Managing Small Businesses Process.

Cash Management

• The projection of cash management as a business process should be for at least six weeks forward.
• Cash management should be a forecasting system that allows management to improve the utilization of excess cash during periods of relative abundance or to anticipate shortages and take action before a crisis occurs.
• This system, when properly automated, should take no more than 15-30 minutes per week for an administrative person to generate for management review.
• It should project account receivable and other inflows against accounts payable and other outflows.

Process Agreement

• The most beautifully documented process will mean naught if there is little commitment from the major actors to follow them.
• Crunch time will come in those tough times of impending deadlines and snappy stakeholders.
• What works well is getting formal sign-off from the process-mapping team leader, the Process Owner and the managers of the interfacing processes (both supplier and customer).
• This may seem overkill and you may get some resistance, however, getting formal agreement now will save you much heartache later when people start to come up with excuses as to why the seemingly agreed process does not apply in this or that case.

Training

• Get the management team to show visible support and commitment to the project.
• Although mapping business processes will not cost you much in capital expenditure, it does require concerted effort.
• Teams will lose faith and energy quickly if management support is seen as piecemeal or being given grudgingly.
• Activities here include holding regular project progress meetings and rewarding the most productive teams.
• Do not skimp on training the teams and their team leaders.
• Team leaders will need to be able to organize effectively and manage their time, along with possessing the necessary interpersonal and analytical thinking skills.

• Each team will also need a mix of abilities; people who can think creatively, bond the team and follow through on tasks, to name just a few.
• Where these skills are lacking, they will need to be learned.
• This is a very wise commitment, as such teams have proved to be a fertile ground for developing the next line of leaders.

Budgeting

• The system should be automated to produce monthly budgets that directly relate to whatever sales volume was, in fact, generated.
• This system should relate to the company’s historical cost structure but allow for zero-based budgeting (justifying all costs by line item).
• This is the one-year profit plan and critical to management control.

• Properly automated, this system should require only a few hours per year of management input.
• Key Indicator Flash Report summarizes on one page the key weekly changes in cash position, accounts receivable, accounts payable, sales and inventories.
• It requires 10-15 minutes per week for an administrative person.
• Variance Report should be automated to produce a comparison of actual results against budget and should report monthly and year-to-date totals by line item
• It is complementary to the budget system.
• Properly automated, this system should take 10-15 minutes per month for an administrative person to generate the report.
• The report should indicate trouble areas, by exception, for management to take action upon.
• Labor Burden Worksheet reports the full cost per hour or year for each employee.
• This can and should be used in pricing strategy and pricing calculations.
• This spreadsheet keeps track of the costs of benefits and other employee related expenses by employee and department.
• A complementary Employee Benefits Sheet repackages the information for communication to the employee as their full-benefits compensation package.
• It requires 15-30 minutes per quarter for an administrative employee to update information.

In summary, the management principles discussed above can be visualized as a stool with four legs. One and two legged stools are totally unstable. Three legged stools are more stable but can tip if too much weight is shifted from one side to another. Four legged stools are the most stable.

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