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1/1/2022

When you first start out, you will have good oversight of everything that is occurring in your business. In the early days, tracking sales and keeping control of expenses may be relatively simple. When your business starts to grow, and you put on staff it becomes harder to keep track of everything that is happening (or not happening) in your business. Your business becomes more complex, and you need a way to track results and activity.

Here are the 6 critical steps to drive growth, increased profits, and protect your business. You may do these things intuitively when your business is small, but as the business grows you will need a structured process to do this consistently.

Step 1 - Understand the profit drivers in your business

There are many factors that affect the ultimate profitability of your business, and these are the profit drivers that you should identify, measure and monitor. These will differ from business to business, but let's have a look at a few common profit drivers that you may come across. Of course, most businesses will want to track their sales. As your business grows you will require more detailed analysis of sales e.g. by salesperson, distribution channel, source, geography, demography. You will probably want to understand the price elasticity for your products. These are all potential profit drivers, along with your marketing strategy, and how you target customers and source sales opportunities.

Another key profit driver may be a skilled and motivated staff. For example, a highly trained and enthusiastic sales team may produce greater sales, and you need to decide how you will achieve this and how much you are prepared to spend on training, culture, benefits etc.

If you have staff producing goods and services, you may want to monitor staff productivity, efficiency, error rates, staff satisfaction, staff turnover, absentee rates etc.

If your business is automated or relies on machines, you may want to monitor process or machine run times, efficiencies, outputs, downtime etc.

You will want to monitor your Cost of Sales and variable costs, making sure you are sourcing products and services at the best price, but within your quality and service expectations.

Most businesses keep close control on fixed costs. Some of these costs will be set and forget, only requiring consideration or negotiation irregularly e.g. you may negotiate a 3 year lease on your office or factory. Travel costs may require more regular review.

If you have excess capital and investments, you will want to ensure you are receiving the best return, within your own risk profile. You will want to monitor profitability. Not just for your whole business, but you may want detail on profitability by product, product mix, breakeven points, contribution margins, profit margins, and details of price elasticity by product category and/or product.

Step 2 - Understand the risks to your business

In addition to understanding the profit drivers in your business, you should also understand those things that threaten the existence or success of your business. These would include any legislative requirements, safety requirements, insurance requirements, and any other risks that may cause downtime or reduced productivity. Let’s look at some common examples.

If your business requires a license to operate, then you need to ensure you meet the requirements of that license or you may be subject to fines, penalties, or cancellation of your license.

Failures in safety procedures may result in death or injury to staff, or damage to machinery and equipment. This may result in disruption and significant cost to your business.

In the event of an accident or catastrophe, you may rely on your insurance policy to get your business back up and running. If you have failed to comply with the terms and conditions of your insurance policy, you may find that the insurance policy does not respond in the event of a loss. For example, failing to adequately secure your data may negate your cyber security insurance.

There may be other risks specific to your business. For example, if you store large quantities of flammable materials, these may be a fuel source in the event of a fire. While you can insure against fire, prevention is much better than remediation.

Step 3 - Create a strategy, targets, and budget

Once you have identified all the profit drivers and key risks within your business, you should prioritise these in terms of the impact they have on your profitability and sustainability. As part of your business strategy, you should set strategic goals and targets for each of the key profit drivers and risks. You will need to determine the most appropriate KPI(s) for each profit driver or risk and ensure you can obtain the data needed to set a target and to measure actuals in future.

These strategies and targets will also provide input to your financial budget.

Step 4 - Monitor results

You should monitor all critical and high priority items on a regular basis. You may wish to monitor lower impact items on a less frequent basis. You will need to determine how frequently each of these need to be measured based on the potential impact on your business and set an operating rhythm that encourages these reviews. Many businesses report on a monthly basis, with quarterly or annual reports for less critical activities, but I have implemented daily and even hourly reporting for critical activities.

These reports should provide enough information to validate the expected result for the relevant profit driver or risk, and give you a comparison to budget or target. They should also highlight any exceptions or unexpected variations that are experienced. Remember that you may also need to monitor trends over time as results in isolation may not present a complete picture.

You will probably want to collect detailed data, and produce detailed regular reports which can be analysed, sliced and diced as required. These may be used as operational reports for the appropriate manager or staff to review and monitor. And you should look to automate production of these reports as much as possible to ensure timely and consistent production.

Step 5 - Structured Board and/or Management Report

Typically, there is much data extracted in step 4 and many operational reports produced, and it is often not practical for the owner or the board of directors to review all these detailed reports. So, the next step should be to produce a regular board report or management report showing highlights, lowlights, trends, and exceptions from the operational reports. The report should also have commentary around any key findings. Again, you should look to automate production of this report as much as possible, to reduce cost and effort.

Step 6 - Make timely decisions

The operational reports can be used within the business to make day-to-day decisions that align with the business strategy and targets.

Board reports or management reports can be used by the board and executive team to understand all aspects of the business and to make timely and effective business decisions.

These reports will also provide valuable input to your strategy and budget decision making process.

Summary

I have applied this approach consistently throughout my career and found it a very reliable way of ensuring good governance, good decision making and good leadership at all levels within an organisation. With improved technology, what was once an onerous task, can now be done quickly and cheaply.

I would encourage every business to set up this type of monitoring and reporting process and to set an operating rhythm that includes regular reviews of your business results and activities. I’m sure these 6 steps will help you grow and streamline your business.

And if you need help, Dynamic Reporting can assist you throughout the process.

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1/2/2022

This is a key question that you need to ask yourself before spending time and money creating your reporting regime.

There are many options available in the market, but even the biggest companies struggle to select and implement the right reporting tools. Some key considerations will be:

• the industry you are in
• the size and complexity of your business
• whether you have dedicated reporting staff
• what reporting tools you already have
• your IT and reporting budget

The industry you operate in may have existing software that is commonly used for reporting. Often these are operational systems that handle B2B or B2C transactions, online marketing and sales, automated stock ordering, employee time/activity recording, extensive back-end reporting and integration with your accounting system. In this case, it may be a fairly straight-forward choice of vendors and systems.

The size and complexity of your business will have a major impact. If you are running a small business, you will probably be looking for a system that is affordable and easy to implement and run. As your business grows and becomes more complex, your needs will increase and you will need more comprehensive reporting functionality. Ultimately, this may lead to a full Enterprise Resource Planning (ERP) system.

More complex reporting systems and processes require staff to develop and maintain. The initial setup may be a major project, involving significant time and cost. If you are involving consultants or external suppliers to design and implement your solution, it is critical that you have complete knowledge transfer to your staff, or have robust on-going support arrangements. Even if you have developed the solution in-house, you must ensure that you have documented processes in case of staff turnover. I have seen many examples where a reporting system is lost due to the departure of the sole developer/user.

If you're not ready to go out and purchase a proprietary system or invest in a fully integrated reporting system, then you may prefer to use reporting tools that you already have, or that are available at a reasonable cost. You may already have an operational system that provides some data and reports. The next step may be to set up your own data warehouse and look at ways to obtain additonal internal, third-party or industry data to augment your existing information. There is a plethora of database and reporting options available, and with storage space and processing power reducing in cost, it can be relatively simple to set up your data warehouse (perhaps in the cloud) and develop reporting that is available wherever you happen to be.

And last, but not least, your reporting system will be highly dependant on your budget. An ERP is an excellent solution for large businesses, and may provide a single source of truth for all your reporting needs. Many businesses will implement their own reporting systems and processes, which will pull data from various sources into a central data warehouse and they will utilise Data Scientists, Analysts and IT teams to maintain these processes. But there are still excellent reporting options available for small businesses or those on a limited budget. Many large businesses are utilising cloud based data warehouses and reporting tools like Power BI and Tableau to provide their reporting needs. Many businesses also utilise Excel for reporting as it allows the users of the reports to design and maintain their own reports. These can be very affordable options for small businesses.

Dynamic Reporting can assist you with this process. Call us to see how we can help.

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1/10/2022

Many businesses think they lack the ability to innovate. They think they need extensive resources and skillbase and that it will cost too much. Innovation is not just about implementing cutting-edge technology and re-desiging your whole business. It can be as simple as putting in some small time-saving measures or process improvements, that will improve your productivity and eliminate unnecessary work.

In fact, if you have a culture of continuous improvement, you will find many time-saving innovations that will add up to a significant cost saving to your business. But where do you start?

Let me start by giving you some real-life examples:

Example 1: Automating the manual Sales Report

Ted (not his real name) was the manager of a business division with sales of around $50m. Ted had to report on his financial progress each month and in order to measure his sales pipeline he received a hard-copy report from the company mainframe each month. One of his staff would spend 2-3 days reading numbers off the report and typing them into an Excel model to get the figures required for his report. I had offered to review the report several times, but Ted was certain the process could not be automated. I finally convinced Ted to let me look at the report. I considered scanning the hard-copy report, but scanning hundreds of pages each month would have been a long process and still prone to errors. I considered getting access to the soft-copy report from the mainframe, which would have been a solid option, but I thought there had to be a better option. Finally, I opted to extract data straight from the mainframe datasets. This had a number of benefits:

• The program could be run at any time. Ted no longer had to wait until the month-end hard-copy report was producted.
• I was able to extract many data attributes that were not included on the hard-copy report. This included customer and product details that weren't previously available.This allowed greater analysis of the data that was extracted.
• As it turns out, not all data was being displayed on the hard-copy report. It was producing an incorrect result.
• I was able to use SAS to extract the data and write the data straight into a structured Excel file, eliminating even more work.
• The program took 1 minute to submit and 2 minutes to run, converting a 3 day task into a 3 minute task.
• I was able to add the program to the IT schedule and so no-one had to run the report, it just appeared on schedule.

This was the first of several reports I automated for Ted, which saved a huge amount of manual labour and produced a much more accurate result. Not to mention the improvement in data analysis. The whole process took around 3 days to automate.

Example 2: Automating Data Entry

Kevin (again, not his real name) identified an error in pricing for over 2000 purchases. Each customer required a transaction to be posted to correct the charge. A fairly simple process, but one that was going to take hours to identify the incorrect transactions and days to manually process the adjustment.

IT could fix the problem, but not before the client billing run on the weekend. This would impact customers and cause a raft of complaints and queries. Staff could manually key the adjustments, but at 3 minutes per transaction, there just weren't enough staff available to process 100 hours worth of transactions before the weekend. I was asked if I could think of a workable solution. Within an hour, I extracted a list of incorrect transactions based on parameters provided by Kevin. I used Excel to store the list of adjustments and used Excel's VBA programming language to take the adjustments and post them to the mainframe. At 1 minute per transaction for the automated process, and without the need for breaks or sleep, the task was completed within 40 hours with no disruption to staff.

Example 3: Automating the Monthly Reports

One of the best projects I have been involved in was building a PowerBI model to provide monthly profitability reporting. I had historically built a process that extracted data from the ledger and client database and combined these details into an Excel model that provided detailed profitabilty figures across various attributes (customer, product, segment, distribution channel etc). That model was also automated on a monthly basis and only required updates at the start of a new year.

PowerBI provided the ability for the data to be refreshed automatically every day. It could be deployed to large numbers of staff which is more difficult to control using Excel. It is able to be deployed over the web and therefore is available anywhere there is a device with internet access.

PowerBI is simply a great reporting tool that can be designed and deployed fairly quickly and with minimal cost. And it integrates seamlessly with Microsoft Apps and Platforms.

So how do we start innovating?

The key to innovation is to embed a culture of continuous improvement in your business. Many businesses claim to have done this, but still struggle to reap the benefits they seek. In many cases, the reason is that they do not really have a culture of continuous improvement at all. Innovation takes commitment and effort at all levels of your organisation.

First you need to understand what innovation is. If you think it is keeping up-to-date with all the latest cutting edge technology, you will never achieve this as the rate of technological change is huge, and the cost would be enormous. I have seen businesses try to promote innovation without spending any money. While it is possible to drive innovation internally without spending any money, typically people become jaded by putting in lots of effort just to see good ideas abandoned due to cost.

Second, you need to set up a model or structure that supports innovation. You need dedication and leadership from the top of your organisation. Anything less will be interpreted by staff as lip-service. You then need managers to support the process by encouraging staff, and enabling them to create change. You will have people in your business who are prepared to put in the effort and who have the skills to innovate, but you need to empower them. You need to support them when they need help, and you need to recognise their efforts, whether successful or not.

Remember not every initiative will work out. Without failure, there will be no success. Make sure you celebrate the failures as well as the successes, to foster the right culture.

Dynamic Reporting can assist with automating data analytics and reporting in your business. Call us to see how we can help.

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9/5/2023

You can implement Process Automation in your business today and save time and money immediately. It doesn't require new computer systems or Apps, and you don't have to bring in an expensive team of consultants to make it work. Here are 3 ways to save time and money that you can implement in your business today.

1 Automate repetitive tasks

The first step is to identify repetitive tasks that chew up your time. This is usually a quick win. Repetitive processes can be automated quickly and easily using tools you probably already have in your business.

Perhaps you are a small business owner, who is tired of spending all weekend catching up on admin? I recently automated a reporting task that took a business owner 2-3 hours every weekend. He now gets the same productivity report, but it takes 2-3 minutes instead of 2-3 hours. He can run it whenever he needs an update, it's always accurate, and he has an additional 2-3 hours free to spend with the family, workout at the gym, or fit in a quick 9 holes of golf.

2 Fix your Excel Models

I know people who spend hours each month updating their Microsoft Excel models to get their board and management reports. I used to be one of them. I would spend between 3 and 5 days producing a swag of financial, operational and compliance reports. I found better ways to access the data, and to automate the process, which reduced my work to about 2 hours, primarily checking that the reports were correct and complete. Many people know how to use Excel, but there are so many features available that can simplify common tasks in Excel that will save you a huge amount of time. Getting the structure of the model right and automating data updates is a great way to save you time.

Many Excel budget models are inherently time consuming. The data loads are not automated, the structure is wrong, and there is no/little error checking, so when you do complete the model, the resulting output is incorrect. Some simple changes to the data handling and structure of the model can save loads of time and embarassment.

3 Schedule your regular reports

Data is critical when you are running a business, and you can spend a lot of time converting this data into the information you need. Many IT systems will allow you to schedule your reports and deliver them straight to your desktop or email. If not, there are still ways to steamline the process and to produce reports that aren't available in your system. I recently built a series of reports where the data was extracted from an SQL database, populated into an Excel model and then formatted into a Word document automatically.

If you require more comprehensive reporting, then PowerBI is a great way to speed up your reporting. Get the data sources and data model correct, and reporting becomes so simple. You can create regular reports that update at the touch of a button, and you can build adhoc reports quickly and efficiently. People are always amazed at the versatility and simplicity of PowerBI. It will give you the information you need in a timely and cost effective manner.


These simple changes can save you time and money. If you need assistance, Dynamic Reporting can design and build automated processes that are simple to run and maintain. Call us for a free consultation.

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