Now more than ever, smaller businesses must understand how they can improve their performance, eliminate unnecessary costs and focus on the right strategy to survive the recession. To this end, CIMA has published an updated extract from "Making a success of your business: essential checklists", a toolkit designed to help members--especially those in SMEs--prioritise key issues and deal with them effectively.
This resource, sponsored by SAP, starts by stating that a well-managed business needs:
* A robust business plan. This systematic review of the organisation forms the basis for all decisions, it should be updated frequently to ensure that it stays relevant as conditions change. The budget is derived from the business plan and is the day-to-day method of controlling activity.
* A range of key performance indicators (KPIs). These financial and non-financial measures are used to gauge how successful the business is in achieving its goals. Its performance will improve if you choose the right KPIs and use them well.
* Accurate, reliable and timely information on performance, which must flow up through the organisation regularly. It should be simple, easy to measure and focused on the long term.
According to the toolkit, the most successful businesses know what factors create value. They have a small number of KPIs to monitor their performance against these factors and they use this information to ensure that the following things are in place:
* Products and/or services that are attractive to consumers both now and in future.
* Clear objectives that are communicated properly to the workforce.
* A desire for continuous improvement.
* Useful management information and effective financial control.
* Efficient services and distribution.
* Good, well-informed managers.
* Regulatory compliance with minimum disruption to organisational routines.
Good businesses also avoid complex strategies. They focus instead on those that can be reduced to simple ideas, which are easier to communicate, grasp and execute.
To help CIMA members optimise the performance of their businesses, the toolkit provides checklists on 12 key topics, including "Getting value from your business" (see panel). At the bottom of each checklist is a brief summary of the points that you should consider when taking decisions in that area.
Using these checklists will put businesses in a better position to understand their weaknesses and exposure to the downturn. The key is then to...