Every business owner who started from scratch probably felt the shift from a phase in which he knew even the most minute detail about his business to the moment accompanied by a feeling of loss of control over the activities in the company.
This occurred because businesses have the awkward characteristic of growing faster than the systems that control it, and the insight you have in the business is not what you had before nor the one you wish to have in the future. Correspondingly, the negative consequences of the loss of control become more expensive over time. Do not let that make you feel guilty. Such a situation is normal even for bigger companies than yours.
The feeling of loss of control is the beginning of ‘slippery ground’. Every business can be bursting with ideas, energy and ambition; however, without a framework that will ‘anchor’ it, it may be a great challenge to find a way to streamline that creativity into the real world of results. The pressure to create and develop the business often results in making the control mechanisms obsolete and superfluous, requiring re-design and adaptation to existing activities.
Different activities have different tolerance levels with regards to the point at which it becomes critical to implement a system of internal control, as a prerequisite for the stabilization of operations and preparation for a new phase of growth. But one thing is certain: every activity is vulnerable unless it is carried out in a measurable and methodical way, taking into consideration the following aspects:
Developing a system of designating tasks and responsibilities,
Establishing a system of approving costs and investments,
Creating a methodology for monitoring the creditworthiness of customers and product profitability,
Creating a system for assessing cash flow, stock, and/or other key items of the business,
Establishing monthly KPIs (Key Performance Indicators) and the process of preparing regular business reports,
Support from financial institutions,
Providing technical support for quality preparation and monitoring of selected segments.
Establishing internal controls as well as systems and frameworks that will enable all segments of the company to develop, presents a necessary prerequisite for further growth and development as well as efficient management. The earlier the ‘trend of loss of control’ is identified and followed up by establishing a set of internal controls, the simpler and cheaper the process will be, and the results more positive.
The aim of the process is to ensure better visibility of the operations, restore a sense of control, and enable the management structure to manage the business efficiently, instead of just doing it.