| For decades men of vision have regarded | | | | and credit committees. |
| businesses as living organisms with the | | | | Could this have been avoided? In many |
| ability to react to stimuli and respond | | | | cases it was. During these times, a CPA |
| to the pressures of the marketplace. In | | | | we'll call Bob consulted with one |
| the modern swell of progress, businesses | | | | circuit board manufacturer whose main |
| at the cutting edge of competition are | | | | customers were prime defense |
| pumping iron, revisiting their diets and | | | | contractors. Bob served as their |
| using consultants and experts like | | | | "fisician." He and his client determined |
| aerobic conditioners in programs to | | | | that for this particular company to |
| maximize strength and powers of | | | | compete they needed to take aggressive |
| endurance, to ensure excellence on the | | | | action in a number of areas. First, in |
| playing fields of Wall Street or Ventura | | | | order to price effectively, they had to |
| Boulevard. The best companies are those | | | | institute a system which accurately |
| in the condition of excellence, are | | | | described the costs incurred in the |
| those, like championship athletes, who | | | | manufacture of each of the boards the |
| are in excellent condition. | | | | company produced. They then needed to |
| If a man wants to improve his health and | | | | institute a system of production |
| conditioning, he goes to his physician | | | | controls which tracked orders throughout |
| for a physical examination. He allows | | | | the production process to determine the |
| himself to be poked and prodded, stuck | | | | most cost efficient use of machinery and |
| with needles and strapped to machines so | | | | manpower. They also needed to review |
| that he can discover the answer to a | | | | quality control procedures and testing |
| single question: how am I doing? This is | | | | at all stages of production to reduce |
| what he asks his family doctor. How am I | | | | scrap and, with it, the cost of |
| doing? Certainly, it's the man's own | | | | producing their circuit boards. Then |
| body he's asking about, but the | | | | they held meetings with the company as a |
| physician/consultant is trained to tell | | | | whole and with individual departments to |
| him all the things he doesn't know about | | | | get everyone involved in the "new" |
| his interior and its health, about the | | | | operations, to obtain employee input, |
| prescription for diet and exercise that | | | | which was incorporated when applicable |
| will make him more fit and productive. | | | | into the streamlining of operations, and |
| The rules of health apply to the body | | | | to get people excited about what they |
| business as well. When was the last time | | | | were doing. They let them know how |
| your company had a fiscal examination? | | | | important they as employees were to the |
| What kind of shape is your business in? | | | | company and how their efforts would lead |
| How is it doing? Where do you find a | | | | to increased efficiency and |
| "fisician" to answer these questions? | | | | profitability. And they established a |
| Look no farther than your full-service | | | | profit sharing plan in which all |
| certified public accounting firm. | | | | participated, so that employee efforts |
| Full-service CPA's have years of | | | | also proved monetarily rewarding. |
| experience dealing with business | | | | This company survived and grew while |
| conditions and assessing the relative | | | | competitors died. There was no magic |
| health of the companies with which they | | | | involved, just an accurate reading of |
| deal. They know how to recognize the | | | | the external and internal conditions |
| telltale signs of change, both in their | | | | affecting one circuit board |
| clients' operations and in the | | | | manufacturer, an accurate diagnosis of |
| marketplace, and are able to make | | | | the problems facing the company, and the |
| observations and recommendations | | | | production and implementation of a |
| regarding those changes. | | | | prescription for change. |
| Take the case of XYZ, Inc., the | | | | What Bob did was perform a fiscal |
| well-known manufacturer of printed | | | | examination of his client. What his |
| circuit boards. For years all XYZ had to | | | | investigation of factors extrinsic and |
| do to secure a government purchase order | | | | intrinsic to that company revealed, he |
| for military-use circuit boards was to | | | | shared with his client, and his client |
| make a bid. The price was what XYZ said | | | | acted upon those findings. The client |
| it was. No questions were asked. No | | | | acknowledged the existence of a problem |
| answers were offered. And all were happy | | | | when he retained Bob, sort of like you |
| in this paradise in which cost and price | | | | and I do when we go to the family doctor |
| were no object, in which scrap was just | | | | and tell him we're not feeling good, and |
| trash. There was heavy demand, barely | | | | the family doctor checks us over and |
| enough suppliers to meet that demand and | | | | tells us what we need to do to feel |
| huge backlogs of orders. And then the | | | | better. |
| President and Congress decided that | | | | But doctors insist that we see them at |
| maybe we had enough new weapons systems, | | | | times when we're not feeling ill. They |
| that maybe we didn't require a military | | | | want us to have a check-up once a year |
| as large as it was and that maybe we | | | | so that we can see if there are any |
| could cut back in what we spent for | | | | conditions present of which we are each |
| military hardware. Things changed. | | | | unaware but which, if undiscovered, |
| Demand decreased while the number of | | | | might prove injurious or even fatal to |
| suppliers remained the same. What do you | | | | us. We don't tell our doctors that |
| think happened? | | | | they're being excessive, that we think |
| What happened was that companies saw | | | | they're just trying to line their own |
| their orders from the government begin | | | | pockets at our expense. Because we know |
| to shrivel. They began to compete for | | | | they're not. They have our health and |
| orders that their competitors had been | | | | welfare at heart; they want us to be |
| filling at whatever price they could | | | | patients for a long, long time. So are |
| charge. Government procurement agents | | | | full-service certified public accounting |
| saw this and pitted suppliers against | | | | firms. Your CPA wants you as a client to |
| one another in bidding wars. Competition | | | | be around for a long, long time. When he |
| for available jobs drove prices down. | | | | recommends a complete fiscal exam for |
| Costs remained constant or increased. | | | | your business, it's so that he can |
| Those companies which lacked full job | | | | uncover any potentially life-threatening |
| costing systems or had failed to monitor | | | | conditions existing in your business |
| quality sufficiently well to reduce | | | | before those conditions can do serious |
| scrap rates on complex multi-layered | | | | damage, so that he can proactively keep |
| circuit boards found themselves in | | | | his clients resourceful and competitive |
| unfamiliar territory, losing orders, | | | | in today's marketplace. No one wants to |
| losing money and losing out. Many | | | | see a client panhandling on a Wall |
| circuit board manufacturers died, | | | | Street corner, muttering, "I coulda been |
| including XYZ. If obituaries were | | | | a contender." |
| written, they were written in the | | | | Call your CPA today. Don't ask him how |
| business sections of newspapers. The | | | | he's doing. Ask him how you're doing. |
| only funerals which were attended at all | | | | Arrange for a fiscal exam to find out. |
| were presided over by bankruptcy courts | | | | You'll be thankful you did. |