Business failures are all too common. You may be an excellent doctor,
“Best Practices” are techniques that businesses employ to control costs, stream-line processes and avoid disruptions. Over the years I have worked for three very large companies; and worked with a great many small and medium sized businesses. I have found that small and medium-sized businesses incorporate some Best Practices, but not consistently. However each large Fortune 100 company I worked with incorporated best practices consistently.
On March 6, 2014, CFOTips publisheda quick 32 question survey to understand the existence of standard best practices in small and medium-sized businesses. Questions were general, so the concepts would have applicability to all responders, regardless of the business model. Select results were as follows –
- To understand the success of your business, it is recommended that an annual business planning process be conducted. But when asked, only 47% of responders had a long-term plan of where they expected to be in five years; while only 47% of responders had a documented, detailed business plan for the next 12 months.
- A best practice for an entity is to annually set strategy for the coming year. This activity requires external information to validate your approach and direction. Interestingly, only 41% of responders conducted competitor surveys; while 59% conducted customer satisfaction surveys; and 41% conducted employee satisfaction surveys. Only 59% of entities conducted an analysis of their place in the market, similar to a Strength, Weakness, Opportunity, and Threat (SWOT) analysis.
- To ensure processes are efficient and reduce expenses, a best practice is to establish policies and procedures and document job descriptions. Only 41% of responders have policies and procedures for most, if not all processes; and 59% of responders have job descriptions.
- To ensure your cash flow is not disrupted, a best practice is to have a collections process and utilize it when required. Based on our survey, only 65% of responders have an established collections process.
- To reduce the
risk , of fraud annually a segregation of duties analysis should be performed. Yet only 47% of responders performed a segregation of dutyanalysis. And to ensure an environment where all employees act on behalf of the company’s best interests, ethics policies should be established, with a system available by which employees can identify unethical behavior. While 75% of responders have an ethics policy, only 35% of responders have a whistleblower program. - To control costs, periodically vendor agreements should be reviewed to understand what you are paying for and what you are receiving. Yet, only 35% of responders review vendor agreements and company needs periodically.
- But the most surprising results were related to the prevalence of a business continuity plan. Only 29% of responders reported a documented business continuity plan for their business.
Note, as less than 100 responses were received, this information should be considered directional only. How do you compare?
If you wish to add your responses to the survey, paste this link into your browser - https://www.surveymonkey.com/s/Y9HQQTW
I hope to update the data overtime.