Good financial management significantly improves the profitability and performance of your business
By Robert Jewell
If I had to suggest to you that all your customers are everywhere, would you agree or disagree with that statement? Let’s look at a case study about a business we refer to as Everywhere Services!
The details of this business are as follows:
The main business consists of an internet café and computer training school. There are a number of computer workstations with internet access and a colour printing capability, enabling it to also render printing services to schools and other businesses in the area.
Everywhere Services also tenders for contracts for the supply of stationery and other office supplies, but these rely entirely on government tenders. The tenders are opportunistic and therefore do not result in a continuous and sustainable source of business.
Everywhere Services in fact consists of 4 very distinct and unique businesses!
The only permanent employee is Mr Energetic. The tasks of Mr Energetic were huge as this was 4 businesses all being managed by one man. As the only full time employee of Everywhere Services, even though there were synergies between the four businesses, Mr Energetic simply could not cope, but his vision, drive and expertise directed the business and moved it forward.
In this context, Mr Energetic is a scarce resource. The growth and profitability of Everywhere Services is heavily dependent on the efficient and effective use of Mr Energetics’ time and energy. He obviously began to lose focus on where the business made more profit, by simply having too much to handle. The business also suffered the problem of not having accounting systems to report separately on each of the businesses – so the source of profits and losses were not clearly visible and could not be maximised accordingly.
Ultimately, Everywhere Services, by being everywhere, failed to perform financially.
The lessons we can learn from the Everywhere Services business and Mr Energetic:
- The resources of every business, no matter how big or small, including your business, are finite. No resources, like Mr Energetic, are infinite.
- If you want to improve the profitability of your business, it does not necessarily mean that you need to reduce the expenses, but your time, money and other resources must be utilised efficiently and effectively.
- Different businesses, in order to maximise profits, require different financial management strategies.