This blog is the third in a series on financial reporting practices that have greatly improved Pro Back Office’s (PBO) clients' financial and operational results.
The last blog covered the contents of an ideal monthly financial statement workbook to give management a dashboard view of the business.
This month I will cover the Operational Process Improvement list. This list includes the key business initiatives that drive the execution of a financial plan, improves performance and increases value of the company.
The following are some of the initiatives from the Operational Process List that I use with my clients. They are to be reviewed in our weekly or monthly meetings:
Top line growth
- Expand e-Commerce lead generation by adoption of affiliate programs
- Expand channels of distribution by hiring a salesperson that will focus on that channel
- Raise prices where the competitive situation will allow
- Put the company’s best salesperson back in a sales role
Cost of goods reduction, gross profit improvement
- Eliminate the lowest margin products
- Explore using lower cost materials and alternative suppliers
- Get offshore turn-key manufacturing quotes
- Plan production to more closely match sales demand
- Calculate customer profitability and have an action plan for the lowest margin customers
Operating expense reduction
- Hire more entry-level employees when additions or replacements are needed and train internally
- Rank the employees by performance high to low and replace employees that are underperforming or that hinder others from performing
- Consolidate and re-locate facilities
- Review all outside services and software subscriptions and eliminate/adjust those that are no longer used or not providing value
- Outsource where permanent employees cost more or the expertise is lacking
- Reduce printing costs by using more digital media
- Identify expense metrics in the industry to show where costs and expenses are out of line, then develop an action plan
- Challenge all managers to make a list of cost and expense reduction ideas that encompasses the entire company.
Until next time,
Greg Leiser, Pro Back Office Consulting CFO