A Solid Business Foundation Is Built On “Doing the Right Things”May 10, 2021
“Management is doing things right; leadership is doing the right things.” = Peter Drucker.
Crisis can be avoided by setting a proper foundation for the business, and the very problems that companies sometimes experience can be avoided by bringing objective perspective — in the form of another set of eyes — counsel that provides a clear look at the business.
Fortunately, businesses are rapidly realizing the value of bringing in a skilled, experienced and trusted advisor or business coach to help navigate the complex maze of running a business.
The very problems that companies sometimes experience can be avoided by bringing counsel in sooner, rather than later.
Management advisory professionals can assist in a multitude of ways, not the least of which include:
Accounting and Finance Controls. A major cause of companies losing their direction and finding themselves with losses, not profits, is poor accounting and finance controls, the wrong software, or even worse, the wrong CFO or Controller. A common mistake is underpaying for these roles and getting someone with inadequate experience, who can be more of a problem than a solution. The incremental cost of hiring the right professional in this role, as well as getting another set of eyes on the financial controls such as a management consultant, can pay off exponentially. And the company’s external CPA firm isn’t always the answer unless the company commits to higher quality financials, such as reviewed or audited, and not compiled, and lets the CPA do his or her job and review each month’s internal numbers.
Operational Fundamentals and Dashboard Reports. The business can’t run with poor or incomplete information, and the right advisory professional can develop dashboards, KPI’s and metrics to optimize the business, the level of quality service provided to customers, employee morale and of course, profitability. Knowing what is important and of priority in running an enterprise is critical, and daily, weekly, monthly and quarterly reports which provide management with specific, quantifiable results let them run the business with great intelligence, clarity and objectivity. The point is to eliminate the “noise” and extraneous nonsense and get management and employees to focus on what really matters to customers, and what drives growth and profit.
Business Strategy. Many companies run their outwardly oriented sales and marketing communications based on the biases of the owners, managers or sales/marketing management. This is often a viewpoint that is misaligned with what customers want and need and where the market opportunities are for the company to sell its products and services. This is where objective analysis to determine where the company ought to be focusing, can be extremely valuable. In addition, an objective consultant can guide the company to greater success by looking at larger trends, opportunities and by seeing their offerings differently.
Avoiding Operational Catastrophe. Management science and operational excellence pros are far more evolved than ever before, with approaches such as Six Sigma, 5S/6S, Continuous Improvement, LEAN, e.g. applied to a variety of businesses ranging from supply chain, to manufacturing, to selling of products and services. A management advisory professional is skilled across multiple industries, company sizes, and sectors, both public and private, and can quickly assess, identify and remedy failure factors which are impeding operational productivity and profitability. For example, a fresh approach to managing a company’s procurement, warehousing and inventory logistics, and distribution can save substantial money and free up capital and resources (human, financial, operational, capex) which can generate greater returns elsewhere in the business. Experienced advisors can even identify opportunities such as energy grants, enabling the company to improve lighting, HVAC, water systems, and reduce utility consumption.
General Counseling on All Fronts. Experienced management advisors can write objective plans to streamline and optimize operations resulting in greater profits, improved growth, more targeted and effective marketing communications (including a relevant social media strategy), optimized branding and better alignment between the company’s value proposition and customers. Other general areas that are often neglected are safety and health, procurement and vendor management, working with subcontractors, wage and hour compliance, e.g. A comprehensive overview of the business can identify areas needing a fix earlier, rather than later.
HR Issues, Recruitment. Finding, developing and managing your people is as much art as science. HR is a highly complex discipline and there are countless compliance exposures and employer responsibilities. It is wise to have an advisor prepare specific HR strategies and plans to manage these departmental responsibilities with highly trained and experienced experts. As with hiring the right person in the CFO or Controller role, getting the wrong HR profile can create “swim lane” problems when that person gets too involved across other senior level disciplines in the organization. There are some excellent platforms to outsource HR completely, such as The Verity Group, an excellent example: http://theveritygroupllc.com
Risk Management, Compliance, Benefits, Insurance e.g. The right advisor can keep a business out of trouble with regulatory authorities, taxing authorities, mitigate potential claims and ensure the company is well protected with the right benefits and insurance package, also ensuring that the firm is not overpaying for its policies. Affordable Care Act compliance alone is a whole new frontier and the right management advisor can refer benefits SME’s (subject matter experts) to help navigate the constant changes to the benefits landscape. Many companies, particularly contractors, are remiss in adequately covering themselves, and the list of common insurance oversight items includes:
- Lacking environmental/pollution policies
- Lacking Directors and Officers coverage
- Paying too much for General Liability insurance
- Inadequate umbrella coverage (excess liability)
- Overpaying for workers’ compensation policies because wage classifications are incorrect or poorly tracked
- Not having WC coverage in all states the company is operating in
Commercial Lending, Access to Capital, Exit Strategy. Management professionals have extensive contact networks in commercial banking, private equity, venture capital and private investment. They are often instrumental in matching companies needing growth capital with money resources, or identifying a deal enabling them to exit the business by accessing a level of professionals and capital the business can’t reach on its own.
Investing in the right advisor, or naming one to your board, can help avoid the common traps and pitfalls that put many companies out of business, and let you build further success on top of a solid foundation.