Bottleneck-oriented Business Management

Bottleneck-oriented Business Management

by: Stephan Szugat

Simple and effective Business Management In every enterprise there are, at every time, one or more bottlenecks, which have influence to the commercial situation. Bottleneck-oriented business management has the purpose to early track the bottlenecks and to remove them, to allow an optimum of commercial development. To know at any time, what a business lacks of and to be able to add the missing things, is today a determining competition advantage. Bottlenecks can be, e.g.: low sales proceeds high due or overdue accounts receivables low liquidity (Cash on Hand, etc.) high amount of liabilities low number of customers too many new customers too high capacity utilization defective administration or management and a lot more. These example show that bottlenecks not only concern negative circumstances, but also can apply to positive commercial development. If an enterprise takes up many new customers, this results in new orders, which lead to other circumstances, like a possible excess in capacity utilization. In case the excess of capacity utilization stays for a longer time, this may result in a lower employee motivation, because of a slump in working atmosphere within the company, which then could lead to less qualtiy of the work performed. Due to a TIMELY reporting system many companies take care of reaching the desired commercial development. However, a regular analysis of expenses or the annual reports are not enough to control a business today. In the today's dynamic markets these evaluations are too statical, too much oriented on the past commercial development, which had been achieved. Also cost accounting only shows what has happened in the past. The actual direction in which a business is running could not be seen. Imagine a business to be a car. If you sat down in a car, do you like to receive information from the instruments from the last year or month? Probably not. You would like to have actual information about fuel tank content, coolant temperature and a lot more. Bottleneck-oriented business management should exactly bring the most important and actual information about a business to you, including so-called early warning signals (Screenshot abenetis ERS-Diagram). Data oriented to the past for early-warning-systems? A working early-warning-system needs data which are not oriented to the past, like from cost accounting or year-/month-end-closeings. It needs data from so-called early indicators, which has to be gathered from different areas of an enterprise. Of course, figures from the finance and accounting department belong into an early-warning-system, but they only have a subordinated role, because they are oriented to the past. Nowadays the reporting must show the present situation of a business. In many businesses the expenditure of time for the reporting rose considerably, due to the today's flood of information. Aggravatingly added to this, is the selection of the really relevant business ratios, which allow an appropriate overview of the actual business situation. Too often reports are prepared, which are not perceived by anybody, due to the lack of necessary statements about the business development. There are already proven business-ratio-systems, that enterprises only need to take over. Get back into the car again, imagine you have only one instrument in front of you, which shows the value "35". What does this signify? It is not recognizable how many fuel exists, how the Temperature of the coolant is or how fast the car is driving, etc. At this example you could recognize the little expressiveness of only one business ratio. It shows the importance to use the right business ratios, which must have a connection to each other and which have a different temporal origin. Nevertheless, many business ratio systems are mostly based on data which originate from the past. This turns often to the problem, that immediate information are not available, to indicate the actual situation of a business. However, there is still the alternative, to reduce the period of the past. How would it be with one week instead of analysing business data every 4 weeks? This would lead to the fact that you could act a few weeks earlier, if something should run a little bit inclinedly. Only very few data are needed to receive an informative evaluation. This again is comparably with a car. If you are driving with your car, you only receive a small, well-chosen number of information and nevertheless, have an actual picture of the situation. This is also possible for businesses, as well! As a motorist we receive only one fraction of the data which is acquired by the system of the car, and just these fraction of information is enough for us to reach the desired destination. When traveling usually we are well prepared, but the principle of the preparations is often neglected in business operation. As it is with traveling, the final goal has to be clearly stated by the business management. This could be done by having planing data available. Only by target/actual comparison divergences of the commercial development will be recognized. Unfortunately, many small businesses renounce to use plan data. Besides, it is not about, to cut plan data into the smallest pieces, but only to get a rough picture, what the business is going to achieve. It is absolutely possible to run a business on the basis of the figures from the previous year, however, to use these figures, the past commercial development should be taken into consideration. So the figures from the previous year should be improved to fit with the new goals. And finished are the planning data and the basis for an operational risk management are laid. Still if it is most important to know the actual bottlenecks in business operation. Recognize problems and act! One of the most important factors in business management is the early recognition of problems and potentials. There are bottlenecks in every business, which could have serious results. Pecuniary difficulties could lead to bankruptcy for example. Therefore symptoms must be recognized early, in order to turn a possible crisis away and to secure the future of your business. Also to use available potentials, regular analyses should be done. Nowadays products and services could not be sold forever, because product cycles become shorter and shorter due to market dynamism. The recognition and development of potentials is exceptionally important, to avoid losing the already achieved basis of a business. About the author: Stephan Szugat is founder of abenetis a web-based service about Business Management Solutions focusing on the core needs of business management. This includes operational and strategic analysis especially Early-Recognition-Systems, Knowledge-Management and other Services for small and mid-sized businesses. He has approx. 15 years experience in the Finance and Accounting Area from companies of different size and from various industries. http://www.abenetis.com Circulated by Article Emporium

Why Online Presence Is Essential For Small Business Success

Why Online Presence Is Essential For Small Business Success

by: Srinivasan R.G.

If you are any kind of small business or home operated business, online presence is essential. Majority of web site visitors are from the English speaking population due to the high levels of internet penetration in that category, online presence for all small enterprises cannot be overemphasized. The research data in the US about online connectivity reveals the following facts which may help to understand the importance of the web presence for businesses especially the small enterprise. 70 % of the US households have web connectivity. In 2004 worldwide online population was 801 million worldwide. Of these 36% used English as the language. Of this U.S. alone accounts for close to 200 million. The next major group was European languages with 38 % and major single language next to English was Chinese accounting for 14%. Home web users were generally affluent, literate, and belonged to the younger age profile. This means the web presence for any business is necessary if you want to succeed in promoting your products and services to a population who can afford them and also willing to buy them online. The household that did not own a computer or who were were not connected to the web, generally felt it is not useful or needed and cost too much. What this means for a small business owner is that they are better off promoting their products to people who were online. You small business success is undoubtedly linked to your online presence

Starting An Online Business From Home

Starting An Online Business From Home

by: J. Elisha Burke

Many people believe that starting an online business from home is difficult. In fact it is quite easy. If you are already familiar with what product you will sell you will need to create or hire someone to produce an online website for you. This website should list the product or products you have available. If you will be selling your own products, make sure that your online business has a name that reflects you and what you offer. After this has been completed, you should inquire in your local state to learn the guidelines necessary for you to run a business from your home. Many states require that even an online business register with them and receive a business license. You will have to get the necessary forms to request this license. After you have obtained you license, you should also find out how running an online business from home will affect you tax situation. You would still need to report any income you make from your business, even if you are working at home. After all this paperwork is completed for you business, it is important to set up your home office for you new job. It is suggested that you have a separate space to conduct your business affairs. A separate phone line that customers can call is also very necessary and I strongly suggest you get a fax machine. You will lose customers if you are not able to be reached by telephone, fax and e-mail. Having a separate phone line from the rest of the house is essential! Other than a second phone line, it is also a good idea to buy the necessary hardware and software for you home office. You will save lots of money if you have your own fax machine, scanner, and printer. Also it is probably wise to have the latest software additions for word processing and accounting. The accounting software is especially useful for you to keep track of all expenses and revenue for your online business. When you have established the business and things are going well, it is a good idea to consider outsourcing. This would mean hiring someone to take care of the little jobs that you would have to do such as email or letter correspondence or creating marketing brochures. By doing this, you will be able to focus on the more important areas of making money and marketing your business, which will be key to your success. Copyright 2005 Burke Publications All Rights Reserved About the author: Dr. J. E. Burke, an educator and entrepreneur, has been involved in various business enterprises via his business, Burke Publications for 11 years. Dr. Burke is an educator, writer and motivational speaker on a variety of topics. He is also known for his expertise on nonprofit organizations and grant proposal writing. Dr. Burke can be contacted at http://burkepublications.comor http://news.burkepublications.com