From start-up to IPO and beyond, all companies need a winning formula that can help them optimize their resources and navigate periods of volatility. We look at four key drivers that are vital to business success.
Amid the current economic difficulties, enterprises must nurture those critical business operations that support sustained growth and, ultimately, deliver financial results. Of these, four areas deserve particular attention.
Finance – Control Costs and Reinforce Efficiency
It is not hard to see why finance plays such an essential role in a company – money matters. Establishing comprehensive financial processes is pivotal to a firm’s development. Robust budgetary mechanisms help an enterprise to function efficiently, as they help regulate costs and underpin efficiency. In turn, this should boost profit margins and encourage the pursuit of new revenue sources.
Effective processes emerge from strategic financial planning. The focus here should be on growth, forecasting sales levels over the medium to long term, anticipating the staffing levels required to strengthen operating momentum, and identify any cost-related factors – either savings or additional expenses.
Governance – Create Trust and Promote Positive Financial Outcomes
Governance refers to the means by which a company ensures its operations meet all the compliance requirements under corporate laws and other relevant regulations. Building an potent governance model is pivotal to expansion because it creates trust and connects various stakeholders, such as management and shareholders, in a shared purpose – business success.
Good governance can secure a firm's capital flow at a financial level by reassuring investors that all reporting is transparent and honest. In the long run, this can make capital easier and cheaper to access. It also underscores a company's reputation for good business practice and enhances its brand value.
People – Retain Employees and Develop High-Quality Teams
Behind the services, a company offers to the market are the people who do the hard work to ensure the product is delivered on time and to the required standard. The evolving operating environment spotlights the need to leverage various corporate solutions so employees can focus on the tasks that add value. This could involve a broad-based reassessment of individual skills and the introduction of personal-development programs to let staff reach their full potential.
A vigorous performance appraisal and reward process is also essential for rewarding quality people. Trusts and fiduciaries, employee stock ownership plans, and employee benefit trusts are just a few examples that can improve retention rates. Firms that want to play the infinite game should focus on succession planning, aiming to identify tomorrow's executives from their existing workforce rather than tap the market for new talent.
Digital – Embrace Technology and Improve Productivity
As technology has disrupted many industries, a growing number of companies are undergoing digital transformation programs so they can remain competitive and take the lead in areas including finance, governance, and people.
Initiatives, such as board portals and virtual AGMs or board meetings, can enhance business performance and optimize internal processes, engagement, and transparency. For more information on these developments, read our articles on digital transformation, issuer portals, and digital board meetings.
Understand the Wider Market and Recognize Megatrends
Beyond these four aspects, opportunities beckon for firms that understand external dynamics and the directions their markets are taking. This means recognizing megatrends, such as globalization and changing demographics. It then involves adopting sustainable business practices and embracing technology to seize opportunities when they emerge.
Therefore, corporations need to be innovative in the pursuit of efficiency and adhere to the best governance practices to protect their reputations and balance sheets. They should also bolster their financial processes to ensure that spending is controlled, and of course, treat their employees fairly, encouraging them to develop above and beyond their current roles. By doing this, forward-thinking and outward-looking companies will be well-positioned to secure their futures and maintain long-term growth.