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Secret System to Reduce Costs of What You Don't Know in Your Business - 4 of 7
By Gary W Patterson Platinum Quality Author

Article Word Count: 329 [View Summary] Comments (0)

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In this challenging economy where risk is a guaranteed certainty, companies can't afford not to have some kind of ERM strategy in place even if they're up against budgetary constraints, companies must periodically review their business model.

Wikipedia defines business model as used for a broad range of informal and formal descriptions to represent core aspects of a business, including purpose, offerings, strategies, infrastructure, organizational structures, trading practices, and operational processes and policies.

Create some process or method to revisit your business model regularly. One particularly crucial and often understood or maligned issue that incorrectly applied can cause havoc throughout your business model is the dreaded term revenue recognition problem. Understand the difference between sales, bookings, billings, cash collected, and revenue recognizable under accounting rules. Or you can just make a mistake where the taxing authorities let you pay taxes, but you do not get to recognize financial statement revenue. For those who never liked accounting, there are CPA and CFOs who can convert financial soup terms into understandable communications.

If you have not gotten to this yet, put it near the top of your financial model review schedule. To ensure that your business model stays on track, use a flash report or executive dashboard to track your top 5 to 7 business metrics. If you do not know your top 5 to 7 business metrics, how can management know what areas to focus on in the current economic turbulence?

So whether your base system to manage risk now is enterprise risk management, ERM, strategic planning, risk assessment, risk management assessment, entire enterprise risk management assessment, operational review, due diligence, scenario budgeting or another process, supplement it with one or more of the items listed above.

That will help unearth the "hidden risks" that could topple your company with these proven methods and best practices above to help your company maintain or restore long-term profitability and meet your long term business plan results and personal current year bonus targets.

Bottom line? - What is the cost of what you do not know in your business, when you are not reaching your financial numbers and employees are full of excuses?

And apply the free Fiscal Test available at http://fiscaldoctor.com/fiscaltest.html

From the author of the forthcoming book, 'Stick Out Your Balance Sheet & Cough: Best Practices for Long Term Business Health'. Available on Amazon. So open this book and say Profit.

From Gary W Patterson, http://www.FiscalDoctor.com Copyright 2009

Article Source: http://EzineArticles.com/?expert=Gary_W_Patterson

Gary W Patterson - EzineArticles Expert Author

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Article Submitted On: April 24, 2009


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