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