The Medical Model for treatment of business disorders
We find it helpful to consider the medical approach to looking at business problems. The symptom is rarely the actual problem; it is the evidence of a dysfunction, the result of a chain reaction of events, where a number of things may have gone wrong.
A clinical protocol: examination, testing, assessment, diagnosis, treatment, monitoring, and measuring outcomes. We expect this in our medical treatment. Most companies practice a similar discipline to assure the quality and safety of their products. Why shouldn't these same steps be applied to keep your company's financial record-keeping processes healthy?
When was the last time your finance and accounting operation had a check-up?
What If? ..or.. What Now?
Several years ago, we helped a company that had an incredible opportunity to double the size of its business, with one new but very large contract. We worked with management and staff to identify the ramp-up costs and incremental operating expenses. Given the potential lag between expenses and receipt of payment on the new revenue, we plotted out several scenarios on a "cash-burn" graph. It showed how much new borrowing the company needed, and for how long. The owners were surpised at the size and duration of the potential cash deficit, but grateful to know about it ahead of time.
We used these scenarios, along with a projected balance sheet to negotiate debt covenants to make sure the standard loan terms from the bank didn't cause immediate compliance issues. Furthermore, our asssumption-driven, flexible financial model helped mitigate the economic and performance risks by showing the company how to modify the new business agreement to spread out growth in phases.
The LESSON: By doing a detailed "WHAT IF" analysis, the company avoided a huge "WHAT NOW" situation - which could have been devastating to the company.
The Pyramid Theory of Information©
Think of your information like a pyramid. At the bottom are bits and bytes and scraps of paper, invoices, sales receipts, payroll stubs, etc. Halfway up the pyramid is a report - the typical 35 page computer printout with endless tables of endless, mind-numbing numbers. Somewhere around 80% of the way up, you will have a report that is five or six pages long - but only because the print is so small.
Very few reports ever get to the summit of the pyramid. That lofty goal is a single page that facilitates a decision that results in action being taken. It takes a financial expert with skills not just in finance and accounting, but also in analytics, and with an understanding of company strategy, budgets, external economics, and most importantly - practical knowledge in the art of communicating complex information to a diverse non-financial audience.
How is the view from your current financial reports?
We can be your Sherpa guides and help you find a better view.
Our logo is actually a photograph. There are three zig-zag walls in a temple in western China, and in each wall is a circular opening. At the proper height and angle you can see through all three.
We thought it fitting, as we want to help you find new perspectives on your business issues, challenges and opportunities.
"The question is not what you look at, but what you see." Henry David Thoreau