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Leopard Business lessons

lpo


I find the National Geo channel very fascinating…i like the wild and most of the times been looking at big animals such as lions, elephants and buffaloes but rarely the leopard.


Of all the big cats, the leopard is the wisest…hunts alone, an introvert but has a great success rate on hunts. Once it kills prey it must quickly pull it up a tree for safety keeping.


How many of you shout on top of the mountain when you get a big deal? How many even start talking about big contracts before signing them?Once heard 2 guys talking about a half million Command Agriculture deal at OR Tambo Airport! A leopard knows there is stiff competition for resources, once you land a prey quietly pull it up a tree and start feeding lol


Delay and big guns such as lions and hyenas come for their own share.
I like how leopards attack prey whilst flying from trees…unbelievable stuff. Its like lightning….boom and in a split second an impala is gone. So impalas will be resting under a tree, looking for tree shade oblivious of the danger up tree. Impalas and most land animals are wired to look for trouble from the ground…most predators attack from the ground…but the impala uses the ground and from tree tops.


Risk Management Lessons:In your business, are you focusing on risks strictly from the ground or sometimes you are taking a look upwards? The greatest risks are often surprises! When attacking from above, the success rate for leopards is close 100%.


When the going gets tough sometimes the leopard goes for birds…yes birds in trees…unbelievable stuff.
Do you have an agile strategy that adapts to changing economic environment? Study leopards for inspiration. When you want to study about wisdom, forget the lions, forget the cheeter which only relies on one strength…speed….try the leopard.


When it comes to business models;

Lions for boldness,

Cheeter for speed,

The tortoise for slow but sure speed,

Buffaloes and elephants for team work,

The croc for stealth,

The leopard for wisdom,


Which animal or animals does your strategy follow?

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Diaspora Matters

Management Accounts for Small Businesses 101

management-accounting

As a small business operator, how do you review your financial operations? Do you prepare profit and loss financial statements, balance sheets and cashflow statements? On the ground what we have seen is few ever bother to maintain their financial records. This makes it difficult to review operations and make strategic decisions of expanding or even scaling down. Most do know the state of their finances which mostly involve how much cash or inventory they hold but when its not systematically recorded, it becomes difficult to review your operations.

One great way to review your operations is through the preparation of management accounts which is defined as;

The process of preparing management reports and accounts that provide accurate and timely financial and statistical information required by managers to make day-to-day and short-term decisions.

The Chartered institute of Management Accountants ( CIMA)  also define it as is the procedure of recognizing, gauging, gathering, studying, researching, analyzing and communicating of information utilized by the management to plan, evaluate and control within body and to ensure proper use of and liability for its resources.

Basic Components of Management Accounts

  1. Profit and loss accounts
  2. Balance sheet
  3. Cashflow statement
  4. Budget (Integrated into the above financial records with a variance analysis)
  5. Risk Management reports
  6. Inventory reports
  7. Department or operational areas reports
  8. Strategy or business plan report

Review procedure

The starting point in your business is the compilation of your business strategy. How do you intent to operate? What are your strategic goals? Expansion? Access to new markets? Acquisition of new equipment and machinery? Most small businesses lack strategic strategies and yet its crucial in guiding you the direction you would like to take.

Your strategy helps inform your budgets-budgeted sales, budgeted expenditure, budgeted growth ( balance sheet) and budgeted cashflows.

When your financial records are prepared, you will be reviewing what has transpired against your budget and taking corrective measures where there are negative variances (for instance if your budgeted sales are R500.000 but you only manage to get R100.000 then this is a cause of concern and you should investigate further on the reasons for such a huge discrepancy and take corrective measures)

Depending on the size of your business, you may need to go line by line in review or simply review major line items.

Management Accounts review also involves the review of risks. In the current environment, you may need to review the impact of forex rates fluctuations on your business. Ignoring this aspect spells doom for your operations. One massive spike in rates can result in your business going under. So you should review this major risk and assessing its impact on revenue, expenditure and operations. Other risks facing your company need to be factored in and reviewed such as tax compliance, environmental regulation compliance, risks of fraud and others.

Inventory reports are one of the lifeline of your business and you need to closely monitor performance in securing products, usage and convenience. You can design them according to your needs and monitoring opportunities and risks in the operating environment. Do you need to make strategic decisions on partnering? Are there anticipated bottlenecks in the supply chain? How do you address them?

For starters, we will not flood you with a lot of information on management accounts but the above are the basics which you should have and reviewing at least once a month.

Benchmarking

We have mentioned the importance of budgets which are aligned to your strategy but budgetary review is mostly internal and in the business world, this Is not enough. You need to review your operations against those of competitors in the industry. If your profit is US$800.000 but others are getting 50 times more then you should ask why and what strategies or business models they are using. What is your market share in the industry? Any disruptive forces in your industry? You align your business to the best practices not only in the country but the region and across the world

The big picture on management accounts

Where is the organisation going in terms of strategy?

What needs to be changed or reviewed?

Where are the opportunities or risks?

Implementing Management Accounting Systems

If you have no business strategy, get one…engage an expert to assist you in the process.

If you have no budget, then create one based on your strategy.

If you have no accountant or bookkeeper, then engage one-student interns can assist you in this regard.

Find an expert who can design your management accounts system and the development is based on industry practice and according to your needs.

In conclusion management accounts helps you review operations and take advantage of opportunities whilst reducing your risk exposure in a fast paced and volatile business landscape. The key word is DECISION MAKING, you would want to make decisions based on accurate, timely and useful information.

In the past, the focus was strictly on financial information but this is no longer enough. In the past the focus was on historical performance but this is grossly inadequate-there is need for past, present and future information inorder to come up with better business decisions.

This is the basic on management accounts and in future we will build up and cover Key Performance Indicators, Balanced Scorecards, Big Data and Block Chain Technology.

Give us feedback, how are you preparing your financial statements and do they give you sufficient information?

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