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July 2012 Edition   

Founder's Monthly Message

Rahmat Ushaksaraei

Historically, there has been continual debate over the significance of two major phenomena of Money and Management in a business. In specific, the two opposite schools of thoughts are opposing each other in signifying the importance of one over the other.

From one hand, the first group regards the Money, Financial Status of a business, as the most prominent criterion for measuring its growth and success. In particular, the financial status of a business is valued as the only acceptable key performance indicator in evaluating a business. In more simple term, according to this business mentality, Money is the remedy for all internal business issues and safeguards its stability and growth.

On the other hand, the opposing philosophy values the importance of Management, Leadership and Organizational Structure of a business as the main contributing factors to its success or failure. More specifically, this business approach promotes the value of Management as the pillar for ensuring the long term stability of a business despite of the short term financial ups and downs.

Although it may have presented itself in a more modern business debate, these opposing business mentalities have roots in the historic mind boggling question of "Which is better; Wealth or Knowledge?"

So, why is this issue so important?

The importance may be revealed, if one asks you the following questions:

a- As an investor, would you invest in a business that is financially successful yet has poor management, leadership and organizational structure?

b- As an investor, would you invest in a business that has strong business management, leadership and organizational structure, yet historically has been experiencing financial hardship?

So, I would sincerely hope that the contents of this article allow us to develop a benchmark for evaluating the importance of both Money and Management focused approaches and define clearly the direct and indirect relations between them.
 
Sincerely,

Rahmat Ushaksaraei

t: 416 - 275 - 5543
e:
Rahmat.Ushaksaraei@accrete.ca
w: business support initiative



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3- Considering the Book Value versus Market Value Reality Check, what is the true value of your business in the market?
4- To exit your business in a foreseen or an unforeseen future, transfer it to someone, or simply limit your scope of involvement, when is the right time to start planning, where would you start from, and what are the critical elements that you would be required to consider?

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Disregard of the nature of a business, its three building blocks are People, Process and Bi-directional Information flow between People and Process. Also, these building blocks impact the three fundamentals of CSA (Cash/Finance - Sales/Marketing - Administration) within a business.

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Money versus Management; an important business issue!

From a static point of view, Money and Management are individually two key elements of a business and from a dynamic perspective the interrelation, dependency and balance between them are of high importance.

From the business financial perspective:

I- Cash Flow is often regarded as a barometer in measuring the health of a business. Accordingly, a positive cash flow is often known as the sign for stability and potential growth of a business.
II-
Reserved Funds & Assets are measures in evaluating the financial stability of a business. Therefore, accessible reserved funds are valued as a positive attribute for a business.
III- Ability in attracting Investment is viewed as a viable indicator of the degree of the health of a business and an important factor in determining its financial stability.

So, considering these static definitions, if a small or mid-size business meets all above mentioned criteria, does it mean that it is a successful entity? Think about it!
Cash Flow, Funds and Assets nad Investment equals Business Success?

On the other hand, considering the Management aspect of a business, it is a combination of People, Process and Information. From a static point of view:

I: No business could exist without People. Therefore, having the right and qualified People especially at leadership and key positions are often known as the essential contributing elements in success of a business.
II: Regardless of the product produced or service rendered by a business, Process is needed to govern its internal and external affairs. Therefore, among many scholars of process management, the nature of a process and the degrees of its applicability and stability are the key elements in success of a business.
III: Business interactions are governed by the exchange of Information at various levels. Without clear and concise flow of information, misunderstanding and chaos will be dominating all internal and external communications. Therefore, many believe that a systematic flow of information is a key deciding factor in success of business.

Similar to the previous case, if a small or mid-size business entails all above mentioned criteria and safeguards the corresponding principles adequately, does it mean that it is successful? Think about it!
People, Process, Information equals Business Success?

In reality, neither Money nor Management alone is responsible for success or failure of a business. In other words, it is quite possible for a business to experience the financial comfort and due to poor organizational structure collapse in long run. Furthermore, it has been experienced many times that a business may have suffered financial hardship for an extended time and with a strong leadership, passed through all hurdles to success.

In specific, now, the main questions are:

- Is the injection of funds always the best solution for a business in trouble?
- Does the injection of funds always guarantee the success of a business?

To perhaps achieve a better grasp of certain business realities, let's review the interactions between Money and Management from a dynamic point of view: 

Based on the fundamental principles of the CSA Business Model , both Money and Management are the intricate components of every business. Furthermore, the balance between Management and Money is an extremely important element in maintaining the overall stability of a business.

In this regard, Money is a sub-component of Cash/Finance aspect of the CSA Business Model and Management, is a fundamental ingredient of the Administration. Furthermore, it goes without saying that it will be a prominent success factor, if and when both Money and Management are in balance with the third aspect of the CSA Business Model, i.e. Sales/Marketing.

In summary, without such harmonious balance between all three aspects of Cash/Finance, Administration and Sales/Marketing it will be impossible to expect that strengthening the financial aspect of the business alone via injection of funds and/or acquiring more business opportunities guarantees the success for a business.

Quiet on the contrary, not only injection of funds or higher ratio of business opportunities will not help a business with poor leadership and management, but also it accelerates its downfall. As it is a business reality, although Money creates temporary and short term relief and comfort for such businesses, in the long run, due to an unbalanced and unstable business structure the liabilities resulted by injected funds will be an eventual roadblock.

If the circumstance is reversed, in majority of the cases, a business with strong leadership, which experiencing temporary financial hardship, has been able to change its course and as the result gain success and financial comfort.

Now, considering the above simplified discussion about Money and Management, their interactions and impacts and their overall relations to 
CSA Business Model:

- What is the status of Money in your business?
- What is the status of Management in your Business?
- What is the relation between Money and Management in your business?
- Historically, how Money or Management has impacted your business?
- From CSA Business Model's perspective, how balanced is the interaction between Money and Management within your business?
- What is the status of Sales/Marketing in your business?
-
What is the overall success rate of your business in balancing between Cash/Finance, Administration and Sales/Marketing?

and many more...

If in doubt, contact me directly and let's have a business chat!

CSA (Cash/Finance, Sales/Marketing and Administration) Business Model and People-Process-Information business approach have been developed by Rahmat Ushaksaraei - All Rights Reserved.


About the author: Rahmat Ushaksaraei is an Accredited Associate of the Institute for Independent Business (IIB), Founder of GeBTL, Global executive Business & Trade Links, the only global top level executives' business platform, Founder of Bio Wood Pellet, representing the North American producers of the wood pellet in the global market, President of the accrete, The Business Excellence Realization , an author, presenter, Professional Engineer (P.Eng.), Project Management Professional (PMP), renowned expert in Concept, Project, Process, Quality and Communication Management,  business executive and leadership coach to large corporations, business mentor and advisor to small and mid-size businesses, pioneer of Diamond Total Management (DTM)business excellence model and Human Intelligence Management (HIM)and Human Emotion Realization (HER)methodologies and architect of the valuator™ and evaluator™ business evaluation tools for small and mid-size businesses. Rahmat Ushaksaraei may be reached at: Rahmat.Ushaksaraei@accrete.ca Rahmat Ushaksaraei




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