Performance and Accountability

Leading a team requires diligence, interpersonal skills, and a combination of management and leadership aptitude.

While many of those we’ve asked tell us they aspire to assume a team leadership role, virtually every organization we’ve encountered struggles with developing teams. Some teams are dysfunctional; they take too long to accomplish tasks, the work is filled with errors and waste, the costs are excessive and turf wars abound. Others struggle to stay-the-course; as a result, their efforts to make improvements are ineffective and then slowly peter out.

The necessary ingredients for developing high performing teams include:

Strong leadership and sponsorship
Alignment around a common purpose
Task and project management
Communication and meeting management
Measurable performance targets
Identifying the right process/game plan to achieve results
Holding people mutually accountable for results
It is often the final bullet that brings about failure, as holding people accountable can be a process within itself!
Based on our research and experience, developing a “culture of accountability” requires clarity in five key areas:

Clear expectations. The first step is to be crystal clear about what you expect. This means being clear about the outcome you’re looking for, how you’ll measure success, and how people should go about achieving the objective. It doesn’t all have to come from you. In fact, the more skilled your people are, the more ideas and strategies should be coming from them. Have a genuinely two-way conversation, and before it’s over, ask others to summarize the important pieces – the outcome they’re going for, how they are going to achieve it, and how they’ll know whether they’re successful – to make sure you’re ending up on the same page. Writing out a summary is a good idea but doesn’t replace saying it out loud.
Clear capability. What skills do people need to meet the expectations? What resources will they need? If the team does not have what’s necessary, can they acquire what’s missing? If so, what’s the plan? If not, you’ll need to delegate to someone else. Otherwise you’re setting them up for failure.
Clear measurement. Nothing frustrates leaders more than being surprised by failure. Sometimes this surprise is because the people who should be delivering are afraid to ask for help. Sometimes it comes from premature optimism on both sides. Either way, it’s completely avoidable. During the expectations conversation, you should agree on weekly milestones with clear, measurable, objective targets. If any of these targets slip, jump on it immediately. Brainstorm a solution, identify a fix, redesign the schedule, or respond in some other way that gets people back on track.
Clear feedback. Honest, open, ongoing feedback is critical. People should know where they stand. If you have clear expectations, capability, and measurement, the feedback can be fact-based and easy to deliver. Is everyone delivering on commitments? Are they working well with other stakeholders? If an effort to increase capability has been put in place, are people on track? The feedback can also go both ways – is there something you can be doing to be more helpful? Give feedback regularly (at least weekly), and remember it’s more important to be helpful than nice.
Clear consequences. If you’ve been clear in all of the above ways, you can be reasonably sure that you did what’s necessary to support the team’s performance. At this point, you have three choices: repeat, reward, or release. Repeat the steps above if you feel that there is still a lack of clarity in the system. If the team or if individuals succeeded, you should reward them appropriately (acknowledgement, promotion, etc.). If some have not proven accountable and you are reasonably certain that you followed the steps above, then they are not a good fit for their role, and you should release them from it.

Why Automation Is Imperative for Long Term Success

Automation is a major workplace disruptor. An undeniable reality of the coming decade is the significant level of displacement resulting from Artificial Intelligence and automation. Occupational change is bound to affect around 75 million to 375 million people globally due to the fact that a large chunk of what they are currently doing will be swept over by automation.

However, instead of viewing the above statistic in a negative light, one should see it as a mark of rapid development and advancement. What is often left unacknowledged is that automation and robotic technologies will redeem the workforce of all the mundane work. They will permit them to shift their focus on valuable and more rewarding tasks. Currently, there is a considerable scope of delegating routine and redundant tasks and elevating creative endeavours.

Disruptive technologies should not be considered as rendering jobs redundant. Rather, we can say that automation is making it possible for us to view conventional roles from a completely different perspective, which is advantageous for both the employee and the employer. Brenda Harvey, IBM’s general manager, sums up this change perfectly when she says, “Every role is going to be changed by technology and augmented – not necessarily replaced, but made better.”

This shift in job roles brought about by automation is a leadership challenge that tests business leaders and executives on a critical front. They need to be able to leverage automation in the best interests of the organization. At the same time, they also need to make this shift in a manner that disperses all concerns about job redundancy from the minds of employees. Automation should be implemented in such a way across the organization so that it is able to serve its true value and is successful in triggering a digital transformation.

Aligning with the Vision of Automation
Every business line can reap the benefits of automation in unique ways. However, you need to ensure that all business lines are fully aligned with its vision for it to occur. Let’s take the case of IBM. The numerous HR customers here take advantage of data and insights via an automated hiring process that provides them suitable candidates whom they can then reach out to quickly. Notice that it’s not the staff that is being replaced, but their ability to work better and intelligently to manage more complicated scenarios is being enhanced.

Automation is also well at work in the manufacturing domain. Here, automation solutions are helping with practically everything, beginning from marketing outreach to onboarding vendors, management of orders, and anomaly detection.

Presently, most businesses allocate a considerable budget to the IT and automation role in enhancing productivity, efficiency, and securing has remained strange to none.

The Path to Getting Results
In spite of the rising awareness of business automation as vital to driving digital transformation, researchshows that organizations that have successfully reaped their benefits are a minority. For enterprises, the secret to the success of any transformation plan lies in its ability to project value quickly. It allows the CIO to transition from a small initial deployment to a bigger transformation goal.

Business automation is a great starting point for a transformation strategy because of its ability to yield productivity quickly. Success with automation can best be achieved by leveraging its productivity wins and using insights from them to further enhance engagement with the technology.

Some critical steps for implementing automation include:

Gaining a clear understanding of the business process.

Figuring out which ones are suitable for automation.

Optimizing them.

AI-powered business automation solutions provide enterprises with a ton of insights that allow them to continue gaining greater value from it. It thus unleashes a cycle of consistent optimization.
Turning ‘quick wins’ into Long-Lasting Positive Outcomes
The success or failure of a transformation strategy can be seen in the results that a business is able to achieve through it. The small initial victories or ‘quick wins’ brought about by automation triggers a long-lasting positive impact on an enterprise. This positive impact can be seen in better productivity, greater customer experience, and efficiency. It is true of enterprises everywhere regardless of their industry and size.

Let’s take the case of Turkcell, which is a telecommunication and technology services provider in Turkey. They had to process and review innumerable documents. Using automation technology, namely, a centralized content manager, they were able to dramatically minimize the time it took to perform the function of data extraction from a whopping 2.5 years to just six months.

Not only this, businesses have saved millions of dollars in operating expenses and enhancedenhance their productivity by using automation tools like facilities management software. A number of solutions record and map facilities data and can even remind the facilities manager about issues in real-time to take instant action and keep everything running smoothly.

Taking Charge of the Future
All evidence points to an inevitable conclusion- Leaders who successfully create the platform for automation, and a cloud ecosystem will be the ones who will find themselves easily navigating an ever-changing environment. Predictive technology, an inherent component of AI-enabled automation, provides valuable suggestions even before the occurrence of the actual problem. It is wiping away many barriers even before they get the chance to form.

This transformation is unimaginable without a reliable technology partner. A partner that aids in building the requisite automation platform will enable enterprises to continue benefiting from automation innovations. Ezofis, an automation management company, strives to provide solutions to businesses that allow them to recognize their true productivity and potential.

A New Year, New Business Goals?

Many businesses have had to face some serious lessons throughout the last eighteen months or so, often being forced to rethink their strategies in some detail. Quite a few of those valuable lessons anticipate being carried forward into 2022, and whilst some will have been tough to learn, often they’ve involved a process of reflection and analysis.

In many cases those insights have gradually been accepted and appreciated for the revised priorities and perspective they’ve brought into life.

How are you looking forward to 2022, what will your focus be?

The year ahead promises to be a time of greater flexibility, with quicker thinking, adaptability and receptivity at the forefront of any planning. Being ready with quick responses to new opportunities or prepared to adapt when the situation yet again shifts has been an important acquired skill, learned as many of the old ways of doing business have changed.

A positive approach to new ideas and methods of working has been a fundamental component to survival and any eventual success throughout this time. Being able to quickly jump onto a request and, for example, deliver online courses or reroute the direction of products, goods and services, as happened with farmers diverting supplies from hospitality to supermarkets, or adapting business meetings to be held online instead of in person, has meant that some businesses have thrived and had unexpected success.

Staff wellbeing has to be very much considered, with the implications of many staff returning from furlough or having worked very different hours, often from home. Many staff will have had to juggle home schooling, the stress of being distanced from family members or had financial or health concerns throughout this time. No one has been unaffected mentally, physically or financially.

Returning to work requires some sensitivity, as staff get used to dealing with things they may have never given much thought to before. Travelling for work, deciding how to dress, coping with the varying demands of each day; things that have never been issues may now surface as issues as the return to work has to be faced.

Some co-workers may have found their priorities to be quite different from the last time you were together and some may prefer continuing carrying out some duties from home. It can require a period of negotiation between staff and the demands of the business to find a solution that accommodates all.

Extended home working involves checking that the appropriate software is installed, with data security, staff training and capabilities all important priorities. Continued investment in staff relationships is important, so that all feel part of the team, as well as measuring performance and accountability. It’s important to maintain a team dynamic, especially when working from home.

Staff support may include regular meetings, updates, training sessions and an open door policy where you listen to what they have to say. Staff are a major asset and overhead in many businesses and may have valuable suggestions and ideas to contribute. Giving them responsibility for implementing their ideas may re-inspire their commitment to work.

Team building is an important consideration, but whilst some teams enjoy group activities others many prefer a more softly, softly approach. Even socialising together may have to be carefully managed, with some staff preferring a convivial, more restrained restaurant meal, whilst others want drinks and a party vibe. Being aware of each other’s wants and preferences is an important step in listening and supporting your staff whilst rebuilding your business’s vision for the coming year.

Customers may also have different priorities, demands and expectations. In hospitality customers may prefer to continue with table service rather than queue at the bar to order. Customers may, in general, adopt a more cautious approach and prefer a less noisy atmosphere, want healthier options, a more environmentally friendly approach to business, less plastic packaging. Some may prefer the convenience of trading and communicating online.

Where do you feature on your list? If you neglect yourself and become unwell, who will be the person to replace you at the helm? If you don’t look after you who will? Taking care of yourself must be at the top of your list of priorities, because you may well be both the business and the brand, the vision behind it all and most certainly have a presence that’s important to your customer base.

This coming year promises to be a year where enthusiasm and flexibility succeed. People still want and need to trade and do business, especially with providers who listen to them and provide excellent client care. Adapting and finding your new normal gives you the opportunity to reflect on what works well for you in every way, as you look forward to a positive new year ahead.

Susan Leigh, South Manchester counsellor, hypnotherapist, relationship counsellor, writer & media contributor offers help with relationship issues, stress management, assertiveness and confidence. She works with individual clients, couples and provides corporate workshops and support.

The Solution Is in One Book. Your Answer Is Here!

“Can you answer a question”? It might have started like that, but then escalated into a full scale confusion or a feeling that the questions are never really answered.

Does that sound or look familiar? And, by now, are you wondering what I am talking about? Or, are you right there, knowing exactly what this article is about.

So, what about questions? Have you ever been in a business and asked a question to one employee and received one answer. And then on another day, or even in another hour, asked the very same question of another employee, but received a totally different answer, with a totally different result? Still puzzled? I’ll make it clearer by giving a more specific example. Let’s say that you work or you volunteer in a coffee shop. You are a new employee. Something happens and you need an answer to a question. Let’s say, you need to know where the bags of coffee are stored so that you can go and get another bag of coffee to fill the machine. So, you ask employee one, “Where are the coffee bags?” And employee one tells you, “The coffee bags are located in the back storage area in the orange cabinet”. So, you go back to the orange cabinet. You take the time, and when you get back there, you see that there is no coffee in the cabinet but you see nothing but towels, and other supplies, in that same orange cabinet. So, now you’ve wasted that time, and you still have no coffee. You go and you ask another employee, or perhaps you ask even the manager, “where are the bags of coffee”? And employee number two tells you, “The coffee bags are in the second room, on top of the green shelf”. Once again, you take the time and you go back there to the green shelf, and to your great surprise, there is no coffee there, either. And so, on, and so on. How long did it take you to find the coffee? Meanwhile, there’s no coffee out there, in the machine where the coffee is supposed to be. And let’s suppose that they keep on switching locations and moving the coffee, and this same scenario happens every single week or month.

Who is at fault here? And who is blamed for the lack of coffee, the lack of good service and who is blamed for the resulting, possible, loss of customers? Is anyone to blame or is everyone to blame? Yes, we all understand that blaming someone gets everyone nowhere, and quite quickly for that matter. Yet, in order to solve the problem, we really need to get to the bottom of this dilemna. We really need to find out, where the coffee is, where the coffee belongs, and when the location is changed and who has permission to change the location of the coffee. And other questions that need to be answered, also, are questions like, “What’s the reason for all these changes when something steady or stable would probably result in better efficiency and probably would result in happier employees and even possibly in more customers?”

Okay, enough with the coffee. These coffee problems are very easy to solve. But what happens with other busineses that might be more complicated? What happens when things change rapidly and no employees have the right answers? What happens when businesses are more complex and complicated and even when businesses have more than customers, at one level, who are affected by all the changes and the lack of accurate information?

Take another example. Try this one on for size. Suppose you have a radio station or a newspaper. And suppose in that radio station or in the newspaper, there are certain rules and regulations that need to be followed in order for those companies to be run efficiently. Now picture both of these companies, the radio station and the newspaper company, in the same city, covering the same areas.

In the radio station there might be seven employees, and in the newspaper company, there might be a hundred employees. (Remember, these are only examples, not real scenarios. I’m giving examples in order to illustrate a problem that might exist all over our city, in different companies and in different corporations). Any resemblance to real companies or to real people is merely coincidental. These examples given are fictional, but are given to give “the picture” of what I’m talking about.

Back to the story, so, at these companies, imagine the very same scenario as with the restaurant, all the employees give different answers to the same questions, even in the same days or same weeks. Procedures and rules are constantly changing and changing so much that none of the employees or just some of the employees don’t really know the answers to any questions. Everyone is giving mis-information or wrong answers. The mis-information and wrong answers are constantly causing the business money. This results in loss of customers, unhappy employees, unhappy volunteers, and even, eventually, quite possibly, the loss of the business, and possibly even resulting in some lawsuits.

You’ve probably known businesses like this, right? So, what’s the solution? What are the answers? How can a business run smoothly, and how can a company train employees to run the business smoothly? How does the company save money and cut losses across the board?

Ready? The answer is in one book! That’s right. Every answer is in one book. How is that possible? Can you guess the name of the book?

Here’s what I think, and here is what I believe, and I’d like your input to hear what you have to say on this very important topic. Your words can help put good, positive change into our society. And your input can help a business thrive or even become quite successful.

The book that is needed in every single company, no matter how large or no matter how small, is a “Manual”. Have you ever seen an “Employee Manual”? Usually, good companies have these updated and current manuals so that all employees, and all volunteers and even all the bosses can be “on the same page”. These manuals stop all the mis-information, and stop all the confusion. And these manuals will, eventually, save hundreds, if not thousands, of dollars for any company that uses the manuals. The manuals can detail everything that employees, and bosses and volunteers need to know in order to run the business smoothly. Most times the manuals will also include hours, times and days of the business. The manuals will indicate the whole “process” of almost all aspects of the business. And, goes without saying that most times, a good manual can also eliminate favoritism, fraud, confusion, loss of employees, loss of funds, loss of company equipment. That’s most times, for most companies.

And usually, when a company has an employee manual, and uses it, and keeps it fully updated, that’s the sign of a good company that really cares for the employees, for the customers and for anyone who does business with the company. If you want to find a caring company, you’ll look to the employee manual or lack of employee manual.

And, don’t let severely outdated company manuals fool you, because these have their own purposes also. Explain that? How about this scenario? You have a company and the manual is so severely outdated, that now, when you ask any question of any employee, you are back to the old habits of getting different answers from every single employee because nobody knows what the current rules and regulations of the company is. What if your company manual is twenty years old? “Wow”, you say? Yes, what if your own company manual is over twenty years old or ten years old? What happens in this case is that most or all of the rules and the regulations have changed. Processes and dates and times and supplies might have been changed severely and or elminated and the manual doesn’t show the changes. Now, new employees and new volunteers coming into the system don’t know what the “real” rules are.

Once the ‘real rules’ are gone, that leave it up to any employees, any bosses and sometimes even any volunteers to make up their own rules, or to guess at the rules or to ignore the rules or to show favoritism. And you ask, “how does favoritism fit in here? Here’s how. if there are no rules or no current rules and no current regulations, then when employees or volunteers ask for things, when they put requests in, or when they want to know solid information about the company or about the company procedures, any employee can give any answer — depending on who is asking the question. And that will definitely produce favoritism, since no answer will be uniform, and no answer will be the same. The answers will change when Jim asks a question, and then when Joan or Marvin asks the same question, depending on which employee or which boss he or she asks, the answers will be totally different. (Note: the names in this article are only examples and are not real individuals; Remember, the disclaimer you read states that these articles are for entertainment only).

So, if you are ready to save money for your company, and if you are ready to save your customers, and save time, and save equipment and even have less turnover in your business, you should be ready to print out a current employee manual and make sure that every employee, and every volunteer and every one involved in the workings of your company has that current employee manual.

Are you ready?

Or do you like not knowing, and chaos to rule your company rather than efficiency, along with happy employees and happy volunteers?

It’s your choice. Sincerely, I hope, that if you own a business, you choose the happy, productive, efficient route of always having a current, updated, fully-understandable employee manual available to everyone involved in your business.

Kudos to you, when you make the right choices! Your business shows it. Look deeply into the workings of it, and you will see the result of “good business”!

Questions and comments welcomed!

LPerry is an experienced, published author and artist, who writes from the heart. Along with heartfelt stories, words and ideas, the articles are packed with emotion, facts and opinions. All of Perry’s articles are for entertainment only and not intended to substitute for any professional advice, so readers are urged to do their own research and make their own judgments regarding any information in the articles. LPerry is making a comeback after a season of personal injury, trauma and tragedy. Yet, even after all that, her words bring information, tears and smiles in a world that is, sometimes, spinning too fast for people to stop, pause, breathe and take a moment to really take everything in.

The author welcomes your comments, questions and your helpful criticism, anytime, night or day. Yes, you’ll learn something, and yet, LPerry invites you to participate by commenting on the articles and on the information.

Using A Chartered Accountant: The Benefits

In my experience, many people or clients don’t fully understand the various roles or activities that bookkeepers, accountants and Chartered Accountants undertake.

Whilst some activities are undertaken by all three, it’s important to note the key differences between them before choosing your professional advisor.

Bookkeepers (also known as accounting clerks or assistant accountants) often label themselves as accountants.

However, this doesn’t mean that they are qualified Chartered Accountants (or Chartered Certified Accountants or Certified Public Accountants in other countries).

Bookkeepers primarily record, process and report a business’ day to day business transactions. Typically, anyone can become a bookkeeper.

They don’t need to have passed any accounting qualifications and may “qualify” through experience.

Professional Membership

Professional bodies, such as the Association of Chartered Certified Accountants (ACCA) or the Chartered Accountants Australia and New Zealand (CAANZ), require its accountants to complete advanced education.

Chartered Accountants typically undertake a minimum of seven years training and education before being allowed to call themselves one.

They must also complete a minimum number of training and professional development hours each year to maintain their membership. They’ll stay up to date with recent changes to tax legislation, the economy and general business environment.

Many accountants are not Chartered Accountants and do not need to comply with these standards.

Reasons to Choose a Chartered Accountant

The modern-day business environment is extremely competitive and fraught with risk. Engaging a finance professional is often seen as a key component of a business’ success.

It’s not mandatory to engage an unqualified accountant but they may lack the knowledge and experience to offer the best advice for your business.

A competent Chartered Accountant will be an asset and will help you and your business flourish. They’ll generally have more tax knowledge and understand the financial intricacies of running a business.

To maintain high professional standards and competence, they must continually meet high professional standards and are bound by a strict code of ethics.

This provides greater assurance that your business is in safe hands.

Trusted business partner

Your Chartered Accountant should be a trusted and valuable business partner. They possess the skills and knowledge to provide insight and to evaluate both financial and non-financial data and unwanted trends.

They’ll help you identify viable financial and business strategies by recognising changing demands in the business environment.

They will use this insight to recommend tailored solutions for your business. Offering you practical advice, they’ll help you meet the myriad challenges you and your business will undoubtedly face.

Who Else Wants To Know About Operating Cash Flow

Today we’re going to take a look at operating cash flow, which is one of the most important numbers in a company’s accounts. Many investors pay a great deal of attention to these figures as it gives vital clues to an investor trying to assess the health, and value of a company.

What does Operating Cash Flow Means?

It’s simply the amount of cash that company generates from its normal operations. For example, if you are a retailer like Walmart, the bulk of your revenue will come from the difference between the sale price of an item, and how much it costs you to sell it.

The operating cash flow shares a lot of similarities with E.B.I.T.D.A., that’s earnings before interest taxes, depreciation, and amortization. And typically these numbers are not hugely different, that’s why I say they’re very similar.

The difference is due to working capital. I can assume you know what working capital is. One of the problems with learning accounting is that you have to learn multiple things at once. Eventually you will piece it all together.

Working Capital

So let’s take a very quick look at working capital. Working capital is the difference between current assets and current liabilities. The word current simply means that it should be off the company’s books within a year. So a current asset is something that is expected to be sold or consumed within one year.

Now, we can see the formula. Operating cash flow equals the net income plus non-cash expenses. This is typically depreciation and amortization, mainly let’s add our power of E.B.I.T.DA., plus changes in working capital.

That’s the fundamental formula for operating cash flow

Mathematically,

Working Capital = Current Assets – Current Liabilities = Net Income + Non-cash Expenses + Changes in Working Capital = FUNDAMENTAL FORMULA FOR OPERATING CASH FLOW.

Some Applications and How this is Useful to an Investor.

Working capital is very useful; the main use is that;

It can reveal dodgy accounting. For example; a company may generate huge profits but very little cash flow. This may indicate a problem, and you should be very skeptical about the source of the profit when it is not backed up by strong cash flows.

It gives you a more realistic idea of a company’s health. Consider a retailer that owns its own stores, if the property market rockets, the company will report huge profits. But its flow of cash won’t be huge. So when you go into those numbers, and analyze them, you’ll see that the core business is not nearly as profitable as the overall profit figures would indicate. The other thing you need to be aware of is that

A company’s cash flow is what is used to expand its business. So a company that is not generating much cash flow will need to get its expansion capital from somewhere else. Usually a bank.

Benefit Of Having Good And Timely Financial Report

While there are numerous benefits of having accurate and timely financial reports, we have identified few key benefits of financial statements.
1. Understanding the Financial Status of Your Business
The complete financial status of your business can be presented in a quality financial statement. The three main financial statements are the balance sheet, the income statement and the cash flow statement. The balance sheet reflects the owner’s equity after the liabilities are subtracted from the assets. The income statement which is also known as the profit and loss statement shows the profit derived from income over a defined period of time. A cash flow statement is a valuable tool for showing if there is enough cash coming in to pay for the operations of the business. A cash flow can be projected out over several months. The Income Statement shows how the restaurant and hotel perform over a period of time (i.e. a week, month or year). It takes all restaurant and hotel expenses into account, from prepaid expenses to expenses paid in the future. Overall, the Income Statement tells the operator if the business is making a profit. From there, the operator can begin making changes in policy and implementing strategies that will help the restaurant achieve its goals. Should new sales programs be implemented? Does food cost in line with menu prices? Is the restaurant hitting its budgets? Can the owner(s) make distributions to the partners? These are some of the key questions that need to be addressed. The basic formula for an Income Statement is:
Sales – Cost of Goods Sold – Expenses = Profit/Loss
The Income Statement is everyone’s favorite financial statement to review because it reveals the nature of the restaurants and hotel success. Restaurant and Hotel financial statements should be broken down into the following categories:
• Sales/room revenue
• Salaries
• Employee Benefits
• Controllable
• Occupancy
• General and Administrative
• Depreciation
• Interest
• Other Income

If sales and expenses are broken down into specific categories, the operator can easily compare and analyze his or her restaurant and hotel to industry standard percentages. Timely financial reporting will help to control the cost of goods sold like beverage cost food cost
The health of a restaurant and hotel can be analyzed from the Balance Sheet at any point in time (i.e. today, last month or tomorrow). The Balance Sheet allows operators to forecast short and long-term cash flow. As important as it is to review the Balance Sheet, few restaurants ever bother to prepare it. By checking the accuracy of the Balance Sheet, an operator can ensure the accuracy of the Income Statement. The Balance Sheet lists all the assets, liabilities and equity of the restaurant. The formula for the Balance Sheet is:
Assets = Liabilities + Equity
In the simplest terms, assets are what the business owns such as equipment, inventory or cash. Liabilities are what the business owes such as vendor bills, loans, notes, and leases. Even a gift certificate is a liability because the restaurant owes someone a meal at a future date. Equity is the ownership of the business.
It is important that assets and liabilities are properly classified on the Balance Sheet. To get a clearer picture of the business, an operator should break down the Balance Sheet into subcategories. The breakdown is explained as follows:
• Current Assets: assets with the life less than a year (i.e. cash, credit card receivables, inventory and prepaid expenses).
• Fixed Assets: assets with a life greater than a year that directly attributes to producing revenue (i.e. equipment, computers, furniture and leasehold improvements).
• Other Assets: assets with a life longer than a year that is not directly involved in the production of revenue (i.e. security deposits, trademarks and artwork).
Liabilities require a similar classification and are broken down as follows:
• Current Liabilities: debts due within one year (i.e. accounts payable, accrued expenses, short-term loans and even gift certificates).
• Long-Term Liabilities: debts due that extend beyond one year (i.e. notes payable or long-term leases).
There is so much information to be gained from the Balance Sheet. For example, a restaurant and hoteliers that have large debts may have major cash flow problems. Identifying the current debts from the long-term debts on the Balance Sheet help determine the short and long-term cash needs, as well as the business potential success. Restaurateurs and hoteliers who take on large debts upon opening could be shooting themselves in the foot. The restaurant may show large profits based on the Income Statement, but the restaurant may not have money because it is paying out the outstanding debt (which is revealed in the Balance Sheet).
Most restaurants and hotels are set up as Partnerships or Sub Chapter S corporations, they have to explain all business expenses and income to all partner.
2. Sales Pattern
Financial statements reveal how much a restaurant owner and hoteliers earns per year in sales. The sales may fluctuate, but financial planners should be able to identify a pattern over years of sales figures. For example, the restaurant owner and hoteliers may have a pattern of increased sales when a new product is released. The sales may drop after a year or so of being on the market. This is beneficial, as it shows potential and sales patterns so executives know to expect a drop in sales.
3. Financial Statements Will Help Prepare A Budget And Make Financial Decisions
Timely financial reporting will help you prepare a budget and make an easy way to take the financial decisions to grow the business.
4. Improved financial management
Timely financial reporting helps you to examine and correct any weaknesses in your financial systems. Improved financial management allows you to focus on current financial matters and develop future plans.
5. Better resource management
Due to timely frame financial report the restaurant owners and hoteliers will get accurate numbers of resources, therefore, they can use optimum use of all resources.
6. PERFORMANCE EVALUATION
Under this type of accounting practice, Business Owners may assess the performance of the Employees in the financial performance of the business.

Why a Financial Forecast Is Essential for Your Business

A part-time CFO may be what your business needs to navigate today’s complex business environment. Business leaders and CEOs are busy. With little precious time, it can seem impossible to add one more thing to your plate. Financial forecasts may be common knowledge, but few CEOs actually have the time to build a financial forecast for their business. From lack of time to a shortage of resources, there are many reasons you may not have a financial forecast already.

However, this simple tool can work wonders for the future of your business and provide the competitive advantage you need to succeed. Keep reading to learn why a financial forecast is important and how to build one without wasting your time.

What is a financial forecast?
Financial forecasts are most commonly used to predict the financial outcomes for a company. The expenses and income for a business are estimated over a certain period of time, typically one year. Historical data, including accounting and sales, as well as external data from the market or key economic indicators can be used to develop a financial forecast.

Companies utilize financial forecasts to set expectations for the future and determine what is realistically possible for a business. Financial forecasts can also be specific to a certain area of the business. For example, a company may develop a financial forecast for sales.

Why should you create a financial forecast?
As a CEO or entrepreneur, your time is valuable. Much of your focus and effort is spent on seeking new business opportunities, investing in marketing and sales, and looking for new avenues of growth. All of these pursuits are worth your time, but they leave little room for much else.

Financial forecasts get shoved to the backburner all too often. While business leaders recognize their importance, and even intend to create forecasts, they are overlooked due to more pressing matters. A financial forecast may not help you instantly move the needle in the same way other executive moves can, but it will set your business up for long-term success. Financial forecasts provide more than just a simple outlook for the future. They offer a roadmap for your business to follow, setting goals and measuring success along the way.

Gain a clear direction for the future
You likely have sales targets, revenue goals, and growth strategies in plan for the foreseeable future. Reporting for each month, quarter, and year is common among businesses. In fact, it is so common that it often turns into a routine. Have you stopped to think lately about why you project the numbers you do, or what the overall goal is for your business?

Without a clear direction for the future, you are left setting arbitrary goals. Creating a financial model forces you to put concrete plans and expectations down on paper. A one-year financial forecast based on the current path and trajectory of your business is a great place to start. Pay attention to where your business will end up if things continue as they are. Is that where you want your business to be in one year? Are you moving towards your big-picture goals?

A financial model provides a visual representation of the future of your business, so you can decide if things need to change. Approaching your business goals with intention, instead of falling into old patterns, can breathe new life into your company. Also, taking purposeful steps can make you more likely to reach your goals than wondering aimlessly.

Adjust early and often
In business, companies that can pivot are able to survive. Businesses that cannot make adjustments as needed will quickly fall behind the competition. Thankfully, a well thought out forecast can help position you to make adjustments quickly and often. Even the most thought-out plans hit roadblocks from time to time, so preparing for change is essential.

When you build a sound forecast, you set a target or a goal. Over time, you may find yourself moving towards that target too slowly or faster than expected. You may also realize that the initial target you set no longer makes good business sense. Whatever the case, having a financial forecast enables you to line up your expectations with reality.

The sooner you can identify mistakes or notice when things go off-target, the faster you can make the necessary adjustments to get back on course. Instead of reviewing your company’s performance at the end of the year, when it is too late to make changes, use a financial forecast to provide accountability along the way.

Focus on the right KPIs
You likely have countless reports and files of data sitting on your computer. As a business leader, analyzing your company’s performance is a key part of your job. However, there are likely some numbers or metrics you value above the rest. By creating a financial forecast, you can highlight the key performance indicators that make the most sense for your business and cut out the rest of the clutter.

By focusing your attention on the KPIs that move the needle for your business, you can more accurately determine your progress. You can also recognize shortcomings earlier because they are no longer buried under mounds of unnecessary data. Dialing in on your KPIs provides an added level of focus for your business, helping you gain an edge over the competition.

Plan for multiple scenarios
Ideas, big and small, are what keep businesses running. However, tackling a new idea can be a great risk. Investing time and money into a project that does not bring about results can drain your resources, and so can successful ventures that are not planned properly. Forecasts can help you work through what-if scenarios, determining what the result might look like if an initiative succeeds or not.

With the numbers from your forecasting, you can also more accurately predict what the outcome of a scenario would mean for your business. How will it impact the rest of your organization? Financial forecasts enable you to test your theories and walk through ideas without taking a major risk or wasting resources.

Work smarter when you know your numbers
Financial forecasting might sound all fine and good, but what do you do if you do not have the time or resources to build your own? Business leaders can work smarter by contracting out their financial forecast. You do not have to invest in hiring a full-time employee, and you leave your schedule open to focus on running your business.

Reducing Operating Costs for Your Startup Is Essential for Longevity

Cash flow management is already a challenge for startups, but COVID-19 is not making matters better. With unemployment rising and people spending less money on certain goods or services, startups are likely to suffer during this time. However, reducing operating expenses can help a startup stay afloat until operations are back to normal.

Reducing overall operating costs can certainly impact your bottom line, especially as the impact of COVID-19 is felt. Also, reevaluating the budget and allocating funds to different operations can keep essential parts of your business going. Keep reading to learn more about how to reduce the operating expenses for your startup while staying productive during COVID-19.

Review your budget with a new lens

When you created your budget for the year, the coronavirus was not likely to be on your mind. And, with updates and changes happening so fast over the last several months, 2020 can feel like one big game of catchup. Now that shelter-in-place ordinances are lifting and people are venturing back out into the world, it is a good time to reevaluate your operating budget.

Revenue projections are likely in need of an update, and your outlook for 2021 is different now than it was a few months ago. From lower sales numbers to higher churn rates, the priorities of your budget need to be evaluated. However, it is important to avoid simply slashing your budget. Wisely evaluating the numbers may indicate that some areas of your business are actually improving during this time.

Renegotiate contracts

The impact of COVID-19 is being felt across the country. If your business has shifted, it is likely that others connected to you have done the same. You may be able to renegotiate terms or contracts during this time to give yourself some breathing room. From reducing office costs to eliminating subscriptions, there are some measures you can take to prevent waste.

Office Space

If your company has shifted to remote work, you are likely paying for empty office space. Your landlord may be willing to negotiate your terms due to the unprecedented circumstances. In some cases, shelter-in-place orders may prohibit you from working in the office altogether. Review your contract to see if there are any provisions for a situation when the office space is not usable.

Subscriptions

Your startup likely has multiple active subscriptions. Whether you rely on monthly professional services, like IT support, or SaaS licenses to run your business, there might be some room for cuts. Try negotiating with your partners or vendors to reduce subscription costs. You may have licenses that you are no longer using or termination fees that can be renegotiated.

Deferred Payments

In cases where you cannot reduce operating costs in numbers, ask for deferred payments. Lengthening the payment cycle can improve your cash flow temporarily and get you through a rough patch.

Eliminate nonessential tools

When you reevaluate your budget, you may find that it is skewed in one area. Go line by line to review the various tools and services used by your business, determine which are essential and which items can be cut. Reviewing financial statements is a great way to visualize where your budget is going, instead of assuming. You may have duplicate tools, tools that are no longer in use, or items that can be replaced with a less expensive alternative.

Cut Unnecessary Licenses

Reviewing all the tools and services used by your team could also highlight which services have too many licenses. Are all licenses being used, or can some be eliminated? Also, you may be paying for additional functions that you could go without, at least for the time being. Dropping your subscription tier or reducing the number of licenses could help lower operating costs.

Cut Out Paper

While it may seem small, going paperless can help your bottom line. Businesses spend quite a bit on paper, printers, and ink every year. If your team is working remote, there is even less reason to use paper. When you return to the office, you can continue the habits formed during quarantine to reduce the overall paper usage of your business.

Stay flexible

Things are likely to continue changing as we learn more about COVID-19 and its overall impact. There may be unlikely opportunities to reduce your operating expenses over time. The unpredictability of COVID-19 combined with the changing nature of startups makes it important to stay on your toes. You may find yourself considering new or innovative ideas that you would not have previously thought of.

Evaluate More Frequently

Periodically evaluating your budget and outlook can help you stay more agile and flexible. As your startup changes and evolves, your operating costs need to follow. Set up more frequent evaluations to stay on top of your operating costs and adjust as needed.

Pause large investments or projects

For many startups, cash flow is limited. COVID-19 is putting major purchases and projects on hold until businesses can stabilize. Instead of considering these pauses as losses, pay attention to the money you are saving and the cash you are making available.

New Equipment

Were you planning to upgrade everyone’s laptops this year or purchase a new phone system? COVID-19 may not be the right time to make major investments like purchasing new equipment. Instead, stick to only buying what is necessary. Look for refurbished or second-hand items when possible to save on operating costs.

Marketing Initiatives

Unless your marketing initiatives are seeing a positive ROI, it may be time to pause big projects. Instead of rolling out previously scheduled campaigns, reevaluate your marketing calendar to determine what will move the needle for your business. If your customers are pushing off on buying decisions, now might not be the time to invest in sales and marketing.

Utilize Free Trial Periods

If you absolutely must purchase a new service or equipment, take advantage of free trial periods. Ensure the vendor is the right partner for you by testing their product or service ahead of time. In some cases, vendors will negotiate on the trial period if you are serious about buying.

Reduce payroll

Finally, reducing payroll can help lower operating costs. Many startups see this as a last resort because it greatly impacts your operational capacity as well as the individual lives of employees. However, in some cases, it is a necessary measure.

Implement a Hiring Freeze

You can make steps towards reducing operational costs by implementing a hiring freeze. Avoid filling positions unless necessary. Your team may be stretched thin, but you can avoid eliminating current positions this way.

Contract Out

Instead of hiring for new positions, contract out when possible. For example, you may need financial guidance during COVID-19. You can contract with a freelance CFO to work part-time at a lower cost than hiring an executive-level position. Firms like K-38 Consulting provide services from top-notch financial advisors, and you only pay for services when you need them.