Let's imagine that doing business is rowing, where rowers sit with their backs on a boat. They work hard with oars to the right and left, but if there is no single guide, the boat will go off course. Similarly, the company needs to plan and monitor the implementation of plans. The purpose of the existence of the business is not only to arrive in a single period, read more about monitoring the achievement of goals in our study on how to use KPIs. A prerequisite is the comparison of intermediate results, which will direct the company's activities to the set goals. Finoko project article published in the economic journal "Investment Valuation"
The main task of the financial evaluation of plans is to establish the necessary amount of financial and other resources that are required to implement the business project on time and fulfill all obligations.
In order for an entrepreneurial project to be successfully implemented, it is necessary to build the right concept of control, which will help to plan its implementation and monitor its implementation. It is imperative to draw up a schedule of executive discipline, which includes a sequence of stages of the project.
To ensure that the staff does not stray from the right path, checkpoints should be identified. Throughout the time, it is necessary to monitor, control each step and record all this in the relevant documents so that subsequent actions can be adjusted in the future. "Usually, it is after the first inspection that employees really start working in the right direction, and not at the moment when they are assigned the task," says Alexander Sandulsky, Finoko's project manager.
The main purpose of business project control is feedback from the executors so that the management can make the right decisions in a timely manner to adjust it. The control system includes monitoring the implementation of the project and analyzing the effectiveness of activities. The system of obtaining indicators should not be complicated, so that you can instantly find weaknesses and choose the right ways to strengthen them.
The work of a business project may be affected by external factors, which include the economic situation in the country, changes in consumer demand, the introduction of innovative technologies in production, and an increase in the number of competitors in the market. Also, an unstable situation may develop within the company, for example, a change in the management team. Timely adjustment of the project is more likely to bring the company stable development and increased profitability. The system of planning and obtaining actual results should allow the company to rebuild plans and the system for collecting the results of business processes quickly enough.
Current activities and project activities
A business project is a set of documents that indicate the desired goals for achieving, define tasks, fully describe and justify all stages and indicate possible ways to implement them during the implementation of the project, as well as thoughtfully and scheduled the attraction of investments. That is, it is necessary to prove the profitability of the project and the profitability of investing money in it.
Objectives of the business project:
- prove the demand for products or services that the company will provide during the implementation of the project;
- determine the boundaries of the market for the product or service provided;
show the quantitative results of the project, its profitability in order to attract investors.
Classification of business projects:
- subdivision by type, that is, projects are distributed by main areas of activity: social, technical, economic, etc.
- division by classes: monoprojects, multi-projects, megaprojects;
- a large-scale unit that depends on the number of people involved;
- long-term unit: long-term, medium-term and short-term;
- complexity unit, where the main factors are financial investments and technical equipment;
- division by type, that is, by subject areas of activity that play a major role in the project.
- When launching any business project, you can not do without planning. At the moment when ideas about the future project are just emerging, there is a search for the directions of the company's activities, during which it is necessary to build a clear action plan and document it. This is what will help the entrepreneur determine a clear goal of his business. Redevelopment is also necessary for an existing business project - it will allow predicting further development in this industry, controlling the internal processes of production, supply, sales and their management. By properly planning the attraction of funds from investors and partners, you can get a stable profit from the production or sale of products or the provision of services.
One of the stages of planning the company's activities is budgeting, which means the scheduling of all income and expenses of the company, which are expressed in quantitative indicators. The main task of budgeting is to plan and control the movement of the company's funds. Based on the budget, the need for resources that are necessary to obtain the planned profit is determined.
A single model or a ready-made budgeting template has not yet been developed. There are what we call "best practices." Each business project includes an individual budget building option because it reflects the business structure, which is unique in each project.
There are certain approaches to the process of developing a set of actions and allocating budgets, which entrepreneurs often apply in practice. One of the most common are budgets, which are built on the principle of "top-down" and "bottom-up".
Bottom-up budgeting is the sequential transfer of information from performers to line managers, then to company managers. The disadvantage of this method is the large time spent on agreeing on the final result. This approach allows you to take into account the opinion of employees who directly perform the work, can well assess the reality of the current situation on the market. Management cannot see the initial version of the budget, since during the phased transfer the indicators undergo changes, which means that the initial information is reformed. When planning from the bottom up at each level, there is a tendency to "underestimate" sales indicators and form reserves in costs.
Top-down budgeting is a completely reversed sequence. Management suggests targets to be met, and managers and employees work to find ways to meet their goals. At the same time, not only the existing assets of the company are considered, but also the possibility of their acquisition. But it also has its drawbacks. Often, the set goals cannot be achieved in a given period of time or using available resources.
Many companies practice mixed types of budgeting to take into account all the positive and negative aspects.
Goal setting and organizational planning
The main function of management is to ensure the fulfillment of the set goals. Managers are obliged to determine the further development of the company. In the planning process, the main goals of the business project and ways to achieve them are identified. All planning indicators should be expressed in qualitative and quantitative equivalents.
Each company chooses its own style and method of planning. For small companies, it can be informal. But for a large-scale business, planning is an important part of all activities, for its compilation and subsequent implementation, all employees who systematize this process are involved.
You can classify a business plan according to various criteria - it all depends on the goals and objectives. You can highlight the current, that is, short-term planning. If it is necessary to find new opportunities or expand the range of goods or services with new products, then this will be strategic planning. If we assess the degree of coverage, then the planning is general or partial. The most common planning is financial, during which you can plan not only profit, but also profitability, employee salaries, working capital. You can also plan the number of personnel in the enterprise, that is, either an increase in staff or its reduction.
How to correctly determine the qualitative and quantitative results of a business project?
The implementation of any project implies the resolution of exact qualitative and quantitative goals, as well as the creation of a system for monitoring implementation. Any investor will be interested in a business project if he sees a real benefit in it.
Some businessmen believe that a business project is just a formality that is necessary for investment or subsidization. Therefore, it is not necessary to control expenses and incomes. But it's not. For a business to be successful, it is necessary to keep under control the entire chain of creation of additional value in the company. A well-established system should allow us to get an answer to the question of where and what did not go according to plan, if we did not get the final results of the desired level.
Do not focus only on the internal indicators of the project. If the entrepreneur has decided on the niche in which he is going to implement his project, then he can analyze the entire market, consumer demand, take the average figures for the region and, on their basis, calculate the necessary potential results of his activities. The comparative result of the project with the market averages is sometimes more important than the absolute values because it shows how much the project management team managed to realize the potential.
Another important figure in the project is the implementation period. Boundaries must be clearly set. If it is a short-term project, then both budgeting and the financial model will differ from the long-term project.
You can find real figures for calculating the results on the Internet, but it is not a fact that they will be optimal for your business project, then you should analyze the activities of competitors. By comparing all the indicators found, you can find average figures that will be the starting point for your project.
Levels of detail of reporting in a business project
Any project includes reporting. The reporting structure of performance should be identical to planning. With the seeming obviousness of this statement, most projects do not cope with this task. Few people think about the fact that in the original form, the reporting of the accounting service will not allow you to assess the implementation of the business plan if you do not take care of it in advance. The form of the report will also depend on the scale of the project. If it is a small project, then a report on income and expenses will be sufficient. If the company has an impressive size, then the reporting will consist of financial, statistical, tax reports, and among other things it will be necessary to include contracts, certificates and other documentation. Reports allow you to predict risks and losses, instantly make cardinal decisions to eliminate them, for example, reducing the number of employees.
The main purpose of reporting is to provide management with reliable indicators that reflect all aspects of the company's activities during the implementation of the business project, to show the effectiveness of the staff.
Usually, such reports are necessary only for the management of the company and they are not transferred to the tax or other state bodies.
To visualize the information will help tables and graphs. Numerical and comparative tables will allow you to trace the change in percentage and quantitative indicators for a certain period. It is important to automate the process of preparing reports - if the analysis will need to spend several hours or days preparing data in Excel, then this will be done once or twice. An automated system will help to receive data regularly and notice negative trends in time.
Reporting deadlines are approved by management. The main thing is that the information is more relevant. There are weekly, monthly, quarterly and annual reports, but the latter are mandatory. They are necessary in order to collect together all the indicators of the company's work, draw conclusions and make the right decisions.
In small projects, the manager does everything himself, in companies more reporting activities are handled by the accounting department, or the economic department. There is a hierarchy of the reporting department. Ordinary employees keep a database, statistics. Based on the results of their work, they submit their personal reports to managers. Managers are engaged in a weekly summary, analyze the profiles of competitors.
They transmit their reporting to the heads of departments, who analyze all the indicators of the business project and place them in the operational report. Management reporting exists at all levels of the company.
As a result, the director receives a summary report, in which you can see the full picture of all indicators of the implementation of the business project.
The department manager understands his income and expenses of the department, targets and can control them, and ordinary employees understand exactly what their actions affect the receipt of the bonus. Personal KPI indicators, financial reports of departments and summary reports of the budgeting system constitute a single system of management reporting, which should make it possible to manage the entire company and each individual process.
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