Strategic and operational Controlling - Early Recognition of Crisis  

Assistance in good and in bad times - some enterprises
are in a crisis without knowing it. Often it is only noted that
something must happen, when customers move away, loans are
cancelled, suppliers threaten the business with stop of delivery
and when more and more pressure is put on the business. (You find
a detailed article about signs of a crisis under
http://www.abenetis.com/encyclopedia-article-18.html)

It doesn't have to come that far. To recognize the development of
business crises early, it requires a suitable Controlling. Controlling
has to make business finances, processes, costs and dependences
clear and contributes thereby to a higher economic viability. A
sensibly action, that smaller and medium sized businesses rarely
taken. Result: They often react a lot too late to market influences and
crises.

As a basis for the Controlling principally serves the accounting of a
business. Nevertheless, this has to the result that the Controlling
concentrates its work on data from the past. That's why it is
necessary to extend the operational Controlling with strategic
analyses.

However, also the operational Controlling is able to use data from
different areas of a company, which allow to recognize weak spots
in business development early. It has to be paid attention to the fact,
that data from other company areas have their date of origin before
the accounting data. An example for this is Orders in Process. This
is not grasped in the accounting. The accounting receives information
about an order only when it has been already issued an invoice.
Therefore Orders in Process is suitable as an early indicator for the
Controlling.

Also other data can offer explanation about the business
development. Thus the number of customer contacts, new customers
or complaints (within a certain period) is an alternative to find out how
the products and services of the business are accepted in the market.

Strategic and operational Controlling differ in their attempts,
nevertheless, they are a supplement too each other. Requirement for
a good operational Controlling is a strategic Controlling which focus
on circumstances like working processes, product innovations due to
changed customer needs, personnel development as well as to
acquisition of customers and the search for new sources of supply.
The regular analysis of strengths and weaknesses of the business
belongs to the tasks of the strategic Controlling, too.

However, the operational Controlling concentrates on the day-to-day
business and on the most important information about the business
development. It has to be paid attention to the fact, that only that
much information are collected and are evaluated as really necessary
to management a business. This is usually a weak spot of controlling
systems in small and medium sized businesses. Often too less or too
many data are collected and are evaluated without paying attention to
the importance for the business management.

It is possible to manage a business on the basis of up to 30 ratio
values, which are calculated weekly. Continuing analyses can be
done when it is necessary. This saves a lot of time, especially in
small and medium sized businesses in which rarely a Controlling
department exists.

To prepare strategic evaluations, needs no big effort or extensive
methodical knowledge to reach high expressiveness. At regular
intervals prepared strategic analyses give clues for the development
of the enterprise and assists to recognize strengths and weaknesses.
It is important that the analysis is just the first step, from the analysis
measures have to be developed whose implementation has to be
observed.

Controlling is important for all enterprises, in good as in difficult times.
Good Controlling can preserve an enterprise from suffering damage
and in difficult times it helps to find and maintain the right way. A
Controlling system that consists of strategic and operational analyses
is a useful guidance system. Furthermore the information from these
analyses can be used for the preparation and realization of
consultant assignments. Thus with insecurity about the actual
position of the own enterprise or about the further approaches, an
expert can be consulted without the need to carry out basic analyses
once again. This leads to higher efficiency and saves the liquidity of
the enterprise.

From the above the assumption arises, that a combination of
strategic and operational Controlling and occasional short-term
consultant assignments will be the optimum to protect the existence
of a business.

Stephan Szugat is owner of abenetis, which is based near Munich, Germany. abenetis offers web-based business analysing and management tools for strategic and operational Controlling of small and medium sized businesses as well as knowledge and consultancy in the area of business management. http://www.abenetis.com