Experiences in change management
Profit Blog
Jarmo Manninen & Muutosdraiveri Oy
When change is managed the right way at the right time, it is always a possibility. In my blog I write about a business's change management from multiple angles. If any questions arise, I would be happy to answer them!
A company's external accounting produces the company's financial statements and related documents, such as the income statement and balance sheet. A company's income statement is a sufficient document for the tax authorities, so that the tax authorities can find out how much the company has to pay in corporate tax on its results. The company's financiers also want to use the company's income statement. Despite this, presenting the company's goals in budgeting and not in monitoring the implementation of the company's goals is not a sufficient document for the company's financial management. In order to manage a company, the company's management must have at its disposal financial figures that are more in-depth than the company's income statement about the company's current business status and goals, so that the company's financial management is possible. The following are a few examples of the information needed. In the financial management of a company, the company's management needs, among other things, objectives and their implementation monitoring of profitability components (depending on the company's business, for example by product, service, project, customer, business function, region, etc.), the efficiency of the company's resources (people and machines) and the utilization rates of the company's resources. I will talk more about the prerequisites for the company's financial management in my next blog posts. I encourage you to share this blog post of mine on social media. If you have any suggestions for the topics of the next blog posts, I will gladly accept them. I hope that you were interested in this matter and that you can continue to be involved. I have written four books on creating the conditions for the company's financial management, and they are available in well-stocked bookstores and online bookstores in Finland, for example from BoD (Books On Demand) at: https://kirjakauppa.bod.fi/catalogsearch/result/?q=jarmo+manninen
Hopefully the following example doesn't tell you how your company operates! Does your company operate in such a way that the budget goals are first made in the form of a profit and loss statement and their realization is monitored. Every month, we discuss whether the company's income and expenses have been allocated to the correct months, when the monthly result does not correspond to the monthly result target. It is not possible to reliably find out the root causes of the non-fulfilment of goals in the company, but everyone explains and guesses as best they can the reasons for what happened and suggests corrective measures based on their perception and understanding. The corrective measures that are decided to be implemented are chosen based on who and what has been presented. When the root causes of what happened in the company are not known, it is also not possible to be sure that the company's goals will be realized as a result of the implementation of the decided corrective measures. This continues year after year until the company is in a profitability crisis and possibly also in a cash crisis. It is decided to remedy the situation by reducing the number of personnel and personnel costs in the company so much that the company's profit figures can be shown in accordance with the targets. If the situation in your company is similar to the one described above, then your company does not have the conditions for financial management in order. I will tell you what this means in practice in my next blog posts. I encourage you to share this blog post of mine on social media. If you have any questions, I will try to answer them as much as possible, and if you have any suggestions for the topics of the next blog posts, I will gladly accept them. I hope that you were interested in this matter and that you will be able to participate in the future. I have written four books on creating the conditions for the company's financial management, and they are available in well-stocked bookstores and online bookstores in Finland, for example from BoD (Books On Demand) at: https://kirjakauppa.bod.fi/catalogsearch/result/?q=jarmo+manninen
Even this year, at least 140,000 of the companies operating in Finland will make a loss. In addition, at least 90,000 of the business names operating in Finland, i.e. private entrepreneurs, will make a loss this year. Even this year, at least 240,000 of the companies operating in Finland will not reach their profit targets. In addition, at least 154,000 of the business names operating in Finland, i.e. private entrepreneurs, will not reach their profit targets this year. For these reasons, it is appropriate to ask: What is the problem in Finnish companies in their performance? Either as a CEO or as a consultant, I have helped more than 300 companies operating in trade, manufacturing and service industries to develop their business in order to achieve their goals in Finland and, in addition, abroad. Based on these experiences, I know that the reason is not in the market or in business cycles, as is too easily and often heard. The reason for this situation is that Finnish companies do not have the conditions for financial management in order. When the company has the conditions for financial management in order, the company can achieve its profit targets continuously. I will tell you what this means in practice in my next blog posts. I encourage you to share this blog post of mine on social media. If you have any suggestions for the topics of the next blog posts, I will gladly accept them. I hope that you were interested in this matter and that you can continue to be involved. I have written four books on creating the conditions for the company's financial management, and they are available in well-stocked bookstores and online bookstores in Finland, for example from BoD (Books On Demand) at: https://kirjakauppa.bod.fi/catalogsearch/result/?q=jarmo+manninen
Did you know that there are more than 460,000 companies in Finland, of which more than 230,000 are sole proprietors. At least 30% of these companies make a loss. An even larger number of companies in Finland never achieve their profit targets, except perhaps momentarily. More detailed chapters and additional information on the matter can be found in my first book called: KOKO YRITYKSEN KAPASITEETTI TEHOKÄYTTÖÖN . The mini-goal in companies must be that they achieve their profit targets at least cumulatively. In addition, the entrepreneur must ensure that the profit targets in his company are also realized in practice. If the entrepreneur does not accept this principle, based on my experience, the entrepreneur can never achieve his profit goals. In this case, he accepts for himself the principle that it is not necessarily possible to achieve the goals, but they are only a devout wish. If the entrepreneur still explains to himself without concrete evidence that yes, we have done our best to achieve the company's result. Based on my experience, an entrepreneur with this attitude will never achieve his profit goals. It is comforting for the entrepreneur to know that this problem can be fixed if only the entrepreneur wants to fix it. If the entrepreneur himself does not have the ability to consistently achieve his company's profit goals, then the entrepreneur should call in an expert who has concrete evidence based on reporting and measurement about the planning and practical implementation of the necessary changes in similar companies. When an entrepreneur uses the right kind of expert, he is able to train and coach the entrepreneur in implementing the necessary changes so that the entrepreneur can in the future be able to implement the necessary changes in his company without an external expert. Primarily, this is about the entrepreneur's courage to admit to himself that his company has a profit-making problem, which he himself has not been able to fix. When an entrepreneur dares to admit this to himself, the worst obstacle to fixing the problem has been overcome. Based on my experience, the earlier these problems in companies are corrected, the easier it is possible to implement the necessary changes in companies. Text: Jarmo Manninen