In executing effective management of a business, the first thing one needs to recognise is that a business succeeds or fails one day at a time.
And just like the human body – businesses have a pulse.
And managing for success means monitoring that pulse on a daily basis.
One of the most important lessons I learned in my business career was the concept of a “daily pulse” report
Next you need to be aware that managing the pulse – means identifying the key drivers of the business and having a predetermined, quantifiable goal for each – in business terms a budget.
By this I mean a budget for revenue and a budget for expenses – and a budget (projection) for financing. (cash) – which is the single most important issue in a business.
Revenue
What more can one say about revenue other than the fact that it is the genesis of all that follows – that it is critical (vital) in nature – without it nothing happens or is necessary.
So, one needs to have a really good understanding of the following:-
a. the business environment,
b. the market place – including market research
c. the target market,
d. customer profile and motivation,
e. the most effective ways of communication with the customers – calling them to action
e. the competition,
f. the products and
g. pricing .
And, if you don’t, ensure you obtain expert advice to deliver this knowledge and advice.
Marketing and all that it embraces is a specialist function – so get knowledgeable specialist guidance.
Consider this – who in all the world – other than the shareholders – and probably the staff and suppliers – has a vested interest in the business success.
So, consider alliances – other businesses which could increase the possibility of success and by so doing, will themselves be beneficiaries.
These are examples of business management
Why – because the model has identified that the two most sensitive items in the performance of BSA are patients and the bed rates
In addition to your need to understand that expenses are divided into two categories – namely:
a. controllable and
b. uncontrollable
Controllable expenses are items such as:-
a. Rent – you find the premises – agree on a lease – know what you have to pay – and when you have to pay it, or
b. Salaries – you decide on your staff structure – engage the staff – agree on salaries – know what you have to pay – and when you have to pay it
Uncontrollable Expenses
a. Typically such items as electricity usage, water usage, etc. – generated by many activities and
many people
Based on my experience as chairman of a hotel group – one of the biggest issues is food –
particularly when you have a kitchen (as you have)
To calculate a reasonably accurate cost of feeding a patient 3 meals a day + teas – etc. is not
too much of a challenge.
The challenge lies in who else you are feeding – the staff – and their families!
Clear special steps needs to be implemented in this regard.
b. Telephone expenses –
c. Stationery consumption – (everyone needs it and those with kids even more so)
Further the former category – typically are “fixed” in nature – they occur based on time basis and not on volume, whereas the second category are “variable” – i.e. volume related.
The more patients the greater the cost.
In developing the model – and the chart of accounts which I gave to Carlisle Tax (Rudolf Strydom), I divided the costs into “fixed” and “variable” categories.
This may seem such an obvious thing to do – but it illustrates the difference between financial management – and financial administration.
The services provided to BSA by Carlisle are “financial administration”- i.e. they provide the basic information – organised the required way – for financial management to take place.
Left to their own devices, expenses would be alphabetical – useless for management purposes.
So, as you can easily understand there are two sides to the coin.
Business management is holistic – it involves all things – one of which involves financial management.
Effective financial managers are specialists – like you.
And every successful business has proper financial management!
Further – like knowledge – unless it’s is applied – it’s not worth much.
So – firstly you have to understand and embrace the need for financial management, then
Secondly – you have to implement basic admin functions as the basis for financial management systems, and then
You have to implement the systems and manage them- daily!!
Once again, I have no doubt that I can assist – but you (collectively) have to acknowledge the need and that it will incur cost.
Of course, once the systems have been designed and implemented, the management / monitoring should be executed by the BSA management (staff).
I hope that this is useful.
Colin Human
