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