How Existing Business Resources Can Be Leveraged to Spur Growth
COMMENT | VINCENT ERONE | For any business to thrive, it needs to have a sound financial management system in place. The purpose of the system is to ensure proper management of the organization’s resources (cash, cash equivalents or other assets) with a focus on leveraging each element and ensuring that it seamlessly ties into the overall business performance while tracking, evaluating, and remodeling or re-working where need arises as failure to do so could put the business at risk of shutdown.
As one of the ways to ensure the existing resources are beneficial to the business and leading to growth, short and long-term investments can be employed as instruments for mitigating any risk that might a pose threat to a company’s performance. However, this threat can be averted by leveraging the existing resources to generate more profits intended to boost the company’s Return on Investment (ROI) in terms of profit maximization.
A business can therefore decide to invest in assets that can be liquidated for future projects, as long as they are deemed viable options. In addition, assets are indicators of how profitable a company is, given that they can be used to generate more earnings both in the short and long-term, which supports the agenda of having a sound financial management system that is self-facilitating.
Whereas planning future investments is ideal for the business, understanding and ensuring their value to the business is achieved should be in constant alignment with the firm’s balance sheet (a financial statement that reports a company’s assets, liabilities and shareholders’ equity), as it informs key strategic decisions while representing the state of a company’s finances in terms of what it owns and owes.
Effectively, putting in place a strategic capital structure will help facilitate proper running of the organizations’ finance operations designed to avert risks such as inability to finance a loan or debt payment or meet daily operational expenses as and when required.
Case in point, as a business, MultiChoice Uganda has a broad and robust risk management structure, that enables us identify risk areas and mapping out their respective mitigation plans in a timely, efficient and effective manner.
Additionally, in order to effectively deliver our commitments and promises to our customers, MultiChoice Uganda has a rich supply chain at different levels of operation, meaning that we interface with numerous suppliers and stakeholders who are meant to be remunerated as per specified contractual timeframes, whilst maintaining focus on the core business objectives and meeting the projected financial returns.
More times than less, ‘Win-Win’ partnerships are a critical component in delivering a sustainable 2-way business existence. With an extensive supplier chain in the Pay TV industry, and those in the same line of operation as MultiChoice Uganda, not limited to; telecommunication companies, internets service providers, media houses among others, partnerships are a key strategic approach in enabling the business to leverage a sustained financial performance, as such collaborations undoubtedly play a key role in the delivery and enhancement of our value creation to our esteemed customers.
As budgets are apportioned to the different departments for a given financial year, continued efforts to have detailed documentation in terms of reports, evaluation of the investments versus ROI made have to be compiled and audit reviews both internally and externally performed as an objective means of guiding future projects’ selection by assessing funds injected versus profits yielded.
Regular and sustained reviews permit objective appraisal of planned business activities 1, 3 or 5 years ahead with provisions for comparative status review of actual versus planned activities while leaving room for consideration of corrective measures in a timely manner should signs of deviation against business objectives be isolated. The accumulated insights then guide in the determination of market potential for our products/services as well as provide a sound basis for effectively and efficiently investing within identified market segments, while ensuring that we function within a minimal margin of error and improved certainty, with appropriate financial resources and structures to attain the expected ROI.
The continued evolution in how markets operate, greatly influenced by the information age, has made investing in innovation an unavoidable priority for a majority of organizations and necessitated the integration of innovative approaches at all levels of business operations. This helps the business generate, analyze and make good use of the right and updated information in making investment and key management decisions, building informed customer attraction and retention strategies, only to mention a few.
According to the 2018 PricewaterhouseCoopers (PwC’s) Global Digital IQ Survey, few businesses get value for the data they collect, with only 26% in the financial sector agreeing that they utilize all the data they capture to create business value. The public sector and power utilities ranked highest at 43% and 37% data utilization respectively. Citing that Artificial Intelligence (AI) is the frontier that will continue to open new opportunities for maximizing use of data collected. This will be attained through developing predictive models that will allow for analyzing and benefiting from customer habits and behaviors and management decision making monitored over a period of time.
Therefore, its incumbent on companies to continually be on the lookout for avenues that will insure and boost their performance into the foreseeable future by maximizing the utilization of their existing resources to yield higher ROI for their respective business establishments, hence the saying, use money to make more money.
Vincent Erone is the Finance Manager, MultiChoice Uganda.