This is the first in an 8-part series especially for new subscribers to the Creative Finance & Management email newsletter. Every week we will send you an article aimed at helping you think about a different aspect of the financial management of your business. This is in addition to the normal bi-weekly newsletter.

Why are we doing this? Well it's certainly not because we want you to be overloaded with spam! This email is NOT spam. You received it because you consciously signed up to receive our Creative Finance & Management newsletter. But, hey, we know that even some newsletters you consciously sign up to might as well be spam!

So why are we intent on sending you twelve emails in the first two months of your subscription? The answer is that I looked at the newsletters that were queued to go out and tried to think what it would be like to simply start getting them at a random point. It would feel like pretty random subject matter, without a framework or rationale. And I felt that it would probably be useful to give all new subscribers the same orientation to the way that Charis FD thinks about small business performance management. That way we can have confidence that all our subscribers have been given the benefit of foundational advice in all aspects of business performance management.

If you miss any of these articles, don't worry. They are on the Creative Finance & Management blog. Just look for the "New_Subscribers" tag.

These are the articles in the New Subscribers series:

1. The ingredients for success in Finance
2. Strategy and Planning
3. Business Change - implementing your strategic plans
4. Measurement and Management go together
5. Paralysis without analysis
6. Your Finance team - a valued asset
7. Stakeholder management - the importance of keeping people happy
8. Internal Control - 3 fallacies that add risk to your business

So, off we go...

---

The ingredients for success in Finance

First of all, let's recognise at the outset that there are many things that can be said about making business successful. That's why I'm confident that I am unlikely to run out of subjects for the Creative Finance & Management newsletter! But after careful reflection on all that I've learnt over my 18-year career in accounting, finance and business, I believe that the financial and performance elements boil down to seven or eight things.

Now I admit that there are academics out there, as well as big management consulting firms, who have researched and pondered and discussed and head-scratched over many years, and they have written big books on topics such as these. And they have probably come up with other ways of looking at things, perhaps even better. Who knows? I am just someone who has looked at what I have learnt over the last 18 years, in my training, courses I've attended, as well as reflections on the work I've done, and pulled it all together in a coherent way.

So "take it or leave it" is what I'm saying. I have no desire to be seen as any kind of finance and management guru. I simply want to help small businesses do things better.

So what are the ingredients for financial success? All I am going to do in this article is lay out the scenario and describe the model. In the next seven articles I will explain the important parts of the model and how applying these principles can help your business to become financial stronger and more successful.

The way I look at it is like a wheel, with a hub, and a couple of other things. I call it the Business Performance Management Wheel. If you go to the Our Services page of the Charis FD website you will see this illustrated and described. There are four points around the outside of the wheel:

Strategy and Planning

Actions and Change

Performance

Performance Reporting and Review

Those elements are linked with a directional arrow, indicating that actions and change result from strategy and planning, and contribute to business performance. Then you have to review the performance of the business through regular reporting in order to feedback into more strategy and planning.

In the middle of the wheel is "Finance", which should probably be more specifically "Finance Resources". Finance resources keep the wheel turning, providing information and control.

Around the outside of the wheel are two elements:

Stakeholder management; and

Risk management and compliance.

Those are two things that provide the environment for business performance management.

I should also say that there are other dimensions. So cash/working capital is a dimension that has different implications depending on which of the elements you are thinking about. Profit is another dimension. And Performance is a generic term that includes profit, but does not exclude any measure of success in your business.

Over the next few weeks in these introductory newsletters we will take each of the seven elements in turn and outline what the key elements are in getting the business performance management wheel turning smoothly for you.

First, next week, we will look at strategy and planning. Where does strategy come from and how do you decide what your strategy should be? If you don't have strategies for your business and plans for achieving your strategic objectives, then you are leaving too much to chance and your business will underperform.

Second, we will discuss business change. Sometimes it feels like there are so many options for useful projects you could do, or things you could change, but you can't do everything all at once. So how do you know which of the options will be best to choose?

In the third week we see that measurement and management go together. If you want to be able to manage your finances, or your business performance in general, then you have to regularly review measures of performance. This is an area many small businesses need help with.

Fourthly, we talk about the "paralysis without analysis". A lot of big companies talk about "analysis paralysis", meaning they have so many figures, so much management information, so much analysis of figures, that they don't know how to digest it all. Smaller businesses are often paralysed by the opposite problem. They don't know what to analyse and have very little management information and modelling. What things are most useful? Where should you start?

Fifth, we'll talk about finance resources. Finance resources is the term I use to encompass finance and accounting people, as well as systems, processes (and perhaps even cash!). Your finance resources are there to support you in managing your business to optimum performance, providing information and control, as well as expert advice. So that fifth article will tell you more about what you should expect from finance resources and how to get the most out of them.

Sixthly, stakeholder management gets a mention. Stakeholders are anyone who has any interest in your business. Shareholders and investors are the people we normally think of first, but the list gets longer the more you think about it. There are a host of people and entities that should get your attention as stakeholders in the business, and good relationships with them will smooth the way for growth.

Finally, we snooze through 700 words on internal control. I'm joking! It's very important! But a lot of people see internal control as something boring and tedious. So we'll consider three fallacies that add risk to your business in the realm of internal control.

---

Until next time...

If at any stage you want to talk to us, we're quite happy to give you a call to talk more about your business and the challenges you face. And you may be eligible for a free Finance Strategy Review session. To set that up either email us at enquiries@charisfd.com, remembering to leave your phone number and email address; or go to our website and complete the contact form.

Thanks again for subscribing to Creative Finance & Management. We hope you find it helpful.

© Charis Business Consulting Limited 2009