffer when influenced by a wide range of factors, including problems in your personal life and poor security planning, and being vigilant is important. That being said, rigorous fiscal planning underpins a successful business and with proper analysis you can find extra pockets of capital – which will ultimately help to mitigate other problems, and generate growth.
Assessing credit lines and investors
Small and medium enterprise (SME) will often deploy a fairly rigid business model that relies on a set amount of income. This has a habit of leading business owners to fail to challenge their lines of credit and investors to get the best results for their business. The benefit of proactively challenging your investors has hit the news this week as Elon Musk challenged a Goldman Sachs advisory that suggested investors should sell their stock. As a result, the Tesla price closed 5.1 points up. Whilst it is accepted SME don’t have the reach and influence of a big business, the principles stay the same. Assess your business spending and the credit products you are utilizing to see if you could be recouping expenditure via rewards. Challenge your investors to put more capital by exemplifying innovation and strong business planning.
Utilizing cutting edge technology
The big technological innovation set to galvanize industry in 2018 is artificial intelligence. Such trends can often be exemplified by the response from big government, and China have made a huge statement through its $300bn funding of AI startup SenseTime, reported by Bloomberg on April 9th. With the rate of technology exploding, it’s likely you’ll see proprietary AI used for big corporation planning. At SME level, Dow Jones have advocated the use of AI financial planning. With software falling in price and the principles well established, staying wise to the rate of technological innovation will help to perform data-driven analysis of your financial data and to pick out waste.
It also goes without saying that your business should be digital native. Mobile sales accounted for 40% of global online retail, according to Criteo. Google have further reported that 80% of users will complete sales via multiple nodes, demonstrating the need for multiple platform functionality. Sales will generate the largest part of your business capital moving forward, so guarantee your growth by focusing on digital versatility.
With technology revolutionizing industries across the world, it will pay to make your business flexible and able to react. Combining new world technology with old school fiscal savvy will maximize your capital, boost your reputation and increase your capital.
You can download in-depth presentations on Cost Optimization and 100s of management topics from the FlevyPro Library. FlevyPro is trusted and utilized by 1000s of management consultants and corporate executives.
For even more best practices available on Flevy, have a look at our top 100 lists:
These best practices are of the same as those leveraged by top-tier management consulting firms, like McKinsey, BCG, Bain, and Accenture. Improve the growth and efficiency of your organization by utilizing these best practice frameworks, templates, and tools. Most were developed by seasoned executives and consultants with over 20+ years of experience.
