Tag: small business trends

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Analysis, forecasts and modeling: What’s the point?

Analysis, forecasts and modeling: What’s the point?

financeIn today’s business world, risk, uncertainty and volatility are just par for the course – everyday realities of simply being in business.  Nothing is certain, they say, except death and taxes.  Yet there is a fine art to driving profitable growth in a business, and adapting to existing and emerging risk takes a great deal of experience, information and agility.  While planning and process development may occur at many levels within the organization, it is the FP&A (financial planning and analysis) capability which helps top performing businesses be top performers.

Financial planning and analysis are activities central to enterprise performance management (EPM) and must necessarily extend beyond finance.  Integrating various functional domains in the business (financial, operational and strategic), FP&A should bring data together from the various facets of the business and use the information to help structure and guide the organization toward meeting short-term and long-term goals.  Among the most critical of the duties of FP&A is calculating the financial impact, the monetary effects, of potential business decisions.  Everything in business means money, so there is always an impact to a decision.  With the right information supporting the decision, it is far more likely to have a positive impact and a level of sustainability.

While many CFOs may recognize the importance of performance measurement, planning and forecasting, a great many also believe the process isn’t very effective. The cause is frequently the divide between the various domains in the business and the information systems supporting them.  Operational data are distilled into summary financial information and fed to finance systems, losing much of the underlying intelligence that might be gained from analysis of the details.  Strategic development and planning may overlook certain volatile elements in the market, or may base successful outcomes on an expectation that conditions within the business will not change.  Finding ways to integrate the data from the respective domains into a comprehensive model is essential to developing a better and more robust forecasting and scenario-playing capability.  With the right information, analytics may be applied to all facets of management decision-making, anticipating and shaping business outcomes far more effectively than could be done without the insight.

Small business owners may believe that things like “predictive modeling” and “enterprise performance management” aren’t things they need to worry about, but the small business could use this information just as beneficially as a larger enterprise – perhaps even more as the insight could be the key to small business survival and growth.

Using analytics, the owner is able to adjust and re-align strategy in real-time to keep on the right path and goals clearly in sight.  Analytics can also help a business better understand what really drives revenue, working capital and profits.  Analytics can even help managers align compensation and strategy with business objectives, preventing compensation issues from outpacing business benefit.

There is a cost to growing a business, and some strategies might be more sustainable than others.  Time will tell, but it is great if the business owner has some business intelligence that might indicate what’s going to happen before it actually does.

Make Sense?

J

 

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Formula for Success: The Cloud and a Pair of Bunny Slippers

Formula for Success: The Cloud and a Pair of Bunny Slippers

drawn-bunny-slippersInformation technology and the “cloud” is amazing.  With the right IT resources and connectivity, individuals and small businesses are able to compete at global levels with much larger organizations, and are proving that placing focus and attention on the right aspects of the business helps the business perform better. The right IT approach is to use technology to make the business smarter so more gets done in less time and with fewer resources – this is wearing the bunny slippers.  The goal is leveraging systems, software and connectivity to be more efficient and effective, creating the time to stop and think for a while, innovate, or simply relax.

Too often the business owners or managers are tending to computers and systems which simply support status quo and aren’t spending their quality time growing and managing the business – getting more clients, creating new products, rising above the competition. Cloud computing models play a big part in changing that standard, supporting new levels of business sustainability and supporting process improvements never before imagined.

Cloud computing is now integral to many business technology models because the potential benefits are great.  Cloud computing solutions and outsourced information technology management allow businesses to focus on what they do best, and  not on the IT supporting it. These solutions and services are in high demand because they allow businesses to scale easily and affordably, paying only for what is needed at the time.  Improved collaboration and centralized access to applications and data make cloud computing models an important consideration for every business.

I’m not the only one who recognizes how beneficial the right IT approach and anytime/anywhere access can be. Others have recognized the freedom and flexibility these new technology models have enabled… and know the value of a pair of bunny slippers.

Joanie Mann Bunny FeetMake Sense?

J

Doing Business In Bunny Slippers Around The Globe.

Susan Solovic

When I first started my business, like many start-up operations, I decided to work from home.

I equipped an empty bedroom with a card table for a desk, cardboard boxes for filing cabinets and my dogs served as my office assistants. Voila! I was ready to roll, and it was great.

I could go to work in my fuzzy pink robe and bunny slippers. After all, no one other than the dogs would know.

Start-up business operations are always strapped for cash. It’s much less expensive to conduct business from your home than to rent commercial office space. And thanks to the Internet and technology home-based businesses can easily become international enterprises.

Read more at http://www.business2community.com/startups/doing-business-in-bunny-slippers-around-the-globe-01252506

 

 

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Trusted Advisor is About the Work, Not the Title

Trusted Advisor is About the Work, Not the Title

Many accounting professionals believe they are THE trusted advisor the client comes to for advice and guidance on business financial matters.  Having fully bought into the messaging about the value of the accounting and tax work, these professionals are feeling pretty relaxed about their client engagements.  They believe the client will come to them with questions and provide the opportunity to deliver advice or work.  And each year  many clients return to get their taxes prepared or financial statements produced, and even new clients may appear.  But the work remains largely the same – financial statements and tax returns, and addressing additional needs only when the client brings it up, which isn’t all that frequently.

happy_clientOn the other hand, there are professionals who recognize that a proactive approach to helping clients results in better and richer client engagements and better-performing client businesses.  These professionals are truly the business advisors to the client – the trusted partners who understand the variety of conditions which impact business performance and care to make sure they are properly addressed.  This advisor not only reports but makes recommendations and provides guidance on certain situations or processes which are essential in the business model.  These professionals recognize that the bookkeeping and operational information collection is not simply a means to an end; these professionals understand that these foundational processes and the information they encompass are the important details which reflect the true performance of the business… details which no summary report can fully describe.

Having more direct participation in clients’ financial systems is a highly successful component of practice building, helping the firm to mine opportunities that may be hidden in current or new client engagements.  This does not mean that the accounting professional becomes part of client operations or workflows.  Rather, it suggests that the accounting professional understand these aspects of client operations and assist in the development of necessary controls and processes involving data collection or validation.  It may include the implementation of KPI and benchmarking solutions to help identify problems and map improvements, or it may involve the installation of a solution to improve the importing of orders and other transactions into the system, improving the efficiency in processing the information while at the same time reducing the potential for manual data input errors.

Regardless of the depth of direct involvement in client systems, professionals can more fully benefit from every client engagement by providing some level of training, consulting or supporting service in addition to compliance and reporting work.  Services may be aligned toward helping clients set up or support their own in-house bookkeeping and controllership responsibilities, or they may be more suited to providing real-time guidance and review of client business performance data. Either way, the quality of the financial information derived is generally far better and requires less work to adjust and report on.

The key is recognizing that the work involved – whether it is through training, regular process and data reviews, or more direct participation – is not intended to simply streamline reporting on outcomes.  The work the trusted advisor performs is intended to help the client save money and improve business and financial performance, and the practice is rewarded with higher value billable services and a much increased opportunity to engage the clientele in other efforts.

jmbunnyfeetMake Sense?

J

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Confusing Value Propositions: Cloud Platforms and Hosted Applications

it-balancing-actConfusing Value Propositions: Cloud Platforms and  Hosted Applications

When a service provider is in the business of selling computing resources – like bandwidth, processors and memory, and disk storage – it makes a lot of sense to also leverage the value of software products and systems which drive consumption of computing resources.  In short, they market and sell software that runs on the platform in order to get folks to buy the platform, no different from selling desktop and server software in order to sell the hardware to run it.  It’s just that these days the hardware and networking components are often referred to as the “platform” or maybe “the cloud”.

Let’s face it… cloud computing platforms are just no fun if there’s nothing to run on them, and a hard drive has little value when there isn’t anything stored on it.  Once there is something there – an application, data… something – then the part has actual value in terms of driving revenue.  This is the difficulty and the basis for confusing value propositions when it comes to offering and delivering services in the form of a hosting platform.  Once again: platforms are just no fun if there’s nothing to run on them.  Is the value is really about the applications, not the platform? Or is the value in the platform, because it’s necessary for running the applications?

The truth is that both are essential parts of the entire “solution”, and the value of how the solution is packaged and offered is purely up to the purchaser to determine in terms of applicability to the business.  When it comes to hosted application offerings for businesses, there isn’t a single one-size-fits-all approach that will work.  Sometimes people want to purchase from different vendors and put their own solutions together, and sometimes folks want turnkey delivery of whatever they need.  Even channel partners and value-added resellers are finding that, with diminishing margins and aggressive competition prevalent in the market, removing the time-consuming aspects of solution delivery becomes paramount to achieving some level of profitability on the work.

What this means is that providers are looking for ways to increase the overall value and usability of their solutions, and when it comes to platform services there are only two directions to look: automation to support self-service, and application software delivery to drive consumption and usage on the hosting platform.

So now we’re back to the applications again.  There’s no way to avoid them, but there’s no great way for platform companies to engage with them, either.  Working with business application software is sometimes complicated, often annoying, and can be exceptionally time-consuming and resource intensive. And there are few licensing models which make it really easy for hosts and ISVs (Independent Software Vendors) to work together.  Then, of course, there is the desire for exclusivity on one side or the other.

Software companies don’t generally want to select a single platform provider for their software for a very simple reason: they don’t want to limit their potential user base.  Now that Windows platform is available just about anywhere – on local computers, on mobile devices, from platform and infrastructure hosting providers – how does the ISV make a decision on a single delivery channel or model or provider?

Some lean towards working with hosting providers to create branded, point-deliveries of the application.  Too often, however, this approach removes the ability for customers to benefit from other applications or integrations, eliminating some of the value of the solution and certainly curtailing benefits for integrating partners of the ISV.

Host it themselves?  The last thing most software developers want is to be responsible for hosting and maintaining some other guys’ software products; they have enough to worry about with their own offerings.  If the solution is standalone, maybe this approach works.  But there are few solutions made for the desktop which don’t have some strange integration point with MS Office apps, Adobe reader, Internet browsers or other things prevalent on the user desktop.

There isn’t any proven or easy path for software developers, IT suppliers or small business customers looking to create mobility and managed subscription service around desktop and server applications, and there is likely never going to be a single story line that all will follow.  This is among the reasons for the popularity of the “hybrid” cloud approach and growing importance of managed application hosting and ISV-authorized delivery models.  Yet even key providers in those areas have a tough time really communicating what they do in a way that is meaningful to the buyer.  Are they selling a platform, applications, or both? Folks in the industry know the jargon and how to use it, and are often skilled at adjusting their language in order to obfuscate or confuse certain sticky issues regarding software licensing in the cloud and other similar aspects of hosting.  It’s no wonder that many customers remain confused as to what, exactly, they’re being asked to buy, and where the lines of flexibility and responsibility are drawn.

The applications justify the platform, and there are possibly multiple platform approaches to delivering the app. It is a confusing situation for business buyers of IT as well as for their resellers and suppliers, and the increasing number of options for how businesses approach purchasing and using information technology makes it unlikely that the process will become as simple as some suggest.

jmbunnyfeetMake Sense?

J

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State of the Union: The Irrelevance of Good Accounting?

State of the Union: The Irrelevance of Good Accounting?

financeI’m a little concerned, and any professional in accounting and finance who works with small businesses should be just a little concerned, too.  Why?  Because there is a belief out there that some nifty software and Internet Of Things (IoT) approach to finance will ultimately eliminate the need for a small business to work with skilled, trained accounting professionals.  Remember the marketing slogan introduced by Intuit with QuickBooks – the one that suggested that, “if you can write a check, you can do your own books”?  Most accountants will tell you that it is not true, and the ability to operate a product like QuickBooks does not magically turn poor accounting and bookkeeping information into good business data.  In fact, it most frequently enables bad information to turn into bad business decisions – quickly.

DIY bookkeeping solutions have been around for a while, so why the distress about it now? Up until this point, it hadn’t been so overtly stated to small business owners that having less-than-great accounting data is very much OK, and that the role accounting professionals play in small business finances is more of a burden than benefit.  Consider the statement made by President Obama in his recent State of the Union address:

“Let’s simplify the system and let a small business owner file based on her actual bank statement, instead of the number of accountants she can afford”

If I’m an accounting professional, I am pretty steamed up about that statement because I know how screwy business accounting data gets when the work is done by folks without the proper training.  Incorrect or improper accounting treatment can make a big difference when it comes to filing those taxes mentioned…. and not in a good way.  That transaction on the bank statement… Is it a cost of goods sold or a regular business expense? Is it an asset or supply item? Is it a reimbursement or revenue?  Is the payroll deduction before or after taxes?  Is that even a viable payroll deduction item?  These questions and more arise frequently in a small business, and the treatment for these items is improper as often as not.

There is a big value in what a trained accounting professional can offer a small business owner, and the value often translates to eliminating unnecessary tax burdens and the delivery of accurate reporting – both of which are really important when it comes to actually trying to grow a healthy and sustainable business.

Small businesses are often considered to be the fuel powering our economy.  Doesn’t it make sense for us all to recognize that smarter businesses are likely to be more successful, and that more successful small businesses means growth in the economy?  The importance of good fiscal and financial management and reporting – in business and in government – is not something to minimize, and suggesting that it takes no intervention or skill to do the job properly reflects poorly not only on the person saying it, but on the entire establishment.

jmbunnyfeetMake Sense?

J

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Audit or Advice? Small Accounting Firm Practitioners and Small Business Clients

adviceortaxesWhen a small business owner needs advice about running the business or strategizing on financial matters, one would think that the business owner would engage their accountant in the discussion.  Following along with that logic, many small firm practitioners believe that their small business clients will ultimately engage with them for this advisory work and move beyond statutory audit and compliance work.  For a great many firms, however, there remains a struggle to achieve more work and greater opportunity from client engagements; the firm remains relegated to performing mechanical functions of accounting and reporting and fails to gain the additional work which is truly desirable. There are a number of elements which present themselves in this discussion – considerations that the small firm practitioner may not be addressing – and which are likely contributing to the firm losing the opportunity to deliver more and deeper services to the client.

First, let’s consider why small business owners initially engage with their accounting professionals.  More than with larger businesses, smaller businesses tend to rely more heavily upon the involvement of outsourced accounting professionals simply because the business isn’t able to justify the cost of staffing the position full-time.  Needing office managers and bookkeepers or data entry operators is often a more evident need to the business owner, where assistance with daily operational and information management processes are more urgently required.  Functions considered to be “accounting” could effectively be outsourced to a 3rd party and handled in more of an after-the-fact basis.  For many small business owners, accounting is something which can be performed after all the real work is done, and presents the information necessary for payment of taxes, processing of payroll reports and the like.  The accounting professional is typically engaged because the business owner knows this work must be done by somebody, and believes the selected practitioner to be competent and trustworthy, and they’re also probably local.

With the convergence of market environment changes, regulatory and jurisdiction conditions, as well as changes in behaviors (cultural, sociological, technological), a new level of demand has been created for business and financial advisory services. Yet small business owners often remain reticent to approach their local small firm practitioner for the service. Why is it that the client doesn’t often approach their small firm practitioner with requests for advice and advisory services?

Part of the problem is perception.  Small business owners often believe that their needs require specialized knowledge and experience to address, and that the skill and experience can only be derived from a larger firm. Particularly if the smaller firm is not presenting itself in a manner that suggests that business advisory services are not only offered but are a specialty, the firm may simply lose to competitors who communicate the ability more effectively (something larger and more established firms are able to do via referral and reputation as well as through marketing).

A possible way to address the competency and perception issue is partnering, where firms join to collectively deliver solutions to the client.  Where one firm may specialize in an aspect of the engagement and the other firm addresses other areas, the delivery of full service to the client is ultimately the goal, and sharing the work and the revenue is often a more agreeable approach than losing out on the engagement altogether.

Another factor presenting itself in the equation is the “entrepreneurial spirit” from which many small businesses are fueled.  A small business owner is often somewhat of a superman, taking on multiple roles and performing a variety of functions in the business.  It is this DIY (do-it-yourself) attitude that contributes to the business growth and success, but it is also sometimes the barrier to achieving a higher degree of success. Believing more in the personal power of critical thinking than in the reliance on the professional’s education, experience and insight, the business owner simply refrains from asking for advice because they don’t think they need it.

Frugality is another factor playing into the small firm/small business relationship.  Small business owners may want advice, but they don’t want to have to pay for it.  Anyone selling products or services to small business recognizes that there is a certain amount of consulting and advice that accompanies most sales.  For some, this is simply a part of the sales process; helping the customer determine that this is the best choice and they should buy it.  It’s not so simple with accounting and finance, however.  There’s a big difference – and perhaps large risk associations – in giving advice versus performing accounting and compliance work.  Certainly, advisory services aren’t something the firm would elect to give away, so it becomes essential that the value of the advisory service be expressed in a way that the client can understand and believe.

 I once heard a financial planner address this same argument, where a prospective client suggested that they couldn’t really afford to pay for the advice.  The financial planner countered with the argument that a good financial plan will increase the return, which then recoups the cost of the advice.  If you pay $100 for the advice, and you earn $500 more than you would have without the advice, then it kind of feels like you’re getting paid to get advice because you gain more than you spend.  It’s the same with accounting, finance and business advisory services: sound advice should improve the rate of return, which would more than compensate for the cost of the advice.  The trick is getting the client to view the service as something real and valuable and not as snake oil, and to make a commitment to following the advice.  Real value must be communicated and tangible results measured and delivered, not smoke and mirrors.  Otherwise, the client return isn’t there, and the advice proved valueless.

As regulatory requirements increase – and become increasingly complex – the demand by small business for outside help also increases.  It is this ever-expanding demand which represents opportunity for small firm practitioners to capture more (more interesting and more profitable) work from their small business clients.  But competition is also growing from new providers and systems delivering advice, forcing adjustments to how the small firm must present its offerings and services, as well as change how they deliver and support those offerings.Whether through partnering and referral models, the development of new competencies and capabilities, creation of new workflows and methods, or some/all of the above, small firm practitioners must adapt in order to get that opportunity.

While the small firm practitioner may recognize that the small business client is greatly in need of advisory services, what they may not recognize is that the traditional approach has turned around, and it has become more likely that the client will seek advice first and statutory audit work second. For small firm practitioners, it is time to recognize that relationships are changing and how business is done must evolve to meet and advance that change.

jmbunnyfeetMake Sense?

J