Strategic Management Control

Our approach aims to govern corporate marginality from a strategic perspective: how?

The entrepreneur always knows the state of health of his company: we take care of translating these sensations into numbers and improvement objectives, implementing the appropriate strategies to compress costs and develop sales.

Starting from the historical series of accounting data, we build specific strategies, with analysis of future scenarios and estimates, to project the best possible result at the end of the year.

Historical data series help us understand how costs move, which are usually divided into fixed and variable but which we prefer to classify as compressible costs (on which we can intervene to reduce them) and non-compressible costs (on which we cannot intervene or we intervene marginally to reduce them).

The more the study of the past highlights cyclical trends, which repeat themselves over time (as usually happens in every company), the more reliable the estimates we will make will be.

The most effective methodology to achieve the best possible profit leverages the past (i.e. the accounting or accountant's balance sheet, which alone is of little use precisely because it represents the past), to guide the future based on the concept of Break Even Analysis.

Our methodology reverses the decision-making process we are used to: we first define the costs (fixed and variable, or rather compressible and non-compressible) to establish both the Break Even Point (or minimum turnover necessary to balance all costs) and the Sales Budget (or turnover to be achieved as a goal).

If, along the way, the Sales Budget is not achievable, we implement appropriate strategies to reduce costs and develop turnover, defining the product/service lines with the highest added value and the customers to focus on.

How can costs be reduced?

To reduce costs, we define specific budgets for expense items, which the entrepreneur can choose to intervene on directly or, even better, by identifying the people responsible for these budgets within their company.

Sharing the objectives to be achieved with your collaborators creates accountability, delegation and self-control over individual expense items.

The continuity of this process over time, in fact, increases the level of attention on the costs of the entire organizational structure which, involved in the achievement of clear and shared objectives, will be led to ask itself the reasons for any deviations in the results and to intervene accordingly.

How do we operate?

We have created a Predictive Analysis Simulator that, by applying specific algorithms to the historical series of accounting data, is able to open a window on the next 12 months and predict the path that the company is about to take, with the aim of governing the data in advance and building the future, without passively undergoing it.

The heart of this software is the Rolling Forecast Report, consisting of:

• Company accounting report reworked from a management perspective, which analyses the deviations of monthly data compared to the same period of the previous year; it serves to "take stock of the situation", generating awareness of what has happened;
• Profit and Loss Budget, which represents the objective to be achieved in terms of costs and revenues; it serves to stimulate and refine the ability to plan the activities necessary to achieve the objectives;
• Rolling Forecast, i.e. the Income Statement forecast, which projects the Break Even Point and the expected result from company management at the end of the year; it is built using the Actual data (final) for the months ended and the residual budget for the months to end, with the help of statistical algorithms; it is used to measure the ability to reach the objectives set in the Budget and to implement the necessary corrective actions;
• Historical series of data relating to the balance sheets of previous years which, in addition to becoming the reference basis for future estimates, provide a complete view, over time, of the trend of costs and revenues.

By putting all the numbers in a column, the Rolling Forecast leads us to the following question: are we satisfied with the expected result for the end of the year? If we are not, we will have the necessary time to decide and implement the necessary strategies.

To be even more timely and effective in the choices to be made, it is however necessary to make an extra effort, because the analyses on an annual basis are important but not sufficient to define an action plan in the short, indeed very short, period.

The key is in the monthly data: for each single month of the following year, we determine the Break Even Point and the Sales Budget which, compared with the Open Orders (which will translate into actual sales), allow us to understand whether the monthly turnover target is achievable or not.

This information dashboard represents the “Joystick” needed to drive the company.

Periodically, we analyze and validate the data processed by our Simulator together with the entrepreneur, to build the future without passively undergoing it: this is the key to achieving the best possible result for the company.

We also implement Industrial Analytical Accounting to clearly identify the margins achieved (by product, customer or reference market), in order to support both operational decisions (pricing formulation, definition of the sales mix and continuous improvement activities) and strategic choices (market selection, commercial development plans and investment choices).

Bank Rating and Financial Planning

Financial credit risk is a real risk for small and medium-sized enterprises, which requires constant monitoring of the financial area in order to improve relationships between companies and banks, to encourage growth.

It is therefore essential to make financial commitments consistent and sustainable with the actual performance of the business, identifying the most suitable financial structure and therefore the instruments, terms and conditions of the existing financial contracts based on the growth and/or development prospects of the business.

We support companies continuously, guaranteeing the following advantages:

• always have the highest financial skills available at a low cost;
• permanently supervise the financial area;
• establish a constructive relationship with credit institutions;
• improve the bank rating;
• have a better chance of accessing bank credit.

We project the trend of the company's cash flows, starting from the monthly economic budget, to verify the evolution of the financial needs and plan their adequate coverage, as well as to evaluate the feasibility of the planned investments.

We optimize treasury and operating cash flow (cash flow budgets and financial statements), with a view to minimizing the impact of financial charges and reducing the use of bank credit facilities.

We also deal with extraordinary finance operations (Merger & Acquisition), evaluating every aspect related to merger, split, acquisition and/or company due diligence operations, through market analysis, feasibility studies, identification of counterparties and negotiation with the counterparties themselves.

We also plan the international structure of business groups, optimizing national and international taxation.

Business plan for start up company or projects

The birth of a new business activity (and any business project) must be supported by a feasibility study or analysis capable of providing a series of economic-business data, on which to draw up guidelines for the establishment of the business, which takes shape in the drafting of a document: the business plan.

Drawing up a business plan is, first of all, essential to determine the objectives that the entrepreneur wants to achieve and the strategy that he intends to use to achieve them, but it is also important to access subsidized public funding or bank credit.

We support our clients in drafting and implementing industrial plans, which summarize the contents and characteristics of the entrepreneurial project and are used both for business planning and management and for external communication, in particular towards potential financiers or investors; in particular, we provide the following information:

• description of the investment project or the type of business you intend to create;
• presentation of the entrepreneur and management;
• market, competition and critical success factors analysis;
• sales objectives, sales organization, marketing plan and strategic positioning matrix;
• technical feasibility of the project and five-year or three-year economic-financial feasibility plan;
• overall financial requirements (for technical and intangible investments and for working capital) and related coverage;
• expected return on investment and risk factors;
• investors involved and any proposals for participation by third-party stakeholders;
• timetable for the development of activities.

How to reorganize a business

Client: company processing and installing glass for furniture, partition walls, parapets and industrial applications; turnover of 13 million Euros.

Problems: inefficient production planning (delivery delays equal to 50% of the order portfolio); poor autonomy of staff in carrying out their tasks; incomplete and non-punctual management of warehouse stock; lack of in-depth knowledge of actual costs and production standards, suitable to support the management decision-making process.

Intervention: 18-month corporate reorganization activity with complete review of planning and production flows. Given the short delivery lead times for customers (11 days on average from the order), the following were gradually introduced: the use of phase schedules, to monitor production according to the expected dates and with a "pull" perspective, in which the downstream process "pulls" from the upstream process only what is required, at the right time, and in the desired quantity; weekly monitoring of workloads; "in the field" data collection at the terminal and analysis of times and methods by department, in order to optimize batches, cycles and production times (delivery delays reduced to 10% of the order portfolio). To increase the level of autonomy in work management, specific training, empowerment and proactive involvement plans for human resources were introduced, with the definition of roles, tasks, procedures and company objectives. Inefficient inventory management was resolved by implementing barcodes, for the correct detection of production/warehouse loading and unloading as well as to ensure material traceability. Finally, analytical-industrial accounting was implemented to determine the hourly cost for each process (grinding, tempering, layering, etc.) and not for each individual order, given their excessive number and the poor return in terms of information useful for the decision-making process and because the sales price lists are determined on the basis of the planned processes; the latter, therefore, were identified as cost and revenue centers on which to base the analysis of company profitability.