Growth Analysis:
Many
business owners are concerned with changes in their company’s nominal revenue,
referred to generally as growth. Nominal revenue growth includes changes due to
new business, as well as increases or decreases in pricing or changes in costs
of goods sold.
If the company increases the price of services or
products, this causes a percentage change in revenues that would show up as a
nominal revenue increase. Likewise, if pricing decreases the nominal revenue
would decrease in turn. The nominal change in revenues only provides partial
information as the effect of pricing is not factored into the equation; there
is no quick way to know what the real change in services or products provided
by the company is.
If revenues for the year are up 15% but you increased the
overall pricing by 5%, the nominal increase is 15%. The real revenue increase,
however, is the 15% nominal change minus the 5% price increase, or 10%. The real revenue increase of 10% is the
actual “temperature” or growth with which we are concerned.
Put another way. If nominal revenue growth is up 10% and
the overall price increase is 15%, the nominal revenue growth would be
10%. The real revenue growth analysis,
however, would show a decline of 5%.
Assuming the nominal revenue growth comes in for the year
at -10% and the prices were increased by 5%. The real revenue growth would be a -10% minus the +5% price increases
resulting in a real decrease of 15%.
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To begin with, develop a concrete vision for
the company. Perhaps you have already established a company mission statement,
or you have a general idea of the direction the company is going. It is crucial
to the development of a human resource strategy to have a clear vision for the
company. Knowing where the company is headed will give guidance to how human
resources can assist the company in reaching its goals. Communicating those
goals to the human resource department will help provide concrete methods that
the HR strategy can use. By solidifying the company’s short and long term
goals, the HR strategy can be tailored to best help meet those goals.
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For example, If the organization has social responsibility as one of its key goals, the HR strategy should promote that through the hiring process.
The tech company may desire programmers who
personally embrace social responsibility, but may only need a few to meet their
current programming need. The health food store may be gearing up for a busy
season when people are more likely to turn to healthy living, such as at the
beginning of a new year, and need a dozen temporary employees. Understanding
not only the company’s products/services, but their overall vision will ensure
that the HR strategy promotes the company’s vision.
If your HR strategy included the objective of
‘Fulfill hiring needs of company’ it would be difficult to determine if that
goal had been met. By changing the objective to read ‘Filling 5 vacancies with
qualified individuals to meet the needs of the sales department’, you have
established a base-line for success and it is easy to quantify the success or
failure of the objective.
Generalized
objectives aren’t useful because they are difficult to manage and evaluate. For
example, ‘increase safety measures’ is a valid goal, but impossible to qualify.
Do the new fire extinguishers that were installed count? If you replace the
batteries in the smoke detector have you increased safety measures? ‘Develop
safety awareness through staff training program that all employees will
complete by their employment anniversary date’ is both specific and measurable.
Constant evaluation of
success is imperative to a comprehensive HR strategy. With that regular need
for evaluation, there is need to consider potential for change. Suppose sales
figures indicate a need for increased staff. The HR department puts
considerable effort into hiring the extra dozen people needed, and begins their
staff training. When the company gets trouble making the payroll and it is
revealed that sales figures were overstated the HR strategy will need to make
rapid changes. Monitoring legal requirements and regulations can also
necessitate change through the implementation of new laws or mandates that
affect business. An increase in minimum wage may affect the budget and staffing
needs of a company, requiring the company to make changes accordingly.
Operation Analysis
This is the study of operational systems with
the aim of identifying opportunities for improvement. It has many guises and
is sometimes called Operational Research or Industrial Engineering. The
discipline dates to the Second World War.
1. Audit
Periodically auditing your
practices and procedures will help weed out the ones that are no longer
working. It will also help improve those that are working but could be more
efficient. It can be frustrating for employees to be handed a procedure that
they will have to utilize everyday with no ability to comment on its
effectiveness or potential improvements. Ensuring the procedures put in place
will help employees be more efficient and ask for their feedback on the process
is critical. The people with the hands-on experience are the ones that can help
you determine what will make things faster and easier.
2. Document Control
The ability to find
necessary documents as easily as possible is a crucial part of operational
efficiency. Finding the most current variation of any piece of paperwork-
contracts to drawings to specifications- can help keep you on your critical
path. Keeping your business is organized is key!
Document revisions can also
be important, depending on your type of business. If you sell services or goods
that will require service in the future, knowing exactly what the final product
the client ended up with is important when supporting them later. Procedures
for document control start from the top down. Set a good example and document
control will be easy!
3. Consistent Procedures
Consistency makes for
efficiency. Creating and maintaining consistent procedures throughout your
small business operations will help keep everyone on the same page, cutting
down on confusion and rework. A simple plan of how to properly dispose of information properly, is an example
of how to keep consistent procedures. When procedures are consistent across the
board, training employees is easier and assessing performance is a snap.
4. Small Steps
Nothing is going to be
perfect right away. Small, thoughtful steps in the right direction will get
your business up to its optimal operational efficiency. As technology evolves
and becomes more applicable to your small business, you may be inclined to rush
into upgrading and swapping all your systems over right away but taking small
steps to ensure efficient integration of these technologies will likely be
better for your company in the long run. Adequate training on new systems with
enough time for cross training is an important part of implementing new
processes.
5. Schedule
A clear schedule will keep
you and your employees aware of the expectations you have for how they spend
their time. Keeping a schedule will help make sure your bills are paid on time
and your customers’ needs are taken care of. It will help forecast resources
you may need as well as allow you to help schedule your personal life- everyone
needs a vacation!
6. Maintenance
Maintaining your small
business’s assets is important. Whether its equipment used to manufacture your
product or simply the printer/copier used by the office staff, keeping these
items operational is critical to business running smoothly. A little time and
money now will help keep costs down in the long run- it’s better to maintain
equipment as you go than pay for a complete breakdown when things finally fail.
7. Culture
The small business culture
leans toward more relaxed office spaces and less pressure from management.
Keeping a positive work environment alive will help with your operational
efficiency. Happy workers are productive workers. If your employees feel like
they can make suggestions for helping the business run smoothly, they will keep
an eye out for these opportunities.
Cash Flow Analysis
A cash flow statement is one of the most important
financial statements for a project or business. The statement can be as simple
as a one page analysis or may involve several schedules that feed information into
a central statement. A cash flow statement is a listing of the flows of cash
into and out of the business or project. Think of it as your checking account
at the bank. Deposits are the cash inflow and withdrawals (checks) are the cash
outflows. The balance in your checking account is your net cash flow at a
specific point in time. A cash flow
statement is a listing of cash flows that occurred during the
past accounting period. A projection of future flows of cash is called a cash flow budget. You can think of a cash
flow budget as a projection of the future deposits and withdrawals to your
checking account.
A cash flow statement is not only concerned
with the amount of the cash flows but also the timing of the flows. Many cash
flows are constructed with multiple time periods. For example, it may list
monthly cash inflows and outflows over a year’s time. It not only
projects the cash balance remaining at the end of the year but also the cash
balance for each month. Working capital is an important part of a cash flow
analysis. It is defined as the amount of money needed to facilitate business
operations and transactions, and is calculated as current assets (cash or near
cash assets) less current liabilities (liabilities due during the upcoming
accounting period). Computing the amount of working capital gives you a quick
analysis of the liquidity of the business over the future accounting period. If
working capital appears to be sufficient, developing a cash flow budget may not
be critical. But if working capital appears to be insufficient, a cash flow
budget may highlight liquidity problems that may occur during the coming year.
Sales Analysis
A sales analysis report shows the trends that
occur in a company's sales volume over time. In its most basic form, a sales
analysis report shows whether sales are increasing or declining. At any time
during the fiscal year, sales managers may analyze the trends in the report to
determine the best course of action. Managers often use sales analysis reports
to identify market opportunities and areas where they could increase volume.
For instance, a customer may show a history of increased sales during certain
periods. This data can be used to ask for additional business during these peak
periods.
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Source: https://www.template.net/business/analysis-templates/sales-analysis/#
Risk Analysis
Risk analysis is the process of defining and analyzing the
dangers to individuals, businesses and government agencies posed by potential
natural and human-caused adverse events.
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