GENERAL MANAGEMENT
CHECK POINT 4: THE LEAN BUSINESS ENGINEERING METHOD

Please Select Any Topic In Check Point 3 Below And Click.

1. who is doing business in america?
2. statistics about small business failure in the U.S.
3. do you recognize yourself?
4. what is really the problem?
5. how can you succeed in your business?
6. introduction to the business engineering method
7. Basic Tasks Of The Business Engineering Method
8. Implementation Of The Business Engineering Method
9. The First Stage In The Business Engineering Process
10. The Second Stage In The Business Engineering Process
11. business analysis
12. operational management analysis
13. financial performance analysis
14. business plan
15. operational management plan
16. financial performance plan
17. business solutions
18. advantages of the business engineering method
19. what should you do next?
20. what do you need for a long-term success in business?
21. for serious business owners only
22. the latest information online
 

DO I NEED TO KNOW THIS CHECK POINT?

1. WHO IS DOING BUSINESS IN AMERICA?

STATISTICS ABOUT SMALL BUSINESS IN THE U.S.

You and your management team must become fully familiar with the business engineering method if you really want to improve your chances for a long-term success in business.


According to the U.S. Small Business Administration (SBA), there are about 27.9 million businesses in the United States and they include:

• About 21.7 small businesses* without employees or micro businesses .
• About 6.2 million small to medium-sized businesses with one to 500 paid employees.
• About 20,000 large businesses with over 500 paid employees.


The U.S. Bureau Of Labor Statistics provides the following information related to small business activities during 1994 – 2010 period:

About 500,000 to 650,000 new business startups per year.

About 2.5 million to 4.7 million new jobs per year created by new business startups.

You may find additional useful information about Small Businesses In The U.S. online.

*Note: SBA defines small business as any organization with less than 500 employees.

 

THE AMERICAN DREAM

Whether you plan to start a business or you are a business owner - you pursue the American Dream. You share this dream with millions of entrepreneurs who want nothing less, than to be independent! However, since “there is no free lunch”, independence usually doesn’t come cheap! There is definitely a price to pay! The question is:


Are you prepared to pay this price?


If you are prepared to pay this price, than you should begin your "business knowledge rejuvenation" process by carefully reading this important check point and implementing all relevant guidelines contained herein. Hopefully, you will realize that this can "make or break" your business in the future.

2. STATISTICS ABOUT SMALL BUSINESS FAILURE IN THE U.S.

DO YOU KNOW HOW MANY BUSINESSES FAIL IN THE U.S. EVERY YEAR?

Based on statistics provided by the U.S. Small Business Administration (SBA) and the U.S. Bureau Of Labor Statistics:

About 70% of all small business startups fail after 12 years in business.

According to Small Business Trends, five year survival rates for business startups clearly indicate that thousands of business owners experience serious problems and struggle to survive.

Moreover, according to the American Bankruptcy Institute:

About 43,000 businesses per year filed for bankruptcy during a 1994 - 2011 period.

MAIN REASONS FOR SMALL BUSINESS FAILURE


The main Reasons For Small Business Failure usually include:


Lack of business knowledge and management experience by business owners.
Insufficient working capital employed by the organization.
Poor organizational culture adopted by business owners.
Unprofessional management practices employed by business owners.
Absence of a cohesive management structure within the organization.
Poor communication between business owners and employees within the organization.
Low level of morale and motivation by employees within the organization.
Low level of employee productivity within the organization.
Health problems experienced by business owners.
Bad economy.

You may find additional reasons for business failure in articles written by Scott Shane in Small Business Trends and Jay Goltz in The New Your Times.


THE REAL COST OF BUSINESS FAILURE


The Emotional Cost Of Business Failure obviously can’t be measured in monetary terms, but it is certainly devastating to tens of thousands of small business owners and their families. Just ask any of them…

The Financial Cost Of Business Failure is extremely high. According to CNBC:

Top ten business bankruptcies alone involved $91.5 Billion in assets in 2011.


These numbers translate into an estimated $100 Billion Business Failure Cost Per Year or:


Business Failure Cost Per Day: $ 273,972,600/Day.

Business Failure Cost Per Hour: $11,415,525/Hour.

Business Failure Cost Per Minute: $190,259/Minute.

One of the prime reasons for this high cost of business failure is the following ironic fact:

The majority of people in business don't have business management education, while the majority of people with business management education are not in business!

Perhaps, it’s time to look into the serious problem of business failure and ask a 100 Billion Dollar Per Year Question:

 

What can we do to solve the small business failure problem and turn it into a challenging opportunity for the benefit of millions of aspiring entrepreneurs and small business owners?


However, the most important question really is:

 

Are you willing to accept this challenge to secure your long-term success in business?

3. DO YOU RECOGNIZE YOURSELF?

DO YOU THINK THIS MIGHT BE YOU?

Many Entrepreneurs and Small Business Owners share similar traits as outlined below.

See if you recognize yourself.

TYPICAL TRAITS OF ENTREPRENEURS AND SMALL BUSINESS OWNERS

No.

Details

1.

Many entrepreneurs who manage small or medium-sized business, often overestimate their abilities and are unaware of personal inefficiencies in the area of business management. Are you?

2.

Those entrepreneurs who are aware of their inefficiencies still prefer to solve their management problems by themselves either to avoid exposure and possible embarrassment as a result of any mismanagement in the past or to protect their "trading secrets". Are you?

3.

Most entrepreneurs who manage small and medium-sized companies are usually skeptical toward any advice about business management given by outsiders, such as management consultants, and they often cannot afford such service. Are you?

4.

Many entrepreneurs are usually not overly enthusiastic about business management education or literature and do not really know how to select suitable material. They do not have the time to shop around for needed information nor to absorb it. What about you?

5.

Many entrepreneurs consider their accountants as their most important business advisors. Unfortunately, however, most accountants have a very limited knowledge of operational business management. What about you?

6.

Many entrepreneurs are not able to delegate functional responsibilities to their employees, and sometimes become the biggest stumbling block within their own organization without even realizing it. What about you?

4. WHAT IS REALLY THE PROBLEM?

THE REAL ENTREPRENEURIAL WORLD

Some examples which describe the Real Entrepreneurial World are outlined below.

EXAMPLES OF THE REAL ENTREPRENEURIAL WORLD

No.

Details

1.

Hundreds of thousands of entrepreneurs start, plan, or dream to start a new business every year.

2.

All 27.9 million entrepreneurs and business owners in the U.S. will tell you: “I started a business because I wanted to be my own boss, make more money and be financially independent”. Not one of them will tell you: "Because I wanted to go bankrupt!"

3.

However, the reality is quite different! The statistics indicate that about 70% of all newly established businesses fail after 12 years in business. Unfortunately, 100% of these businesses did not use the Business 2100 Management Program.

4.

Each year many thousands of business people, who often "sign their lives away to the bank", file for bankruptcy and lose much more than just money in the process. Business failures create untold difficulties for thousands of families, who often sacrifice everything they have to start a business.

ASK YOURSELF TWO QUESTIONS

Ask yourself the following questions:


1. "What are my reasons for being in business?"
2. "Do I really know enough about business management to succeed in business in
     the long-term?"


If you are not sure about your Business Management Knowledge - you may be "skating on thin ice..." So you had better be prepared to invest in yourself, and don't be afraid to spend a reasonable amount of time and money in the process. It will pay dividends in the future.


Those hundreds of thousands of small business owners who were not prepared to invest time and money in their own education and, instead, chose to remain ignorant, paid a heavy price and ultimately went out of business.


You are urged, therefore, not to repeat the same mistake and you must be prepared to admit to yourself that there are several things that you can still learn about business management. Once you adopt this open-minded attitude, you will realize that learning is a never-ending process and you will become its prime beneficiary.


REMEMBER THREE IMPORTANT THINGS

If you really want to succeed in business, you should remember three important things outlined below.


1. The more you will learn today, the more you will realize how much you did not
     know yesterday…

2. Time will never come back, money you can always make, but knowledge will stay
    with you forever!

3. Your knowledge of various aspects of business management will become the
    cornerstone of your success in business.

5. HOW CAN YOU SUCCEED IN YOUR BUSINESS?

THE KEY TO YOUR SUCCESS IN BUSINESS

Successful performance of your small or medium-sized business will depend primarily upon your Knowledge and Experience in various areas of business management and your Ability to act as an entrepreneurial manager.

Effective small business management is based on an integrated and multi-disciplinary approach. For this reason you must learn how to "wear several hats at the same time", and apply various elements of business management in a systematic manner. You must, in fact, be able “to engineer" your business for success. In other words, if you want to succeed - you must become a "Business Engineer"!

However, this is still not enough! You will also need a business method which will enable you to act as a real business engineer. So, here it is! It is called:


THE BUSINESS ENGINEERING METHOD

Note:

Although this method is called Business Engineering”, it is not designed for engineers. It is designed specifically for entrepreneurs and small business owners of all trade and professional backgrounds, including engineering, who would like to learn how “to engineer” their business for a long-term success.

6. INTRODUCTION TO THE BUSINESS ENGINEERING METHOD

THE PRIME PURPOSE OF THE BUSINESS ENGINEERING METHOD

The prime purpose of the Business Engineering Method is to break the vicious cycle of ignorance, incompetence, mismanagement, and subsequent failure of small businesses and to enable small business owners to acquire essential management knowledge to enhance their chances for a long-term success in business.


The business engineering method is based on a simple and time-tested idea:


Whatever you do, learn about it first!


The business engineering method prescribes to business owners first to study and understand the basic principles of business management and then, simply, apply those principles in their business in a systematic manner, to ensure improved performance and results. This is similar to kids who first have to go to kindergarten to study their ABCs, and then go on through school and to the university to graduate in their chosen profession before they can actually start working.


UNIVERSAL MANAGEMENT TOOL


The business engineering method represents the core of the Business 2100 Management Program. This program, in turn, is designed to be used as a Universal Management Tool by anybody who is studying or practicing business management as follows:


Learning Tool for MBA students.
Management Tool for professional managers.
Be-Your-Own-Management-Consultant Tool for small and medium-sized business
   owners.
Professional Management Tool for management consultants and pro-active CPAs.


The business engineering method was developed by Joseph Shetzen over a 25-year period and all related materials edited by a team of business experts. This method was first described in "Maximum Performance: The Dow Jones-Irwin Complete Guide To Practical Business Management", published by Dow Jones-Irwin in 1990, currently the McGraw-Hill Companies, Inc.


The business engineering method represents a logical continuation of the Contingency Approach to business management as illustrated below. (10)


DEVELOPMENT OF THE BUSINESS MANAGEMENT SCIENCE

Scientific Management Principles (Taylor, Gilbreths, Gantt, and others).

Administrative Management Theory (Fayol, Mayo, McGregor, and others).

   

The Process
Approach

 

The Behavioral
Approach

 

The Systems
Approach

This approach views management as the continuous task of planning, organizing, leading, and controlling a group of employees (Fayol).   This approach focuses on understanding human behavior and evaluating factors which influence workers' performance and productivity (Follet, Mayo, McGregor, and others).   This approach suggests that an organization is a set of interrelated parts such as people, materials, and equipment, arranged in one structure that pursues diverse objectives in a changing environment.
   

The Contingency Approach

This approach provides a methodology for determining the most suitable solution to any organizational problem and includes a company's situational analysis, identification of the problem, statement of performance standards, generation and evaluation of alternative solutions, selection and implementation of proposed solutions, and evaluation of final results.

The Business Engineering Method

This method represents a logical continuation of the contingency approach. It goes one step further by creating a practical Small Business Knowledge Base and providing small and medium-sized business owners, professional managers, management consultants, pro-active CPAs and MBA students with a Universal Management Tool. This tool is designed to enable business people to evaluate their potential for business success, to evaluate their personal level of business management knowledge, to complete their cross-functional management training, to evaluate their company’s performance, to develop a comprehensive plan of action, and to implement cost-effective management solutions in all major operational areas of business activities.

7. BASIC TASKS OF THE BUSINESS ENGINEERING METHOD

THE BUSINESS ENGINERING METHOD IS VERY USER-FRIENDLY

The Business Engineering Method is designed in a very user-friendly manner. Once you start using this method, you will be pleasantly surprised, how simple it is.


The business engineering method will enable you and each member of your management team, if you have one, to accomplish eight important tasks outlined below.


EIGHT BASIC TASKS OF THE BUSINESS ENGINEERING METHOD

No.

Details

1.

Evaluate Your Personal Potential For Business Success.
Evaluate your personal preferences which may affect your chances for success in business.

2.

Evaluate Your Personal Business Management Knowledge.
Evaluate your personal strengths and weaknesses in various areas of business management relevant to you and your business.

3.

Develop A Plan Of Action To Improve Your Personal Business Management Knowledge.
Develop a plan of action to improve your personal knowledge in various areas of business management relevant to you and your business.

4.

Improve Your Personal Business Management Knowledge.
Study operational management guidelines in various areas of business management relevant to you and your business.

5.

Complete Your Company’s Business Analysis.
Complete detailed management and financial analysis of your company’s performance covering all relevant areas of operational activities.

6.

Develop Your Company’s Business Plan.
Develop a comprehensive plan of action for your company in all relevant areas of operational activities.

7.

Implement Your Company’s Business Solutions.
Implement cost-effective management solutions within your company in all relevant areas of operational areas activities.

8.

Repeat The Above Process Annually.
Repeat all steps in the above process on an annual basis to ensure your company’s continued success in the future.

 

8. IMPLEMENTATION OF THE BUSINESS ENGINERING METHOD

THE BUSINESS ENGINEERING PROCESS

The business engineering method, which is at the core of the Business 2100 Management Program, must be implemented in accordance with your Management Level and your specific business needs. The process of implementing the business engineering method is called:


THE BUSINESS ENGINEERING PROCESS


The business engineering process entails two stages as described below.


TWO STAGES IN THE BUSINESS ENGINEERING PROCESS

Stage 1: Accomplish Your Personal Objectives In Business.

Stage 2: Accomplish Your Business Objectives.

Each stage of the business engineering process entails a number of steps, depending upon your specific management level and it is discussed in detail next.


THE BUSINESS ENGINERING PROCESS
IS BASED ON YOUR MANAGEMENT LEVEL

Level 1: I Am An MBA Student.

Level 2: I Am A Professional Manager In A Company.

Level 3: I Plan To Start A One-Person Business.

Level 4: We Plan To Start A Small Business Without Employees.

Level 5: I/We Plan To Start A Small Business With Employees.

Level 6: I Am A One-Person Business Owner.

Level 7: I Am A Small Business Owner With Employees.

Level 8: We Are Small Business Owners Without Employees.

Level 9: We Are Small Business Owners With Employees.

Level 10: I Am A Management Consultant Or A CPA.

Note: SBA defines small business as any organization with less than 500 employees

9. THE FIRST STAGE IN THE BUSINESS ENGINEERING PROCESS

ACCOMPLISH YOUR PERSONAL OBJECTIVES IN BUSINESS

The first stage in the Business Engineering Process entails evaluation of your personal potential for business success and your personal business management knowledge, development of a plan of action to improve your business management knowledge, and implementation of your plan in all areas relevant to your personal business activities.


FOUR STEPS IN ACHIEVING YOUR PERSONAL OBJECTIVES IN BUSINESS

1. Evaluate Your Personal Potential For Business Success.

2. Evaluate Your Personal Business Management Knowledge.

3. Develop A Plan Of Action To Improve Your Personal Business Management      Knowledge.

4. Improve Your Personal Business Management Knowledge On A Continuous Basis.
 

FIVE TUTORIALS IN THE BUSINESS 2100 MANAGEMENT PROGRAM

The Business 2100 Management Program provides the knowledge-based foundation for the business engineering method and contains Five Tutorials covering five major operational management areas. Each tutorial, in turn, contains 20 Check Points described below.


EACH OF THE FIVE TUTORIALS CONTAINS 20 CHECK POINTS

TUTORIAL 1
General
Management

TUTORIAL 2
Human
Resources
Management

TUTORIAL 3
Financial
Management

TUTORIAL 4 
Operations
Management

TUTORIAL 5
Marketing
And Sales
Management

20
Check Points

(1-20)

20
Check Points

(21-40)

20
Check Points

(41-60)

20
Check Points

(61-80)

20
Check Points

(81-100)

Each check point includes a broad range of topics related to the specific tutorial. Thus, the entire Business 2100 Management Program contains:


5 Tutorials x 20 Check Points = 100 Check Points.


You are advised to study all 100 check points in the Business 2100 Management Program to enhance your business management knowledge and professional competency.


STEP 1: EVALUATE YOUR PERSONAL POTENTIAL FOR BUSINESS SUCCESS

As a small business owner, you personify your company and everything that it represents. It is critical, therefore, that you evaluate your personal preferences to identify your chances for success in business. This will help you ensure that you are on the right track. For this reason, it you must complete the Entrepreneurship Test online and identify your personal potential for business success. Upon completion you may need to make adjustments in your current set of preferences, if necessary, to maximize your long-term chances for successful business performance.


STEP 2: EVALUATE YOUR PERSONAL BUSINESS MANAGEMENT KNOWLEDGE

You and each member of your management team must independently complete the Personal Evaluation Worksheet - please study the example online based on your management level. Each check point in this worksheet is linked to the Business 2100 Management Program online and supported by detailed information. You must only decide which check point is relevant to you and your business and ask yourself two simple questions:

1.

Is this check point relevant to my company's operational activities?
If your answer is "Yes" – ask the second question, if your answer is "No" - mark as N/A (not applicable) and proceed to the next check point.

2.

How would I rate my business management knowledge related to this check point?
Click on the check point in the Personal Evaluation Worksheet and use the information provided in this program online as a point of reference for your evaluation?


STEP 3: DEVELOP A PLAN OF ACTION
TO IMPROVE YOUR PERSONAL BUSINESS MANAGEMENT KNOWLEDGE

Upon self-evaluation of your personal business management knowledge, you must complete the Personal Evaluation Worksheet and select a Plan Of Action for each relevant check point. You must ask only one question at this stage:


Do I need to improve my business management knowledge related to this check point in order to meet my business objectives?


If your answer is “Yes” – select Plan A, if your answer is “No” – select Plan B as follows:


• Plan A – Improve my business management knowledge related to this check point.

• Plan B – Keep my business management knowledge related to this check point as is.


STEP 4: IMPROVE YOUR PERSONAL BUSINESS MANAGEMENT KNOWLEDGE

Upon completion of your plan of action to improve your business management knowledge, you must make a total commitment to the knowledge improvement process on a continuous basis. This process, known in Japan as Kaizen, will undoubtedly make the most important positive difference in your business and in your life.


So, all you really need to do is to diligently follow the Plan A summarized in your Personal Evaluation Worksheet.


CROSS-FUNCTIONAL MANAGEMENT SELF-TRAINING

The concept of cross-functional training of managers in various areas of operational business management was initially introduced in Kaizen-driven companies. However, the business engineering method takes this approach one step further and, in addition, prescribes cross-functional management self-training of small and medium-sized businesses owners, professional managers, management consultants, pro-active CPAs and MBA students.


So, if you really want to succeed in your business in a long run – you must be prepared to learn whatever you need to do before you actually do it. This is very similar to these wise proverbs:


• “Aim before you shoot”.

• “Measure seven times before you cut once”.


So from now on your motto in business and in life should be:


Whatever I do, I will learn about it first!

10. THE SECOND STAGE IN THE BUSINES ENGINEERING PROCESS

ACCOMPLISH YOUR BUSINESS OBJECTIVES

The second stage in the Business Engineering Process will apply to you only if you have a business. This stage entails completion of your company’s Business Analysis, development of your company’s Business Plan and implementation of your company’s Business Solutions in all areas relevant to your company’s operational activities.


THREE STEPS IN ACHIEVING YOUR BUSINESS OBJECTIVES

1. Complete Your Company’s Business Analysis.
The main purpose of business analysis is to find out where your company is at present and where it is coming from in terms of its operational performance and financial results.

2. Develop Your Company’s Business Plan.

The main purpose of the business plan is to develop a comprehensive plan of action for your company in all relevant operational areas and to prepare operational budget and cash flow projection for the current fiscal year*.

3. Implement Your Company’s Business Solutions.

The main purpose of business solutions is to implement your operational plan of action in order to achieve your company's objectives in all relevant operational areas in the most cost effective and professional manner.

* Note:


If the timing of this task falls toward the end of your company’s current fiscal year, then you should, instead, prepare the operational budget and cash flow projection for the next fiscal year.


SECOND STAGE OF THE BUSINESS ENGINEERING PROCESS:
1. BUSINESS ANALYSIS 2. BUSINESS PLAN 3. BUSINESS SOLUTIONS

PART 1: BUSINESS ANALYSIS

1.1
Operational Management Analysis
1.2
Financial Performance Analysis

PART 2: BUSINESS PLAN

2.1
Operational Management Plan
2.2
Financial Performance Plan

PART 3: BUSINESS SOLUTIONS

3.1
General
Management
Solutions

3.2
Human 
Resources Management
Solutions

3.3
Financial
Management
Solutions

3.4
Operations
Management
Solutions

3.5
Marketing
And Sales
Management
Solution

Repeat The Above Process On An Annual Basis.

Note:


You and your financial management team should use your existing accounting package, such as QuickBooks®, to complete the financial performance analysis, to prepare financial performance plans, and to implement financial solutions for your company. Alternatively, you may request your accountant or CPA for additional assistance.


11. BUSINESS ANALYSIS

PART 1: BUSINESS ANALYSIS

Business Analysis is designed to enable you and your management team in completing your company's operational management analysis and financial performance analysis.

TWO ELEMENTS OF BUSINESS ANALYSIS

1.1
Operational Management
 Analysis

1.2
Financial Performance
 Analysis

The operational management analysis entails completing a detailed evaluation of your company's current activities in all relevant operational areas and identifying strengths and weaknesses in each area.

The financial performance analysis entails completing a detailed evaluation of your company's current financial performance and comparative financial results during the last three fiscal years, provided that financial statements are available.

12. OPERATIONAL MANAGEMENT ANALYSIS

1.1: OPERATIONAL MANAGEMENT ANALYSIS

Operational Management Analysis is designed to enable you and each member of your management team to complete a detailed evaluation of your company's current activities in all relevant operational areas and identifying strengths and weaknesses in each area. Some of the main questions in operational management analysis are:


• Are we engaged in all the necessary operational activities to ensure our company’s    success?

• What are our company’s strengths and weaknesses in various operational areas at    present?


FIVE ELEMENTS OF OPERATIONAL MANAGEMENT ANALYSIS

1.1.1
General
Management
Analysis

1.1.2
Human
Resources
Management
Analysis

1.1.3
Financial
Management
Analysis

1.1.4
Operations
Management
Analysis

1.1.5
Marketing
And Sales
Management
Analysis


HOW DOES YOUR COMPANY'S OPERATIONAL MANAGEMENT ANALYSIS WORK?

You and each member of your management team must independently complete the Company Evaluation Worksheet - please study the example online based on your management level. Each check point in this worksheet is linked to the Business 2100 Management Program online and supported by detailed information. You and each team member must only decide which check point is relevant to your company's operational activities during the current fiscal year and ask two simple questions:

1.

Is this check point relevant to my company’s operational activities?
If your answer is “Yes” – ask the second question, if your answer is “No” – mark as N/A (not applicable) and proceed to the next check point.

2.

How would I rate my company’s operational performance related to this check point?
Click on the check point in the Company Evaluation Worksheet and use the information provided in this program online as a point of reference for your evaluation?


THE BUSINESS 2100 MANAGEMENT PROGRAM

TUTORIAL 1
General
Management

TUTORIAL 2
Human
Resources
Management

TUTORIAL 3
Financial
Management

TUTORIAL 4 
Operations
Management

TUTORIAL 5
Marketing
And Sales
Management

Information About
Check Points
1-20

Information About
Check Points
21-40

Information About

Check Points
41-60

Information About

Check Points
61-80

Information About

Check Points
81-100


WHO SHOULD COMPLETE YOUR COMPANY'S OPERATIONAL MANAGEMENT ANALYSIS?

You and each member of your management team must use the Company Evaluation Worksheet to independently select each relevant check point and evaluate your company’s operational performance related to that check point.

Upon completion, you must conduct a Management Meeting and use the Final Company Evaluation Worksheet to determine the final evaluation level for each relevant check point by mutual consent among all members of your management team.

The Final Company Evaluation Worksheet will enable you and your management team to identify your company's strengths and weaknesses in various operational areas and prepare you for the next stage in the business engineering method - development of your company's business plan.


13. FINANCIAL PERFORMANCE ANALYSIS

1.2: FINANCIAL PERFORMANCE ANALYSIS

Financial Performance Analysis is designed to enable you and your management team to complete a detailed financial performance evaluation of your company activities. You and your financial management team must use your company’s Financial Statements to complete the financial performance analysis. Some of the main questions in financial performance analysis are:


How is our company doing in terms of its financial performance and results at
    present?
• What were our company’s financial results during the last three years?

• What are the financial performance trends developed by our company in the last
   three years?


THREE ELEMENTS OF FINANCIAL PEPRFORMANCE ANALYSIS

   

1.2.1
Current
Financial Analysis

 

1.2.2
Comparative
Financial Analysis

 

1.2.3
Financial
Ratio Analysis (Optional)

  • • Current balance sheet
  • • Current income statement
  • • Current statement of cash   flows
 
  • • Comparative balance sheet
  • • Comparative income   statement
  • • Comparative statement of   cash flows
 

Evaluation of up to 20 financial ratios related to the company's:

  • • Solvency
  • • Profitability
  • • Liquidity
  • • Ability to manage assets


 

Financial Performance Analysis is discussed in detail in Tutorial 3.

1.2.1: CURRENT FINANCIAL ANALYSIS

Current Financial Analysis entails evaluation of your company's current or most recent financial statements, namely:


Balance Sheet.

Income Statement.

Cash Flow Statement.


The information contained in these statements will enable you and your management team to identify:

Your Company’s Solvency.

   Solvency is determined by evaluating your company’s latest balance sheet.

Your Company’s Profitability.

   Profitability is determined by evaluating your company’s latest income statement.

Your Company’s Liquidity.

    Liquidity is determined by evaluating your company’s latest cash flow statement.

 

Current Financial Analysis is discussed in detail in Tutorial 3.


1.2.2: COMPARATIVE FINANCIAL ANALYSIS

Comparative Financial Analysis entails evaluation of your company's financial statements for the preceding three fiscal periods, namely:


Comparative Balance Sheet.

Comparative Income Statement.

Comparative Statement Of Cash Flows.  

 

The information contained in these statements will enable you and your management team to identify Financial Trends developed by your company over the last three fiscal periods:

• Solvency Trend.

   This trend will be determined by evaluating your company’s balance sheets.

Profitability Trend.

   This trend will be determined by evaluating your company’s income statements.

Liquidity Trend.
    
This trend will be determined by evaluating your company’s statements of cash flows.

 

Comparative Financial Analysis is discussed in detail in Tutorial 3.


1.2.3: FINANCIAL RATIO ANALYSIS (OPTIONAL)

Financial Ratio Analysis is optional and it entails calculation of up to 20 Financial Ratios, designed to describe your company's financial performance. These ratios include:

Company Solvency Ratios.

Company Profitability Ratios.

Company Liquidity Ratios.

Company Ability To Manage Assets Ratios.

 

Financial Ratios are discussed in detail in Tutorial 3.


USE QUICKBOOKS AND WORK WITH YOUR ACCOUNTANT

You and your financial management team should use your existing accounting package, such as QuickBooks®, to complete the financial analysis for your company. Alternatively, you may request your accountant or CPA for additional assistance.

14. BUSINESS PLAN

PART 2: BUSINESS PLAN

Business Plan is designed to enable you and your management team in formulating a sound operational management plan based on the previously concluded business analysis and developing an effective financial performance plan in accordance with your company’s overall business objectives.


TWO MAIN ELEMENTS OF A BUSINESS PLAN

2.1
Operational Management Plan

2.2
Financial Performance Plan

The operational management plan entails completing a detailed plan of action related to your company's operational activities. This also entails assigning responsibility for plan implementation to each member of your management team in accordance with your company’s specific objectives.

The financial performance plan entails completing operating and financial budgets for the remaining portion of the current fiscal year* in accordance with your company’s specific needs.


* Note: If the timing of this task falls toward the end of your company’s current fiscal year, then you should prepare operating and financial budgets for the next fiscal year.

15. OPERATIONAL MANAGEMENT PLAN

2.1: OPERATIONAL MANAGEMENT PLAN

The Operational Management Plan is designed to enable you and your management team to complete a detailed plan of action related to your company's operational activities and to assign responsibility to each team member for implementing specific elements of this plan to meet your company’s objectives during the current fiscal year. Some of the main questions in operational management planning are:


What operational activities do we need to engage in to secure our company’
    success?
• Who should be responsible for improving our company’s specific operational    activities?


FIVE ELEMENTS OF OPERATIONAL MANAGEMENT PLAN

2.1.1
General Management
 Plan

2.1.2
Human 
Resources Management
 Plan

2.1.3
Financial Management
Plan

2.1.4
Operations Management
 Plan

2.1.5
Marketing
 And Sales
 Management
 Plan

Plan A For
Check Points
1-20

Plan A For
Check Points
21-40

Plan A For
Check Points
41-60

Plan A For
Check Points
61-80

Plan A For
Check Points
81-100

         

HOW DOES THE OPERATIONAL MANAGEMENT PLAN WORK?

You and each member of your management team must independently complete the final task in the Company Evaluation Worksheet and select a Plan Of Action for each relevant check point. You and each team member must ask only one question at this stage:

Do we need to improve our company’s operational performance related to this check point in order to meet our business objectives?

 

Click on each check point in your Company Evaluation Worksheet and use the information provided in the Business 2100 Management Program online as a point of reference for your answer.


If your answer is “Yes” – select Plan A, if your answer is “No” – select Plan B as follows:

 

• Plan A – Improve the operational performance related to this check point.

• Plan B – Keep the operational performance related to this check point as is.

 

Next, you must conduct a Management Meeting, complete the Final Company Evaluation Worksheet by mutual consent, and assign responsibility for Plan A Implementation regarding each relevant check point to a specific member of your management team. By doing so you will, in fact, begin the introduction of the Management By Objectives (MBO) Process within your organization.

 

Finally, you and each member of your management team must independently complete the Company Plan Of Action Worksheet, specify all necessary Plan A tasks related to each assigned check point, and establish the required task completion date. The information provided in the Business 2100 Management Program online regarding each check point will help you and your management team members to complete each task.


BENEFITS OF OPERATIONAL MANAGEMENT PLAN

1.

Comprehensive Operational Road Map For Your Company.
This plan will provide you and your management team with a comprehensive road map for ensuring your company’s successful performance.

2.

Effective Assignment Of Managerial Responsibility Within Your Company.
This plan will enable you to assign managerial responsibility to each member of your management team by mutual consent.

3.

Introduction Of The Management By Objectives Process Within Your Company.
This plan will enable you to introduce the management by objectives (MBO) process within your company to ensure maximum commitment and accountability by each manager.

4.

Increased Employee Motivation Level Within Your Company.
This plan will increase motivation among all members of your management team and promote a feeling of “functional ownership” and increased accountability for meeting your company’s objectives.

16. FINANCIAL PERFORMANCE PLAN

2.2: FINANCIAL PERFORMANCE PLAN

The Financial Performance Plan is designed to enable you and your financial management team to complete a comprehensive financial plan of your company activities for the current fiscal year*. This plan entails preparation of a Master Budget which includes Operating Budget and Financial Budget.  

Various budgets and Budgeting Process Questions are discussed in detail in Tutorial 3.


TWO ELEMENTS OF THE FINANCIAL PERFORMANCE PLAN

2.2.1
Operating
Budget

2.2.2
Financial
Budget

 

* Note:


If the timing of these tasks falls toward the end of your company’s current fiscal year, then you and your financial management team should prepare operating and financial budgets for the next fiscal year.


USE QUICKBOOKS AND WORK WITH YOUR ACCOUNTANT

You and your financial management team should use your existing accounting package, such as QuickBooks®, to prepare operating and financial budgets for your company. Alternatively, you may request your accountant or CPA to assist you in completing these tasks.


Upon completion of your company’s business plan, you and your management team will be ready for the final stage in the business engineering method – cost-effective implementation of your business plan within your organization.


17. BUSINESS SOLUTIONS

PART 3: BUSINESS SOLUTIONS

Your ultimate objective is to ensure cost-effective implementation of your company’s business plan by each member of your management team. This should lead to the introduction of prudent Business Solutions in all relevant areas of your company's operational activities. The main objective of this process is to improve your company’s overall performance, to reduce operational costs, to increase profitability and to maximize the return on shareholders’ investment.


Various operational management solutions are discussed in detail in five tutorials as outlined below.


FIVE ELEMENTS OF BUSINESS SOLUTIONS

3.1
General
Management
Solutions

3.2
Human
Resources
Management
Solutions

3.3
Financial
Management
Solutions

3.4
Operations
Management
Solutions

3.5
Marketing
And Sales
Management
Solutions

Solutions For
Check Points
1-20

Solutions For
Check Points
21-40

Solutions For
Check Points
41-60

Solutions For
Check Points
61-80

Solutions For
Check Points
81-100

         

HOW SHOULD YOU IMPLEMENT YOUR BUSINESS SOLUTIONS?

You will need to schedule a Management Meeting with all members of your management team and proceed with the implementation of your company's operational and financial business plans in accordance with the prevailing MBO Guidelines.

Your company's operational business plan, or Plan A, should be clearly summarized in the Final Company Evaluation Worksheet and each task should be identified and listed in the Company Plan Of Action Worksheet, prepared by each member of your management team. This should be done in accordance with simple instructions contained in each worksheet.

 

Each member of your management team should be encouraged to use operational guidelines, contained in the Business 2100 Management Program online, related to the implementation of specific tasks. The ultimate efficiency of the Plan A Implementation will depend upon the specific skills and knowledge acquired by each member of your management team throughout this entire process.


You should also plan to conduct future meetings with your management team on a regular basis to ensure effective implementation of all operational solutions and steady Management Control within your company. This must include a frequent Progress Review related to the implementation of various tasks by each member of your management team to ensure a continuous progress toward meeting your company's objectives. Upon successful completion of each task, the task completion date must be entered in the Company Plan Of Action Worksheet.


18. ADVANTAGES OF THE BUSINESS ENGINEERING METHOD

ADVANTAGES OF THE BUSINESS ENGINEERING METHOD

The Business Engineering Method offers several important advantages to business owners outlined below. (9)

WHAT CAN THE BUSINESS ENGINEERING METHOD DO FOR YOU?

No.

Details

1.

Improved Management Knowledge.
The study of the Business 2100 Management Program will help you and each member of your management team to improve personal knowledge related to various operational areas of your company’s activities.

2.

Better Understanding Of Business Activities Within Your Company.
Upon completing the study of the Business 2100 Management Program, you and each member of your management team will have a better understanding regarding various operational activities and how they integrate within your company.

3.

Improved Process Of Selecting The Most Qualified Managers.
Once you become more knowledgeable in various areas of business operations, you will be in a stronger position to identify and select the most qualified managers to fill key positions within your company.

4.

Improved Level Of Management Control Within Your Company.
Once you become more knowledgeable about functional responsibilities of each manager, and each manager will become aware of it, you will be able to exercise more effective management control within your company.

5.

Improved Communication, Morale, And Motivation Within Your Company.
Once you and your management team members “speak the same operational language”, this will lead to improved communication, morale, and motivation among managers and other employees within your company.

6.

Improved Efficiency And Productivity Of Employees Within Your Company.
Once you apply your newly acquired knowledge in various areas of business management, create a cohesive management team, and implement sound management guidelines, this will lead to improved efficiency and productivity within your company.

7.

Detailed Business Analysis Of Your Company’s Performance.
The Business 2100 Management Program will enable you and your management team to complete a detailed business analysis of your company’s operational and financial performance.

8.

Comprehensive Business Plan For Your Company’s Operations.
The Business 2100 Management Program will enable you and your management team to complete a comprehensive plan of action covering all areas of operational activities within your company.

9.

Cost-Effective Business Solutions For Your Company’s Operations.
The Business 2100 Management Program will enable you and your management team to introduce cost-effective business solutions covering all areas of operational activities within your company.

10.

Improved Profitability Of Your Company And Higher Return On Investment.
Once you and your management team implement all of the necessary steps prescribed by Business 2100 Management Program, this should lead to your company’s improved profitability and a higher return on your shareholders’ equity.

19. WHAT SHOULD YOU DO NEXT?

THE BUSINESS ENGINEERING PROCESS CYCLE

Once you complete the implementation of cost-effective management solutions within your company, you should never “rest on your laurels”. You must ensure that your company stays on the road to success and adheres to the Business Engineering Process Cycle. To accomplish this, you and all members of your management team must “always keep your eyes on the ball” and repeat the business engineering process cycle on an annual basis.


REPEAT THE BUSINESS ENGINEERING PROCESS CYCLE ON AN ANNUAL BASIS
Step 1: Evaluate Your Personal Business Management Knowledge.

Ensure that each member of your management team remains committed to improve personal business management knowledge on a continuous basis. This will determine the ultimate level of your business success in a competitive market environment.

Step 2: Conduct Your Company’s Business Analysis.
Conduct your company’s business analysis on a regular basis to ensure that new problems are identified well in advance. This is the only way to prevent surprises in the future. Once a specific problem is identified, you and management team must act immediately to rectify this problem, and turn it into an opportunity to improve performance and results.
Step 3: Develop Your Company’s Business Plan.
Develop your company’s business plan and make full commitment to its implementation. Identify the progress toward meeting objectives in various operational areas and make necessary adjustments whenever necessary to ensure continued successful performance.
Step 4: Implement Your Company’s Business Solutions.
Implement most appropriate cost-effective business solutions in accordance with your company’s business plan on a continuous basis throughout the fiscal year. This will provide your company with best chances for steady growth and success in the future.
Step 5: Repeat The Business Engineering Process Cycle On An Annual Basis.
Begin the next business engineering process cycle two months prior to your fiscal year end to ensure a continuous improvement of individual results by each member of your management team and your company’s operational performance and results.

Note:

As a Business Management Club Member, you will be able to Subscribe to the Business 2100 Management Program online at a 50% discount and have access to a wide range of worksheets related to various operational management activities.

20. WHAT DO YOU NEED FOR A LONG-TERM SUCCESS IN BUSINESS?

DEFINITION OF INSANITY

Can you imagine sending your children to university after kindergarten and expecting them to succeed, or building a five-story structure without foundation and expecting it to remain intact? The answer to both questions is obviously “No”.

However, this is exactly what happens to the majority of entrepreneurs and small business owners, who often start a business with very limited knowledge and experience in business management. As you know:

About 70% of all business startups fail after 12 years in business at a staggering loss of approximately $100 Billion per year.

You should remember that the definition of “Insanity” is doing the same thing over and over again and expecting different results...


THERE ARE NO SHORT-CUTS FOR A LONG-TERM SUCCESS IN BUSINESS


The definition of insanity also applies to running a business. It means that if you are a small business owner, or you plan to start a business without proper business knowledge, you risk of becoming a part of the next 70% of failed businesses. For this reason, there is only one conclusion:

There are no short-cuts for a long-term success in business. It may be relatively easy to start a new business, but to keep it open – it’s a totally different story. Therefore, if you really want to succeed in your business, you must have solid knowledge of business management.


That’s what the Business 2100 Management Program and the business engineering method at its core are all about. This method does not provide a 100% guarantee for your success in business. However, it is designed to enhance your chances for a long-term success in your business. The rest is really up to you!


21. FOR SERIOUS BUSINESS OWNERS ONLY

ARE YOU SERIOUS ABOUT YOUR BUSINESS TODAY?

Reprinted with permission.

22. THE LATEST INFORMATION ONLINE

WOULD YOU LIKE TO LEARN MORE?

Would you really like to learn how to improve your personal business management knowledge and maximize your business performance?

If you do, learn about Benefits offered to Business Management Club members, join the Business Management Club, and never feel lonely at the top again.

When you are ready, complete the Membership Form or Student Membership Form, qualify for your free one-year membership, and receive a 50% member discount for the Business 2100 Management Program Subscription online.

 

LESSON FOR TODAY:
Your Business Is An Orchestra And You, As The Conductor, Must Know
What And When Your Musicians Must Play To Create A Symphony!