Results, Results, Results

Regardless of what type of business you have - service, manufacturing, retail, tech, bio-tech, and so on - it is about getting results.  Those results are measured in dollars and cents.  By understanding the financial results and their linkage into the activities of your business you are able to make changes and better decisions.  The changes and decisions you make today are reflected in tomorrow's financial results.

Without a firm grasp on what the numbers are telling you about your business, you leave a lot to chance and to other people's ability to understand what is happening in your business.  You abdicate a degree of control and set limitations for yourself and those you ask to provide guidance.

This month's newsletter is about information and how it can be used to improve your results.  It is about understanding how important it is to have information and solutions that fit your business.

Limited Information, Limited View, Limited Results return to top

The consultant’s view, of the business with whom s/he is working is obviously limited to the client’s disclosure.  Many times clients limit disclosure of information to

• what they believe is relevant
• what they “understand”, or
• what they want to share.

One of the motives behind this can be an effort to limit the scope or cost of a project.  It can also be, however, a result of not understanding the full scope or impact of withholding information.

If you provide a limited view of your business, then you will get

1. a limited, incomplete, or incorrect answer to your question
2. a mess
3. frustrated
4. in trouble – financially, legally, or otherwise

When bringing a consultant into your business, be aware that unless the consultant “lives” in your business day-to-day for an extended period of time, s/he must rely on the information and perspective you and your team provide.  If you do not provide the consultant with “all” the available related information, then you cannot expect to achieve maximum results.

In my own experience I’ve heard “But I didn’t think that would make a difference.”  “I don’t understand X, so I didn’t think it would be relevant.”  “I don’t want to understand (accounting, finance, compliance, etc.); can’t you just do it for me?”

Consultants are not part of your day-to-day business on an on-going basis (or at least they shouldn’t be).  Consultants are brought in to work on specific projects and to achieve specific results.  They must be fully equipped with the information needed to complete the projects and achieve the results.  If you as the business owner, executive, or manager, do not understand or make an effort to understand the process, elements of the project, and the need for the specified result, then the consultant might as well stay home and collect your payments from there. 

As a business owner or officer, accountability for understanding what is going on in your business rests with you.  You may hire employees, contractors, or consultants to work with you, execute specific projects, or train your organization.  These individuals or companies may or may not be “accountable” if things go wrong in your organization.  For instance, if the IRS has an issue with your business income tax filing, you will be held accountable for any deficiencies or errors as the business owner or officer signing the return.  If you had a CPA or someone else prepare it, they may assist you in answering the questions – or you may find that they simply state they relied upon the information you provided and based upon that information did X, Y and Z.

As painful as it may be, you in your role as business owner must have a degree of understanding about every aspect of your business, its business systems, and the compliance needs (IRS, etc.). Not knowing or understanding what is expected of your business creates tremendous risk for you as an owner, executive, manager, or individual.  Ignorance of the law isn’t a defense.  As a business owner – running a business – you are on the hook to make sure that your business does things right.

For example, you do not have to understand how to do accounting transactions, but it is important for you to understand what the accounting records reflect about your business transactions.  You also don’t need to know the in’s and out’s of preparing your company income tax filing, but you do need to understand why it was completed as it was, that it was filed on time and completely, and that it is consistent with your business’ accounting records.

Think of understanding the basics of accounting, taxes, marketing, and other functional activities of your organization as investing in the longevity of your business.  If you are able to understand the basics, it is less likely that you will be taken advantage of by unscrupulous contractors, employees, vendors, and the like.  It is also an investment in keeping all aspects of the business on track to achieve specific goals and outcomes.

Performance measures, both internal and external, are important in determining the return on investment for various projects and the business as a whole.  Performance measures have to take into consideration whether or not the playing field was level or if the team was handicapped (by lack of information).  Don’t tie the hands of your team by withholding information.  In the long run, investing more dollars in a complete project is less expensive than spending money on a limited scope project that will get you limited results at best.  Don’t place artificial barriers on success by withholding information.  Lay the cards on the table and see what results.

General Seminars Don't Mean Specific Results return to top

Too often seminar participants leave an event believing that if they follow the example in a seminar they will "get" the results their particular business needs. Unfortunately, unless the example truly represents what your business is and does and needs, it rarely works that way.-

Few seminars are intended to provide you with the exact step-by-step process needed to develop a specific solution or generate a precise budget, forecast, or rate. A seminar simply cannot replace one-on-one consulting to identify an answer for your business.  Furthermore, a seminar which provides incomplete or incorrect information can lay the groundwork for confusion and more work to unravel a knot of issues than hiring a consultant upfront to begin from ground zero.

The majority of seminars are designed to introduce you to the concepts and demonstrate how they work in a certain situation with certain assumptions. Seminars are valuable tools for learning concepts, principles, and methods, which can be applied to your business judiciously.  Rarely will recognized "experts" in specific fields represent that the presentation they make and information they provide constitutes "advice" or "consulting".  In an open forum talking to a multitude of people and companies, there is no way for them to have all the information about particular situations to provide "the answer."

If you have taken a seminar or workshop on a topic that presents an example, take it as that - an example.  From the example understand the mechanism, process, and the underlying principles, and then translate that example to what you need to do.

Recently I met with a company which needed to submit specific numbers to a government agency.  The agency rejected the submission because it wasn't acceptable practice under their policies and requirements.  A member of the company had attended a seminar was teaching concepts.  During the seminar, the presenter provided an example which was not the correct reference for the company to use in generating their numbers.  Furthermore, the company presenting the seminar had a push-the-envelope approach to generating the numbers, rather than an approach that focused on compliance.

The seminar providers are not accountable for what a company chooses to do.  Only the company is accountable.  The seminar leader isn't in the room with the auditor explaining the "logic" - the company must understand and be able to support the methodology used.  And when a government auditor tells you that methodology isn't acceptable - that is the final word - regardless how much money was spent on the seminar or how well known the seminar leader is.
 
As a workshop leader, it is important to make clear what the parameters and constraints are on applying examples to specific situations.  It is also important to emphasize that the concepts, principles, and methods presented are only illustrative, so participants may determine whether the examples apply to their organization's situation.  A "template" serves as a guide to a methodology.  It doesn't mean the template will precisely fit the needs or structure of your business.

Whether you get a spreadsheet, policy, or procedure from someone else that worked for their needs, or you attend a seminar or workshop that demonstrates one perspective or approach on how to do something, it is your responsibility to be sure that it fits your organization and is compliant with laws, regulations, and the like.  As a business owner, executive, manager, or employee of a company, you are held accountable for the results and for compliance - understand what that is.

In addition, if you hire an external consultant to help you craft a custom solution, don't expect them to get it "right" if you insist on using the methodology you "learned" in the seminar or if you place limits on what information you share with the consultant because you "know" from the seminar just what the consultant needs to see.  If you aren't going to listen and avail yourself of the full scope of expertise and knowledge your consultant is bringing, save your money and skip the stress you will be inflicting on yourself, your organization, and the consultant when you prevent the consultant from wielding his/her expertise on your behalf.

If you don't have the knowledge, expertise, or experience to handle a project or issue in your business, then consider the following:

• Identify an expert who can work one-on-one with you to educate you on the full scope of the situation - what you think you know and what you aren't aware of
• Work with the expert to define the FULL scope of what your organization needs to do - not just a part you know about, want to address now, or is partially visible based upon a limited view of the organization shared with the consultant (Note:  If only partial information is shared with someone, only a partial view can be seen and only a partial or incorrect result will be achieved.  Incomplete information leads at best to incomplete answers, at worst it leads to incorrect and costly answers to the wrong questions.)
• Create a budget of dollars and time for the "project"
• Identify the potential consequences for the business if you don't comply with requirements or don't take action on an issue or don't get a "complete" answer because of being pennywise and dollar foolish
• Accept that whether you invest the time to understand the requirements yourself (internally) or use a consultant to "just handle it," ultimately the business is on the hook for the result and outcome

Consultants are always constrained by not being an embedded person in your organization.  They do not have the day-to-day knowledge and history with your business.  They have no way of knowing every activity, transaction, or event that takes place - unless you communicate it to them in some manner.

The greater an organization’s internal knowledge gap about a situation or requirement, the greater the risk a consultant will not get a complete picture of the organization and be able to draw correct conclusions. If you tell a consultant you want "X" done, using "Y" and "A", that is what you will get.  If you tell a consultant “this is my business, this is what I see as my issue, here is all the information I have, what is  "X" and how do we solve "Y", the answers will likely be substantially different.

No consultant wants to waste a client’s money.  It is bad for business.  Most consultants will work with the client and meet them more than halfway to resolve an issue.  If a consultant delivers what the client requests, the issue isn't with the consultant's work.  The issue is that the wrong project outcome has been identified and delivered.  Depending upon the consulting relationship - whether the project is defined jointly or by the client alone, - the ultimate responsibility always rests with the client to be sure  the business gets what it needs. The consultant wants to deliver powerful, effective results for the client and the business.  The client wants those results.  Getting them requires complete disclosure to the consultant by the client so that the consultant can use his/her experience to the full benefit of the client.  Defining the full scope of a project for a proposal is usually free of charge; it is provided by the consultant to determine if the project and client are a good fit and the situation is one the consultant can truly help.  Use that initial meeting to obtain an objective look at your situation through the eyes of an expert.  Avoid these assumptions:

• You know all the ins and outs of what you need - you may, you may not
• Particular documents, information, or numbers are irrelevant
• Your interpretation of a policy or procedure is correct

Set aside all assumptions and share data and information - as much as feasible- before the project is defined.

A project cost, if offered to you, will usually be less expensive than an hourly arrangement and protects you from situations where a project encounters unexpected overruns or consultant “issues.”  Most consultants will stick by the project quote unless the exceptions are occasioned by undisclosed information or substantial changes in project scope as a result of new requirements arising during the course of the project.  A consultant giving a project quote understands that if things don't go as planned, s/he absorbs those overruns and costs - because the commitment is to a specific deliverable or set of deliverables for a specific price.  They deliver the project, regardless, as long as clients hold up their end of the bargain.

Expecting the Exception and Not the Rule return to top

Dell, Baby Einstein, Coachville...I'm sure you can name other phenomenal "brands" that have achieved phenomenal success beyond the expectations of the founders, the public, and "big" business.  These companies are the exception and not the rule.  These are the companies that did it.  For each of these break out companies, there were hundreds, if not thousands, of other companies established at the same time in the same industries or others that achieved limited success.

If you are establishing a business and dream of developing a "brand" that people are going to become fantastically loyal to or that in three years the big boys are going to want to buy, then it is important to understand the odds, the elements that lead to the phenomenal success of your idol company, and the deliverables that it will take to get there.  You may very well have that break out revolutionary product or company. And if you do, it will take more than the product to achieve phenomenal success.  It will also take sound strategy, wise investment, the right priorities, and preparation meeting opportunity.

Here is an analogy for you:  business success is like predicting the weather.  You can calculate the probabilities based upon models, experience, and known factors.  Whether you get the forecast correct or whether you get drenched on a day with 10% chance of precipitation often depends upon things beyond your control.

When working with start-up businesses, one of the challenges is to balance optimism and vision with the practicalities of execution.  Having the dream of how far you want to take your business is key to achieving that dream.  Clear vision enables a business to set priorities and make decisions. Clear vision does not mean rose colored glasses. Clear vision does mean analyzing successful companies to understand how they did it.  Lessons learned from successful companies can enable you to execute a similar strategy - it doesn't mean you will get the same result, because all factors won't be identical.  It does mean that you will be able to avoid some mistakes and pitfalls.

Understanding successful businesses and how they did it provides a foundation for you to follow a model for success.  But like weather models, success is a matter of probabilities and not all variables are captured in a model.  So even with a successful business model, individual success can still be elusive.

Franchised businesses are a great example.  The franchise concept is to  provide a business in a box, a near turnkey solution - with identity (brand), operations, policies, and systems that are already established.  Most franchises include training, marketing, and other assistance to the franchisee.  The one thing that can't be franchised is a guarantee of success.  Because there are factors beyond the business model and systems that come into play.  For instance, location, psychographics of the market (the psychological aspect of buyers/customers), competition, and management style and skills of the owner, operations managers, and employees.

Success is often as unpredictable as the weather.  You can use business models.  You can buy a business in a box.  You can set your sights on ideal weather.  What you can't do is assume that someone else's success is a predictor of what you can achieve.  You may in fact have the next break out concept or business.  If you do then back it up with sound business, an ability to seek out advice and skills that you don't have, and keep an open mind and an open ear to listen and understand lessons others have already learned.  For every successful business you study on how they succeeded, study five that failed and understand what went wrong.  Learning from success and failure improves the probability of a beautiful forecast for your business.

The X and Z Factor return to top

While using my HP PocketPC™ and keyboard recently, I found myself without the letter "X" and the letter "Z".  (I’ve used the keyboard so much over the past three plus years it has just worn out!)  Now you wouldn't think those two letters would be hard to avoid.  After all, they aren’t the letter "e", the most commonly used letter in the English language.  Write an article without using “X” and “Z”?  How hard should it be to address the line between success and failure in business without these two letters?  (Keep an eye out for that article, because I did write it!)

As I worked on the article, I found myself searching endlessly for words to substitute for execution and organization.  Because underlying every success story is the ability to develop the capability of the organization to execute its strategies and tactics.

Without these elements – execution (the “X” factor) and organizational competency (the “Z” factor) - businesses are left searching for substitutes, just as I was exhausting my mental thesaurus seeking words to represent the essence of these two critical elements of success.  Execution is a function of organizational competence.  Organizational competence is based in the composition of the skills, talents, experience, and abilities of the people that make up the organization AND the infrastructure (systems, policies, procedures, and resources) that are acquired, deployed, and aligned toward positive financial outcomes and other desirable strategic objectives and performance measured established.

In order to identify new ways to achieve strategic objectives, an organization must have a comprehensive picture of current capabilities across the entire organization.  Recognition of its capabilities and acceptance of the challenges allows the organization to identify a set of possible strategies and move toward probable alternatives.  This knowledge, in turn, can propel the organization to higher performance.

When the organization identifies a possible strategy it isn’t currently capable of pursuing, it must decide whether or not to acquire the organizational competence necessary to enable execution and keep that alternative as an option.  The decision to build organizational competence, whether changes in infrastructure or people, requires an accurate assessment of what is missing from the organization’s capabilities.

Organizational competence requires an objective evaluation of the business team, individually and as a whole.  It also requires specific, measurable deliverables which are clearly communicated.  These deliverables are set for individuals, groups, teams, and the total organization.  They are the stepping stones of what is required to ultimately achieve the strategic objectives.  Without clearly defined targets which serve to align the organizations activities, the ability to execute is less than optimal.  The organization is constrained by its lack of direction and performance requirements.  Without expectations of performance followed by measurement and feedback on actual results, the organization has no means to steer itself along its stated strategic path.

Woven into the fabric of organizational competence and execution is the ability of the leadership team and managers to define success at the individual performer level, to measure performance against objectives, and to take appropriate action to reward success or remedy the shortfall.  This means that leaders and managers must be capable individually and as a group of setting and enforcing standards of performance.  Without the ability to manage and lead, the organization’s technical competence is sacrificed to inefficiency and ineffectiveness of resource utilization.  The organization is drained of success by lack of action to improve performance.

Another aspect of organizational performance and results is accountability.  Every level of the organization, from the board room to the front desk, from the CEO to the custodian, must be accountable for fulfilling the role the organization has tasked them to play.  Each role is a necessary element to the efficient functioning of the organization.  Each role needs to be identified in the process of achieving success.  The individual who understands how his/her role supports the organization’s mission has a greater stake in seeing that mission succeed.

How do you get your organization on track to succeed?  It begins by assessing objectively what has worked – your successes, and what hasn’t worked – your misses, and by learning the capabilities of your current team which have been ignored, constrained, or underutilized.  It requires an assessment of where you have deployed your best people and whether those roles are the best “fit” for them and for the organization.  It may also mean your organization needs to seek new team members. You won’t know that, however, until you have developed the following accurately and objectively:

• The skills, abilities, education, experience, and aptitudes of your current team members
• Your strategic objectives
• Your possible strategies
• The competencies required to execute those possible strategies
• The timeline for pursuing the various strategies and objectives (your team may have time to acquire new skills)
• Whether the new competencies are intermittent or permanent needs – can they be supplied by “hired guns” on an as-needed basis

Where does your organization stand today? On a scale of 1 to 10 what is your eXecution factor?  What is your organiZational competency rating versus what you need to succeed?  Are you looking for direction (strategic objectives)? Or do you have the “right” objectives and just can’t seem to travel down the road?

Strategic objectives are meaningless if you cannot select the necessary strategies to pursue them.  The process of setting objectives is an intellectual exercise when you are constrained by your lack of ability to pursue the best strategies.  Ultimately your bottom-line success is a function of two factors – organizational competence and execution.  Where does your organization stand?

Chapel Hill Durham e Women Network return to top

Lea Strickland will be the featured speaker at the Chapel Hill-Durham Chapter of the eWomen Network.  She will speak on the topic of the impact of vision, strategy, and structure on achieving the desired results in business.

The meeting will be held at the Chapel Hill Country Club on June 30.  The networking begins at 11 am.

For more information and to register contact:

Joyce Loebsack at her email address: loebsack@eWomenNetwork.com

or visit the eWomen Network website www.ewomennetwork.com

Grant Requirements - Impact on Organization Infrastructure return to top

For grant recipients, both first time and experienced, understanding the scope of requirements associated with awards can be time consuming, complex, and confusing.  Many of the requirements associated with grants are embedded in the overall constitutional structure of the government and the legislative acts that created the specific agencies.  Add to that the fact that agencies have the ability to impose additional restrictions and requirements on grant recipients through specific grant agreements and you have a multitude of requirements to identify and meet.

Many times businesses pursue grants as a "free" funding source without fully understanding the implications on the infrastructure and operations of the business - including recordkeeping, regulatory, and accounting system requirements.  The requirements and restrictions placed on organizations from the moment a grant is awarded can be quite extensive.  An organization which does not have or has not planned for new business processes and systems to aid in compliance with the requirements related to government grants is often faced with a short amount of time to get adequate controls and systems into place.

Each grant agreement generally spells out any special terms, restrictions, or requirements the organization needs for compliance that are unique to the specific award.  However, the "usual and customary" requirements may be incorporated through reference to a specific regulation, etc. or may be implied through the grant application and award process.  Each organization receiving an award (or multiple awards through a single agency or multiple agencies) is responsible for understanding the scope of requirements, restrictions, and regulations they are accepting in return for the grant funding.  By signing a grant agreement, the signatory is accepting and acknowledging the organization’s obligation to comply with ALL requirements, whether directly spelled out or incorporated through reference or practice.

For example, some grants may restrict the use of non-US citizens from participation on sensitive defense or homeland security projects.  A "certs and reps" (certifications and representations) clause may be incorporated by reference and may restrict principal investigators (PI's) and technical or support staff from coming from countries that are not allied with the US (North Korea, Iraq, Iran come to mind).  An organization which signs the grant agreement is bound to exclude from participation, access, or any involvement with the project any person(s) who fall into restricted categories.  Failure to comply with that clause can result in debarment and/or being required to repay the grant (at a minimum).

So how do you decide whether to pursue a grant or accept an award?

• Review applicable requirements of granting agencies
• Inquire about any possible additional requirements that may be placed upon a specific award (Homeland and National Security related, for example)
• Analyze the impact on implementing new systems or making changes to existing systems to comply with government grant compliance specifications
• Accounting
• Human Resources
• Recordkeeping
• Reporting
• Data security
• Other infrastructure and processes

Grants are meant to aid organizations in covering some development costs related to proof of concept. They are not meant as a sole means of funding technology innovation or development, nor are they meant to fund research for the sake of research.  Grants are meant as a means of supporting organizations’ efforts to identify, develop, and commercialize technology.

Grants can significantly impact all of these areas:

• Intellectual property ownership
• Accounting
• Human resources
• Commercialization efforts
• Physical asset ownership
• Other systems and processes

Take time to evaluate your existing operations and understand the ramifications and advantages to pursuing grants as a funding source, BEFORE you apply for your first grant.  If you have already applied, then take time before accepting the award to understand what changes your existing organization will need to implement if you receive the award.  If you have applied for your first grant and have just begun establishing your business, seek out experienced companies and experts to aid you in formulating your business' infrastructure and system.  If you are an experienced grant recipient, you may want to consider having a review of your current processes and system to look for opportunities to improve operations and reduce cost of compliance.

Accounting for Success return to top

Many new and small businesses do not invest time or money in establishing a comprehensive accounting process.  (In this instance, accounting encompasses traditional finance and treasury roles.)  For many of these businesses, accounting activity is a necessary evil driven only by the need to collect customer payments, pay taxes, do payroll, and pay bills.

Accounting for your business can be so much more if done well.  Beginning with the setup of the accounts to be used, all the way to developing insightful reporting which enables you to understand the aspects of your business which are working and the ones which need to be changed or eliminated.

Accounting for your business is a requirement, but it should also be viewed as a tool in your strategic business toolbox; it enables you to make sound decisions, evaluate actions taken, and facilitate continued business growth.

There are ten key areas of your accounting process that, if done well, can provide fuel for organizational growth:

• Chart of accounts stratification
• Product/business line reporting
• Customer profitability
• Accounts Receivable Management and Reporting (Aging of accounts)
• Accounts Payable Management and Reporting (Aging of accounts)
• Sources and Uses of Cash
• Inventory Reporting
• Project/Job Costing Profitability
• Lease/buy analysis
• Credit policy management

The level of detail an organization captures and can see at a summary level determines the degree of flexibility in analyzing and querying results.  For instance, travel expenses could be captured in a single account:  travel.  This account could include airfare, car rental, mileage reimbursements, meals, lodging, and incidental expenses incurred. If you need to understand the detail, it will require quite a bit of effort to extract how much was spent on each element of travel.  The transaction descriptions and detail needed to stratify the expenses may or may not be in the accounting system.

If, however, the chart of accounts was established with a Travel category (main account) and sub accounts (airfare, lodging, etc.), then the organization has the option of printing a summary report (Travel) or a detailed report (airfare, lodging, etc.). Although there is some difference in the effort required to enter transactions at the detail level of specific accounts versus lumping everything into the single travel account at the time of entry, there is a tremendous difference in the effort required to answer analytical and management queries at a later date.  It requires far less effort to drill down into already available detailed accounts to understand the spending patterns and issues that it does to create those accounts from one main category before the analysis can begin.

The more visible an organization’s activity, the more likely the organization is to see patterns of spending, control costs, and areas that require investment.  The ability to capture the financial results of the activities the organization funds and receives funds from is one aspect that is often neglected or overlooked.  Accounting isn’t simply math.  Accounting is the data capture and dollarization of what is and isn’t happening.  The absence of a number or a number that is lower than anticipated can signal just as loudly that something has gone wrong as a number that is too large.  You just have to understand how to interpret the financial reports.  Financial accounting provides a historical look at your organization.

By analyzing the collection and payment cycles (accounts receivable and accounts payable, respectively) and inventory levels and length of conversion from acquisition to sale, a business understands how long it takes to “make money”.  This cash conversion cycle indicates how cash will flow into and out of the business, enabling the business to time transactions and manage activities to match cash demands with cash supply.

Interpreting the financial reports, analyzing results, applying that information to the impact on future activity, and projecting results is “finance.”  For most organizations, accounting activities are the present.  Finance activities (strategic plans, budgets, and financial forecasts) with the emphasis on the future are afterthoughts, intellectual exercises, or ignored entirely.  To move your organization to the next level of performance, it takes both sound historical information to understand past and current performance and structures (accounting for success) and forecasted changes and financial projections that quantify the evolving organization (enabling success).

Where does your organization stand on the availability and utilization of accurate, timely accounting information?  Do you know how your dollars are spent and the returns they generate?  Do you know where your next dollar needs to be invested to generate the best return?  Which customers are the most profitable?  What is the impact of adding a new product line?  What return do you need on the marketing dollars you invest?

All these questions can be answered from the data your accounting system can provide, if it is designed as a tool to MANAGE your operations and not simply record revenues and write checks.  If your accounting system serves as a basis for generating your tax return, you are losing out on a competitive advantage – knowing your business from the financial perspective enables you to be more effective in the opportunities you pursue and the manner in which you use your resources.

Your accounting system can be designed to generate the necessary financial reporting and tax filings while providing you with managerial information to run the day-to-day and for the long term.  Most shrink-wrapped accounting packages are bookkeeping systems that handle the recordkeeping, financial statements, and tax reporting needs.  They do not provide templates and structures unique to your organizations needs.  They can, however, be redesigned to meet your managerial information needs.

An analysis of your operations and activities, including information critical to managerial decision making, is the starting point for maximizing your accounting system.  Taking your organization to the next level means more than accounting for success, it means that you have the necessary data available in a format which enables you to impact future performance.

If you are ready to take your accounting system to the next level, then here are some suggested steps:

1. Ensure that your current accounting activity is consistent and complete
   • If you are using cash based accounting, then you will still want to have the ability to capture the commitments you have made (purchases, contract payments, utilities, etc.), but have-nots yet written the check to pay.
   • If you are using accrual-based accounting, you will want to recognize revenue at the time of invoicing, not only when the check comes in or cash is received.    Also, if you receive lump sum payments, for instance for maintenance agreements that cover multiple years, you will want to follow appropriate revenue recognition and accounting practices to reflect that it is “unearned” and your organization has an obligation (liability) to perform services or that revenue is associated with some time increment, so that revenue is matched to expenses.
2. Ascertain whether your accounting records match tax filings or other governmental financial reporting (grant filings, etc.).
3. Have the ability to utilize fully the capability of the software you are using – off the shelf and into service is normal practice with little or no training on its use.
4. Have a reliable resource for your transactional accounting, whether in your organization or as a consultant; complying with GAAP and tax accounting requirements are important to protecting your business from liability
5. Integrate your “numbers’ into the essential activities of your business, don’t make them simply math or administrative afterthoughts.  Lack of attention to accounting and financial processes often leads to poor decision-making and increased risk for the organization. 
6. Elevate understanding the numbers and financial results to equal status with understanding your customer needs.  You are a customer to the results of your organization.  Many businesses are surprised to learn when they analyze the past performance and customer profitability that they could have made more money missing out on a “big revenue” deal, because the price didn’t cover the cost of producing and delivering the “goods” to the customer.
7. Make the decision to upgrade your accounting system as your business reaches sales in the millions.  As your business grows, your information needs on the financial results will grow.  Most businesses will need more functionality and visibility than “shrink-wrapped” accounting packages provide.
8. Recognize that investing in accounting and financial tools which are usable, scalable, designed to fit your business, informative, timely, and accurate saves money in the long run.
9. View profitability and cash flow as key measures in how efficient and effective your business is at generating returns on resources invested.
10. Understand that financial statements are a reflection of business strategy, operational infrastructure, utilization of resources, and management capability with regard to cash and costs.

Copyright © 2005 F.O.C.U.S. Resource, Inc.