Search

Ask the right questions to get the right answers

IN this column, I continue with a series of articles identifying how to explore different perspectives driving success related to something (the situation, your focus) that you want to decide, resolve, plan and implement. Today, I look at the perspective of economic/financial. Before you and your key people embark on any initiative to change or improve things, spend some time exploring people’s perceptions, understanding and commitment from the economic/financial view point. Here is a list of questions that you and relevant others could consider. You don’t need to answer all questions, just those that resonate with you and your situation or focus. Some questions will produce the same answer. Reason? Sometimes you can ask a question and get no answer. Rephrase the question and, bingo, you get an answer. Give this list to the relevant people and give them time to reflect on the questions, then discuss and explore all viewpoints.What is the impact of this situation on profit and loss? How will this situation affect net profit or cash flow if there is a change in sales volume or gross margins? How could cash flow affect our focus? What are the possible threats to cash flow in this situation?What are the fixed and variable costs involved to fund this situation? What are the potential cost blow-outs and how will we manage them? How could we factor in the costs associated with this situation with current or future budgets? How could we factor in cost of ownership – operating costs, maintenance costs, replacement costs, training costs, cost of disposal, etc? How could our budgeting process incorporate planned revenues and expenditure as well as plans for assets and liabilities and estimates for cash receipts and payments? What are the projected profit margins? What is our minimum return on investment? What do we need to do to demonstrate fiscal responsibility in this situation? What are our projected profit margins based on? What must happen for us to achieve these profit margins? How are we going to obtain the revenue required in this situation? How are we going to manage our cash-flow requirements? How are we going to manage any adverse effects on cash flow in this situation? What could be the on-going operational costs? How are we doing a cost benefit analysis in this situation? What monitoring process do we need so that we can track budget versus actual on a regular basis? How well does our account code structure allow accurate coding of expenditure? What controls need to be put in place so that we can take effective corrective action to remedy any discrepancies between budgeted costs and actual costs? How might this situation have any unusual features that will affect budgeting or cash flow? How could we incorporate any taxation requirements? Depreciation? How does the business plan for this situation contribute to our long-term strategic plans? How might a lack of funds or misplaced funds prevent us from solving this situation?

Add your comment

BNIQ sponsored byECU School of Business and Law

Students

6th-Australian Institute of Management WA20,000
7th-Murdoch University16,584
8th-South Regional TAFE10,549
9th-Central Regional TAFE10,000
10th-Saferight8,000
49 tertiary education & training providers ranked by total number of students in WA

Number of Employees

BNiQ Disclaimer