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Governance
By Paul Fileman

Success in business is dependent on:

  • A clear understanding of your market;
  • The ability to delight your customers;
  • The energy and enthusiasm to get everything done;
  • The ability to turn all this into profit and in to cash.

Many businesses still fail however – even though they have these positive attributes in abundance. Their mistake? They allow the small stuff to get overlooked. If the small stuff includes banking the cheques and reconciling the cash-flow, then it very quickly becomes big stuff. That is why it is often referred to as "Business Governance".

It is essential that every business has a heart-beat and that the Directors and Managers who are responsible for critical business processes are held to account to ensure that everything that matters gets done. During the course of a month, make sure that every routine task is done or is delegated effectively and then confirmed as complete. In some businesses, that might mean reconciling cash on a daily basis and making a trip to the bank. In other businesses, these items are weekly and in others monthly – the important thing is that, whatever your business you and your leadership team establish an appropriate routine and stick to it.

Routine Tasks
If you lack the time or do not have enough people in your business to keep up with your book-keeping, then outsource it. Your accountant will either be able to offer a service or recommend a freelance book-keeper. If your books are always current, you will always know your cash position – which will help you avoid spending the VAT money on something that can wait just as your return is due. And it is not just small businesses that fall into this trap. Any business without a full-time financial controller or Finance Director can easily make costly mistakes in their cash forecasting and liquidity management.

Board Meetings
Effective board meetings are a critical component in ensuring that your team is held to account.

Action Items
Assigning action items and making sure that they are completed is one component of an effective board meeting.

Structured Review
The chair of the meeting is responsible for ensuring that all those present examine the current and forecast future state of the business against plan and for facilitating the assignment of any required actions.

Meeting Structure

  • Schedule a time;
  • Plan an agenda;
  • Run the meeting to the agenda;
  • Write down the key decisions;
  • Assign the action items with names and due dates.

Your agenda might include the following items:

  1. Actions from last meeting – everybody should keep their promises.
  2. Chief Executive’s Report
  3. Numbers
  4. Financials
  5. Sales
  6. Turnover
  7. Profit
  8. Cost of sales
  9. Overheads
  10. Cash
  11. Debtors
  12. Other Reports
  13. Forecasts for next month
  14. Business Improvement Projects
  15. Progress against plan
  16. Any Other Business
  17. Priorities for the coming month
  18. Date of next meeting

Reporting
Succinct written reports give people time to prepare properly for the meeting. Financials and metrics should be circulated a couple of days ahead of the meeting. Narrative reports could include achievements, failures and plans for next month. It brings focus to individual and team time planning and it helps with motivation – when times are tough it really helps if people go over the last month and remember their triumphs.

Added: 10th December 2010

Paul Fileman is a business results improvement professional, marketer & mentor. He works with businesses to improve their profitability and performance. Find out more about Paul's company Results Zone.

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