It’s all in the process!
McDonalds, the fast food chain – and incidentally the 5th largest employer in the world – is renowned for its systems. The premise of this business model is that anyone, anywhere in the world, can pick up the “how to” book for McDonalds and do any of their one of their individual jobs. Their business model is extraordinary. It’s is heralded as the systems process model everyone should attempt to emulate if they are ambitious for growth. You may think the following:
- But my business is more complicated
- But it’s all in my head
- But I don’t have time to write it down
But you would be wrong. All businesses will benefit from working on their system process. No matter how complicated your business, it can be broken down into its component parts, and if you don’t understand how those pieces fit together, then you need to learn.
But what does this have to do with management accounts? Well, ensuring the smooth running of your business will allow you to focus on the bigger picture. Writing down processes will firstly make sure that everyone knows exactly what they are meant to be doing, and secondly will highlight any problems in your process. Focussing on improving these ‘problem areas ‘can help you to save time and increase productivity. Also, it can help to prevent becoming over-reliant on one or two key people, which is detrimental to the health of your business in the longer term.
Engage all your team in this improvement process. They are doing their job day in, day out. Sadly, all too often staff will have come up with ideas for better ways to do things but may not feel they can talk to senior management. Any changes that are bought in by management, will be more readily adopted by your workforce if they feel involved in the process. If you simply impose a new system onto them, you will have more resistance to change. Spending time listening and communicating with your teams will create a better, more productive work environment.
Taking some time to understand about your systems and processes and how you could improve them, will make a noticeable difference to your bottom line. Your management accountant will help you with this process by showing you how the work you are putting in on the ground floor is improving your figures and your bottom-line profits.
Aside from concentrating on systems and processes there are other ways to help your business run smoothly. Take a look, for example, at your sales pipeline. Is it reaching its targets? How are your conversion rates? The overall numbers may look impressive, but are the quality of the leads coming into your sales pipeline of a good enough standard to meet your overall turnover and profit targets?
Customers who don’t pay on time cost your business money. Why not consider hiring a debt-collection agency to chase down debtors for you? They will have proven processes already in place to do this, so they will often be more efficient and effective than doing it in-house. Alternatively, you could offer incentives to encourage customers to pay on time, for example an early payment discount. A bad customer will ultimately cost you money, so if you have any doubts about your customer’s ability to pay, insist on the money up front. Your business will be better off without them as a customer, as the time you will spend on your bad customers could be more productively spent on cultivating more good ones.
Many businesses are running multiple IT systems which have been added into the business when needed, often as the business has grown over time. Often, you find that this means that the systems are incompatible, and that data is being double entered. This is expensive because it is labour intensive. A new IT systems can look expensive at the outset, but sit down with your management accountant and work out how many hours are being lost by duplication of work. That cost will probably far outweigh the cost of a new IT system.
If you are fortunate enough to have a large bank balance, consider what is the best option for this. Could it be invested? Could you boost your pension pot? Is it sensible to pay off that loan early? Maybe invest in some new equipment, but should you wait until next tax year? These are the questions that your management accountant will be able to help you to answer. Weighing up the effects on your tax situation, your cash flow and your bottom line, is a delicate art. Your management accountant will help you to optimise how you use your money, so that you are getting the most out of it.
Remember to work on every area of your business with your management accountant, and you will see the results. A smooth, efficient business will generate more profit and less stress, giving you a better return on your business both financially and emotionally.
If you would like to work with a management accountant who understands that business is about more than just the bottom line, call us on 01905 21411 to book your meeting today.