Integrative Business Planning – Managing Complexity

Introduction

Business Planning is normally done when a business plan is needed for financing purposes or to use as a guideline on running and growing a business (as a start-up or for the next time frame). Many crucial features of a business need to be addressed and balanced in this planning process. Various options, problems and risks relating to these features will be considered.

Entrepreneurs often assume that one variable has a linear relationship with another (e.g. $x spending on marketing will create $y income in sales). Business is, however, seldom that simple. Many multi-directional relationships tend to occur between the various features. Sales would for instance also be influenced by product quality, price, etc. Sales on the other hand will influence future expansions. To cater for this phenomenon an integrative business planning process is required.

Crucial Issues in Business Planning

Every business is different and the crucial issues in one does not necessary occur in another. What is, however, important is that the business planners ensure that they analyse and plan for all the relevant features for their specific business. This would normally include the issues that is highlighted below.

  • The Business – It is essential to ensure that the opportunity, the business concept, its products, services and strategies and the industry that it operates in are sound.
  • Marketing – Marketing strategy needs to be considered. This include aspects such as pricing and promotion.
  • Market Research – This is a crucial issue that is often neglected. It is important to know and understand the customers, the market size and trends and who the competition is.
  • Development – All issues regarding the development of new products, services, markets and facilities need to be planned for.
  • Operations – All aspects regarding the what, where and how of operations must be considered.
  • The Team – The management team need to match the requirements of a business. It would be preferable to establish what skills/jobs are needed and then to link the people to it. Where there are a lack of skills, training programmes can be implemented and new people can be hired. The whole organigram and composition of board of directors, management teams, etc. need to be planned for.
  • Finances – Finances are the ultimate yardstick of the success of a business, but it can not stand on its own. Important financial issues would typically include investment-, financing- and dividend decisions and policies. It is also crucial to plan for turnover (sales), gross profit margins and cost control (of expenses). The relationships between these issues (financial ratios) need further planning to establish if the business will be profitable, liquid and solvent. Return on investment (ROI) and sustainable business growth would for instance be specific aspects to consider.
  • Risk Management – The various risks that occur need to be determined, analysed and catered for. Fatal flaws need to be eliminated. Operational- and financial risks can often be hedged. This would incur certain costs and strategies such as manufacturing in various countries and buying and selling futures and options in different currencies.

The Complexity of Detailed Business Planning

A quick review of the brief summary of the crucial issues that need to be considered gives a glimpse of the complexity involved in business planning. If we just look at the financial issues we will see that the price will have an impact on the sales (turnover). The lower the price the more the physical volumes will normally be (except if image requires a high price). Turnover and total profits will, however, not necessary be higher. There is normally a fine balance that exist between the price, volume sales, turnover and profits.

To complicate this even further the turnover, costs and profits and there timings have a direct impact on the cashflow of the company (a very critical issue). This whole aspect is then further complicated by the investment- (capital expenditure), financing- (equity or debt?) and dividend decisions. By spending too much on a plant, having too much debt and paying out too much to shareholders will have a negative effect on the sustainable business growth of the company and this will reduce the targets that are achievable. This scenario shows only a portion of the various aspects that need to balance within the broader financial sphere.

Unfortunately the complication of the example does not stop with the finances. The finances influence many other crucial aspects of the business. On the other hand many of the other crucial aspects also have an effect on the finances as well as on each other.

The financial decisions would for instance have a direct bearing on the growth of the business (e.g. geographical expansions and new product development), marketing spending and people employment and development. All these issues would similar have an impact on the financial issues and on each other.

An Integrative Business Planning Approach

The general tendency in business planning would be to tackle each issue independently and then to just add the pieces together and re-plan if something is not making sense. Business planning often starts with some projected turnover and profit figures in mind. Everything is then worked backwards from there.

A much better option would be to have an integrative business planning approach. In order to do this the following steps are needed:

  1. Determine all the salient features of the business.
  2. Determine the relationships between these salient features.
  3. Try and solve every feature by keeping the casualties and effects with other features in mind.
  4. Use “what-if” questions to create better holistic solutions.

Summary

The idea in business planning is not to optimise the one aspect of the business and neglect or ignore some of the others. The various relationships (causes and effects) need to be catered for in an integrative way. One crucial salient feature or relationship that is ignored can put the existence of the whole business in jeopardy.

Copyright© 2008 by Wim Venter. ALL RIGHTS RESERVED.

Engaged Brides and Grooms’ Road From a Wedding Dream to Planning and Having a Dream Wedding

The road from your wedding dream to your dream wedding is often paved with uncertainty and lots of apprehension, anxiety and stress. As newly engaged bride and groom, you are suddenly faced with having to make many decisions and probably, don’t know where to start and what to do. So, what should be your most exciting and fun time, could become a burden.

In previous generations, wedding planning was left for the bride with or without her parents. In fact it was customary that the bride’s parents would plan and pay for the wedding

Today, most engaged couples prefer to plan their wedding and pay for it too. That is, today’s grooms do not like the idea of being a guest at their own wedding. Rather, they want to be actively involved in all aspects of the wedding planning and preparation with the obvious exception of the bridal gown and bridesmaids dresses. Therefore, brides and grooms discuss, share opinions, check their budget and decide what they expect their wedding dream to be like.

I wish you a fun, stress free and memory building engagement. Hopefully, this article, tips and suggestions, will provide you with a road map so you will not get lost.

Suggested Wedding Planning Steps to Consider Starting with Your Engagement Decisions:

The Appropriate Order for Announcing The Engagement. In other words who to tell first, second etc…

How to announce the engagement to everyone else.

Pre-Wedding Parties Organizing Tips.

Whoever plans your engagement party should do the inviting.

If you have chosen your wedding date send out save the date announcements.

Before your wedding you will probably have a shower in your honor. Usually the shower is not a surprise party. You need to decide whether it should be a Bridal Shower, a Groom Shower, or a Wedding Shower. That is a wedding shower for both bride and groom.

Setting Your Wedding Budget, Tips and Ideas

This could be the most stressing part of your wedding planning. You need to set up a wedding account and get a “wedding” credit card. Having both, you need to figure out:

Who pays for what? Remember to include any family participation.

Do you want a local wedding or a destination wedding followed by a honeymoon?

Prepare a wedding budget by category after you finish reading this article.

Traditional Roles And Wedding Responsibilities

You must consider who to appoint for various tasks. Before you do so, you must define the Duties of the:

Bride And Groom,

Bride,

Groom,

Maid Or Matron Of Honor,

Best Man,

Bridesmaids,

Groomsmen,

Ushers,

Flower Girl or Boy and their parents,

Ring Bearer and his or her parents,

Guest Book Table Attendant,

Mother of the Bride, Mother of the Groom or both,

Father of the Bride, Father of the Groom Or Both.

Have you considered having a theme wedding?

Having a theme wedding and choosing wedding colors are very popular. A well thought of wedding theme can save you money.

You need information about:

the 13 Phases of Wedding Planning – Timeline Schedule, Wedding Planning, To-Do And Checklists. Also, you must have a wedding planning – appointment and events calendars, and if possible, you should attend bridal shows.

Wedding Guests -Tips And Ideas

If you do not have the appropriate guest wotksheets and checklists, compile the information you need for the following items you may be lost without it..

About out of town guests – who, how many, preferences, arrival date, accommodations, transportation etc.

Notes and etiquette for guests such as proper attire – black tie formal, garden reception semi casual, barbque casual etc.

Guest Lists – You may need to trim the number of guests to fit your budget.

Invitations sent and replies received. You will need this information for set-up, for catering and for cake serving.

Guest accommodations and transportation – hosted by friends and family, staying at a hotel, transportation from the airport to their lodging destination, transportation to and from your wedding events etc.

Guest table decorations, favors and seating assignments. I personally like guests to sit where they want. Less possible conflicts and no seating cards needed. But this is my preference.

Individual guest cards are needed only if you have assigned seating.

Reception seating arrangements and seating chart – Basically how many guest tables do you need and where and how to place them.

Invitations And Wedding Stationery

To save money, word and print your own wedding invitaions and stationery.

Bridal Gown And Wedding Attire

Before you look for it, you need to decide about the formality of the wedding attire for your attendants and who should pay for it. It is quite common today for the attendants to pay for their own attire. But, be sensitive to an attendant who cannot afford the expense.

Do research to find the perfect gown for the bride and dresses for the ladies before you purchase or rent. You also need to decide whether you or your ladies should pay for their dresses.

You may consider to gift your ladies with jewelry to complement their outfits.

Things to take into concideration before you chose your wedding gown or dress

  • Your bridal attire budget – wedding gowns are priced from a few thousand dollars to a few hundred dollars or possibly less.
  • Will you get your attire in a brick and mortar dress shop, a salon, a dressmaker, on the Internet, look for private sellers?
  • Shopping on the Internet will save you a lot of money because the sellers do not have the operating expenses stores have. So they pass the savings on to you. However, to purchase on line you need to provide the seller with accurate measurements or dress size.

For the men: You need to decide if they should wear their own suites and button down shirts or tuxedos. When it comes to tuxedos, they are usually rented. Here too the question is: “who should pay the rental fees.”

Like the ladies, the men wear jewelry such as cufflings and tie clips. Since you probably intend to gift your attendeds, gifting them with jewelry is very appropriate.

Destination Wedding and Honeymoon

Destination Weddings are very popular. The main reason is that they leave the attendees with a lifetime of memories.

With the escelating costs of tradional weddings, many brides and grooms choose to combine their wedding and honymoon. Basically they invite only their families and very close friends. So, instead of feeding many peple, some of whom, such as coworkers of their parents, the bride and groom are not even familiar with, they prefer to provide their loved ones with a memorable exprience.

Planning a Destination Wedding is very different from planning a traditional wedding. Once you decide on the location, you may need to hire a wedding planner who knows what is available in their area. However, if you have friends or family in that vicinity, they may be able to coordnate your wedding to your specificatons.

Case in point; My granddaughter who lives in Texas, is planning to get married near Rochester, NY in July. Her future in-laws live there. So, she and her groom provided his parents with instructons, and trust them to plan and execute the wedding. I can’t wait to fly to NY for the wedding.

If you plan a Destination Wedding – Honeymoon, be sure to draw yourselves one packing list for the bride and her needs and one for the room and his needs. Make sure to include your driver’s and marriage licenses, cash and credit cards.

You have to prepare to work with Wedding Vendors, Professionals And Service Providers

To choose the wedding vendors, professionals and service providers who are right for you, you will need to interview them. Don’t be shy! Negitiate with them. They want your business. Before you choose, be sure to interview at least 3. For example: Interview at lease 3 florists. Ask to see samples of their wedding arranements and choose the one that impressed you most with both their work and the price that is most compatible with your budget. When you interview bakers, make sure to not only see samples of their wedding creations but taste a few of their goodies. When it comes to photographers, depend on their work. Photographers are not vendors to save money on. You want the very best! this is the only vendor that will create your wedding memories, to enjoy and pass on to your children and theirs. Be very choosy!

Create Your Wedding Day Schedule!

By the clock. Hour by hour.

By activities both at the ceremony and at the reception.

Ceremony

as a ceremony site you may choose either your place of worship or the location where your reception will be held.

Choose and appoint your officiant to preside over your marriage ceremony. Some officiants may quote you a fee for their service. Others especially within your place of worship require no fee, but expect an honorarium.

You may want to personalize your wedding ceremony with flower arrangements, and family traditions. Add your own touch such as tying a knot, lighting a unity candle, the wine ceremony where white wine and red wine are combined, representing the souls of the bride and groom uniting as they have become soul mates. How about inviting the mothers and giving each a rose?

The order of a Christian ceremony processions is different than a Jewish one. Both are different than a Moslem one. Indian and Oriental are still different. And so on.

You also need to:

  • Pick and choose the music you want for the ceremony,
  • Readings you want recited,
  • Pew seating arrangements for the family. Usually the front row of the sanctuary.

Reception Venue

Your wedding reception does not have to take place in a wedding hall or hotel ballroom that are very expensive. Instead, you can get creative have fun and save a lot of money.

You may choose to have a beach wedding, a garden wedding, a wedding at a historical site, an apartment complex club house etc.

Once you secure the wedding reception location, it is time to plan the reception and figure out your costs. Note: The recepion is the most expensive part of the wedding but, you can control the costs.

Your saving depend on the location and the vendors, professionals and service providers. Keep reading and you may get some option ideas.

Reception Rentals

Most wedding halls provide you with all your reception needs. However, if you choose an alternative wedding reception site you may need to rent chairs, tables, and unless you provide them, table cloths, napkins, dishes, cups, flatware etc. you’ll need to rent them too. If you hold your reception in a garden, on the beach, have a barbeque reception etc. using paper products is acceptable. In fact it makes clean-up easy. But, you may still need to rent furniture. Finding the right rental company depends on their price and whether they deliver, set-up and pick-up.

Bakery

Every wedding must have baked goods, the most important of course is the wedding cake. Yet there is a way for you to save money.

Don’t be shy! Ask wedding invitees to help and participate in your wedding. Find out if there are any bakers and ask them to bake goodies for your wedding. You may even find bakers who will be able to create your wedding cake. Most will feel honored to be asked and you will save money.

Finding the right bakery is quite easy especially if you have been to a wedding recently. Ask for word of mouth recommendations. visit and interview at least 3 bakeries.

  • See their work,
  • taste their baked goods,
  • find out if they charge for cutting and serving cake to your guests,
  • negotiate the prices,
  • calculate additional costs,
  • select the bakery you want to hire for your wedding.

Once hired, you will need to provide the bakery with the approximate number of servings.

Catering

When it comes to catering, you have lots of options. Some depends on your wedding style, the number of guests, and the time of day your wedding takes place. morning or early afternoon wedding – (lunch can be a catered sit down, light buffet, salads and cold cut sandwiches, finger foods ), afternoon wedding – (light buffet, salads and cold cut sandwiches, barbeque, finger foods or tea time and deserts) evening wedding can be casual (serving a buffet) or formal (serving a catered sit down dinner with a few courses).

If you plan on a catered meal, whether a sit down or a buffet, choose the caterers carefully.

  • Make sure that they have a license and are top graded.
  • Ask to see their food presentation. You must be impressed to impress your guests.
  • Request a menu that you can select from.
  • Taste, taste and taste some more.
  • Be sure that the food meets youe expectations.
  • Compare the presentarion, the food choices and the pricing of at least 3 caterers before you hire.

Your reception food setting

You can:

  • Have a catered and served sit down lunch or dinner,
  • Provide your guests with a catered self serve buffet,
  • Serve a buffet with food items you or your family and friends provide. Here you can be creative.
  • treat your guests to a tea-time and desert party reception, a barbeque or even a picnic, etc.

The FREE, personalized and printable wedding planning guide you should download from our magazine, offers you ideas for Self Catered Buffet. It includes items and quantities needed for 50 or 100 guests.

You must also decide if you will serve alcoholic as well as non-alcoholic drinks. If you plan to serve alcoholic drinks other than the toasting champagne:

  • Will you place a bottle of wine on each table?
  • Will you hire bar tenders to serve your guests?
  • Will it be an open bar where guests pay for their own drinks? (This is quite common.)
  • Will the bar tenders charge you a ‘corking fee’?

Florist

Flower selections offer you many options.

You can choose:

  • fresh flowers,
  • silk flower,
  • seasonal flowers,
  • flowers to match your wedding colors,
  • locally grown flowers,
  • imported flowers,
  • to have flowers purchased in a store,
  • to order fresh flower arrangements from stores like Costco or Sam’s Club
  • to have stores like Michaels or Hobby Lobby create your arrangements from silk flowers
  • Order your flower arrangements from a wedding florist.

Note:

A wedding florist will set-up your flower arrangements in your ceremony site and at your reception.

Stores will not. When you order flower arrangements at a store they will have the flowers avaiable for pick-up. You or someone you designate will have to pick the flowers up, deliver them and set them up at both the ceremony and the reception sites.

Yoy will need to provide the florist or your designee with information about delivery and set-up at the ceremony and reception Locations.

Music And Entertainment

Music and entertainment are the soul of a wedding celebration. However you have options.

You can choose:

  • live performance, (live band, live singers, live entertaunment) etc.
  • a DJ – Master of Ceremonies,
  • pre-recorded music, or music right out of your computer. – You will need to set up good speakers.)
  • classical selections,
  • dance music
  • Songs of specific era ( the 20s, the50s, the 60s etc.)

Photographer

When it comes to a photographer, choose the very best! Do not hire a photographer based on price! Hire the photographer whose work quality is more than superb. The same goes for the videographer. Your wedding pictures will become a family heirloom. They will be handed down to your children and theirs and will tell the history of your family to up-coming generations.

Transportation

It is most important that you arrange for transportation. The transportation company must be super reliable!!! You don’t want anyone stranded!

You need them to:

  • transport out of town guests from the air port to their hotel or other lodging facility.
  • you will have to arrange guests’ transportation from the hotel to the ceremony and to the reception and back to their hotel or other lodging facility.
  • You will need special transportation for the bride and groom too.

You will need to provid a transportation providers with all the details: Service date(s) event(s) number of guests, pick-up locations, times, etc.

Our Wedding Rings

Budget for your wedding rings and selct them accordingly.wll they be gold, platinum, another metal, with or without diamonds, what shape diamonds?

Don’t forget to budget for:

  • Wedding Favors for your tables
  • Gifts for your family members and wedding party.
  • Tips for your vendors
  • Taxes if applicable

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Financial Planning to Meet Your Future Goals

All of us do some bit of planning to manage our income, savings, expenses, future liabilities (money we expect to spend in the future) whether we understand anything about financial planning or not. While we may be managing it well for now, it may not be the best way to do or it may not give us the best results. While financial planning may sound technical, all it means is how do you recognize your future earnings and liabilities today, list down your current earnings and expenses, see if there is shortfall between what you’ll need in the future and what can get to with current means and then plan your savings and investments to overcome that shortfall.

List Current Income & Expenses:

Start with your current income which should include your salary, salary of other working members in the family, any other income like rent, business income etc. Add it all up and remember to also deduct the taxes you’ll pay on each of the income to finally arrive at the net income for your family at present.

After having arrived at your family’s net income, deduct all expenses like household expenses for the year, tuition fees, loan EMIs or any other short-term liabilities (expected within next 3-5yrs) you foresee like renovating the house or a medical treatment etc. Post this deduction what you now get is the savings you have that you need to invest wisely for the future.

Setting Future Life Goals

The next step in financial planning should be putting down all your future financial liabilities, the time when they will arise, the amount you will need etc.

Goal 1: For instance, if you are a 40 yr old man and expect your daughter’s college education to be due after another 8 yrs and anticipate this may cost around 30 lakhs then, will you have the money to finance it? Decide on an investment and the amount that you need to make today to achieve this goal 8 yrs later.

Goal 2: Similarly, if you intend to retire at 60 yrs, you need say 1 lakh p.m to maintain your current lifestyle which is INR 50,000 in today’s value. Given the advances in healthcare, you can easily expect a 25-30 year long retired life. The money you need to live your retired life can be funded by a long-term low risk investment (like debt mutual funds, pension plans) made today. Set aside some money for such an investment to be made today.

Goal 3: You may set aside money for buying some health insurance that you’ll need during your retired phase or even earlier. The insurance premium needs to be funded from your current savings.

The goal setting process helps in understanding your future requirements, quantifying them and making investments in the right asset class to fund each of the goals when they become due.

Asset Allocation:

While asset allocation can be done along with goal setting, it is better to understand how asset allocation can impact the success of your financial plan. You can invest your savings in various asset classes like equity, debt, gold, real estate etc. Look at the investments you have already made like if you own a PPF or EPF account, money you have invested in bank FDs, home loans you are paying etc. From the current savings and investments, you have already made, calculate the percentage of allocation made to each asset class. For instance, all bank FDs, PF amounts, govt bonds, debt-oriented pension plans should be classified as debt. Any money invested in IPOs, company stocks, equity mutual funds should be classified as equity, loan EMIs should be classified as real estate etc.

As a thumb rule, 100 minus your current age should be allocated to equities and equity like product. If you are 40 yrs old, 60% of annual savings should be invested in equity like products and the balance in debt products. If your current investments don’t seem to reflect this, try balancing your investments by reducing the money you put in debt products like FDs and bonds and divert that money towards equity mutual funds or stocks.

Most people are not comfortable investing in stocks as it requires special research, constant monitoring and a lot of undue stress. Hence equity mutual funds are a better option since your money is professionally managed by fund managers who do all the research on companies before investing and continuously monitor the performance of the fund by buying good stocks and selling underperforming stocks.

Start Early

You must start your financial planning early because this will give you the advantage of compounding example whichever option you choose to invest in, your money will get to grow for longer duration with returns compounded every year.

Annual Review & Rebalancing

While a sound financial plan is a good starting point, following it with discipline and rebalancing your portfolio every year is very important. Since life circumstances change frequently, you must relook at your plan along with your financial advisor and make changes to reflect your new circumstances.

Event Planning Career – How To Develop An Enriching Career

A career in event management can surely take you places if you are serious of making a career of organizing events and managing them on a large basis. Event management has come to be recognized as a management profession by many companies and educational institutions in the past decade so much so that leading universities have started offering degree programs in event management to individuals who are looking as event planning as a career option.

Event planners are also known by different names many of which include, conference coordinators, program managers event managers and so on. It all boils down to the event planner making all the arrangements for the event be it a conference, trade show, fete or a marriage party. Many business organizations have even begun hiring them on a full time basis because as their organizations are growing so are their needs for communications and event planners are a great asset when it comes to organizing conferences and meetings in the shortest of time frames.

With the logistic requirements of the business world growing at a rapid pace it is necessary for the event planner to acquire the best skill sets to be able to effectively manage business conferences and meetings. For those who are considering a career in event planning there is no dearth of opportunities waiting for them to cash in on. Apart from a regular paying jib with one of the many business houses just waiting to rope in a skilled event manager to manage their various business shows and meetings there are the opportunities of entrepreneurship.

Event managers can earn handsomely even by starting their own event management business. There are people just looking for reliable people to outsource their event management needs to. There are weddings, birthday parties to mention event management on a smaller scale then there is the grand scale event management program such as organizing large trade shows and various other grand functions of the corporate world.

Event managers have made a mark in the field of event management by successfully organizing trade shows on international levels. The Auto trade show is one such example of event planning and management. There is a lot to be learnt and earned by taking to a career in event planning. This involves a lot of traveling and meting top brass of the corporate world. The most important skill is management skills and then communication skills.

Event management professionals need to handle logistics and invitations after scouting for a location for the event venue. In fact, this is done in an orderly fashion. First identifying the event that needs to be organized, then managing the enclosures such as the stalls etc. organizing, electric power, security, sending out invitations, publicity and ensuring that everything just falls into place for the participants. The ability to achieve this is what makes successful event planners.

ICT Modernization Planning

The current technology refresh cycle presents many opportunities, and challenges to both organizations and governments. The potential of service-oriented architectures, interoperability, collaboration, and continuity of operations is an attractive outcome of technologies and business models available today. The challenges are more related to business processes and human factors, both of which require organizational transformations to take best advantage of the collaborative environments enabled through use of cloud computing and access to broadband communications.

Gaining the most benefit from planning an interoperable environment for governments and organizations may be facilitated through use of business tools such as cloud computing. Cloud computing and underlying technologies may create an operational environment supporting many strategic objectives being considered within government and private sector organizations.

Reaching target architectures and capabilities is not a single action, and will require a clear understanding of current “as-is” baseline capabilities, target requirements, the gaps or capabilities need to reach the target, and establishing a clear transitional plan to bring the organization from a starting “as-is” baseline to the target goal.

To most effectively reach that goal requires an understanding of the various contributing components within the transformational ecosystem. In addition, planners must keep in mind the goal is not implementation of technologies, but rather consideration of technologies as needed to facilitate business and operations process visions and goals.

Interoperability and Enterprise Architecture

Information technology, particularly communications-enabled technology has enhanced business process, education, and the quality of life for millions around the world. However, traditionally ICT has created silos of information which is rarely integrated or interoperable with other data systems or sources.

As the science of enterprise architecture development and modeling, service-oriented architectures, and interoperability frameworks continue to force the issue of data integration and reuse, ICT developers are looking to reinforce open standards allowing publication of external interfaces and application programming interfaces.

Cloud computing, a rapidly maturing framework for virtualization, standardized data, application, and interface structure technologies, offers a wealth of tools to support development of both integrated and interoperable ICT resources within organizations, as well as among their trading, shared, or collaborative workflow community.

The Institute for Enterprise Architecture Development defines enterprise architecture (EA) as a “complete expression of the enterprise; a master plan which acts as a collaboration force between aspects of business planning such as goals, visions, strategies and governance principles; aspects of business operations such as business terms, organization structures, processes and data; aspects of automation such as information systems and databases; and the enabling technological infrastructure of the business such as computers, operating systems and networks”

ICT, including utilities such as cloud computing, should focus on supporting the holistic objectives of organizations implementing an EA. Non-interoperable or shared data will generally have less value than reusable data, and will greatly increase systems reliability and data integrity.

Business Continuity and Disaster Recovery (BCDR)

Recent surveys of governments around the world indicate in most cases limited or no disaster management or continuity of operations planning. The risk of losing critical national data resources due to natural or man-made disasters is high, and the ability for most governments maintain government and citizen services during a disaster is limited based on the amount of time (recovery time objective/RTO) required to restart government services, as well as the point of data restoral (recovery point objective /RPO).

In existing ICT environments, particularly those with organizational and data resource silos, RTOs and RPOs can be extended to near indefinite if both a data backup plan, as well as systems and service restoral resource capacity is not present. This is particularly acute if the processing environment includes legacy mainframe computer applications which do not have a mirrored recovery capacity available upon failure or loss of service due to disaster.

Cloud computing can provide a standards-based environment that fully supports near zero RTO/RPO requirements. With the current limitation of cloud computing being based on Intel-compatible architectures, nearly any existing application or data source can be migrated into a virtual resource pool. Once within the cloud computing Infrastructure as a Service (IaaS) environment, setting up distributed processing or backup capacity is relatively uncomplicated, assuming the environment has adequate broadband access to the end user and between processing facilities.

Cloud computing-enabled BCDR also opens opportunities for developing either PPPs, or considering the potential of outsourcing into public or commercially operated cloud computing compute, storage, and communications infrastructure. Again, the main limitation being the requirement for portability between systems.

Transformation Readiness

ICT modernization will drive change within all organizations. Transformational readiness is not a matter of technology, but a combination of factors including rapidly changing business models, the need for many-to-many real-time communications, flattening of organizational structures, and the continued entry of technology and communications savvy employees into the workforce.

The potential of outsourcing utility compute, storage, application, and communications will eliminate the need for much physical infrastructure, such as redundant or obsolete data centers and server closets. Roles will change based on the expected shift from physical data centers and ICT support hardware to virtual models based on subscriptions and catalogs of reusable application and process artifacts.

A business model for accomplishing ICT modernization includes cloud computing, which relies on technologies such as server and storage resource virtualization, adding operational characteristics including on-demand resource provisioning to reduce the time needed to procure ICT resources needed to respond to emerging operational or other business opportunities.

IT management and service operations move from a workstation environment to a user interface driven by SaaS. The skills needed to drive ICT within the organization will need to change, becoming closer to the business, while reducing the need to manage complex individual workstations.

IT organizations will need to change, as organizations may elect to outsource most or all of their underlying physical data center resources to a cloud service provider, either in a public or private environment. This could eliminate the need for some positions, while driving new staffing requirements in skills related to cloud resource provisioning, management, and development.

Business unit managers may be able to take advantage of other aspects of cloud computing, including access to on-demand compute, storage, and applications development resources. This may increase their ability to quickly respond to rapidly changing market conditions and other emerging opportunities. Business unit managers, product developers, and sales teams will need to become familiar with their new ICT support tools. All positions from project managers to sales support will need to quickly acquire skills necessary to take advantage of these new tools.

The Role of Cloud Computing

Cloud computing is a business representation of a large number of underlying technologies. Including virtualization, development environment, and hosted applications, cloud computing provides a framework for developing standardized service models, deployment models, and service delivery characteristics.

The US National Institute of Standards and Technology (NIST) provides a definition of cloud computing accepted throughout the ICT industry.

“Cloud computing is a model for enabling ubiquitous, convenient, on-demand network access to a shared pool of configurable computing resources that can be rapidly provisioned and released with minimal management effort or service provider interaction.”

While organizations face decisions related to implementing challenges related to developing enterprise architectures and interoperability, cloud computing continues to rapidly develop as an environment with a rich set of compute, communication, development, standardization, and collaboration tools needed to meet organizational objectives.

Data security, including privacy, is different within a cloud computing environment, as the potential for data sharing is expanded among both internal and potentially external agencies. Security concerns are expanded when questions of infrastructure multi-tenancy, network access to hosted applications (Software as a Service / SaaS), and governance of authentication and authorization raise questions on end user trust of the cloud provider.

A move to cloud computing is often associated with data center consolidation initiatives within both governments and large organizations. Cloud delivery models, including Infrastructure as a Service (IaaS) and Platform as a Service (PaaS) support the development of virtual data centers.

While it is clear long term target architectures for most organizations will be an environment with a single data system, in the short term it may be more important to decommission high risk server closets and unmanaged servers into a centralized, well-managed data center environment offering on-demand access to compute, storage, and network resources – as well as BCDR options.

Even at the most basic level of considering IaaS and PaaS as a replacement environment to physical infrastructure, the benefits to the organization may become quickly apparent. If the organization establishes a “cloud first” policy to force consolidation of inefficient or high risk ICT resources, and that environment further aligns the organization through the use of standardized IT components, the ultimate goal of reaching interoperability or some level of data integration will become much easier, and in fact a natural evolution.

Nearly all major ICT-related hardware and software companies are re-engineering their product development to either drive cloud computing, or be cloud-aware. Microsoft has released their Office 365 suite of online and hosted environments, as has Google with both PaaS and SaaS tools such as the Google Apps Engine and Google Docs.

The benefits of organizations considering a move to hosted environments, such as MS 365, are based on access to a rich set of applications and resources available on-demand, using a subscription model – rather than licensing model, offering a high level of standardization to developers and applications.

Users comfortable with standard office automation and productivity tools will find the same features in a SaaS environment, while still being relieved of individual software license costs, application maintenance, or potential loss of resources due to equipment failure or theft. Hosted applications also allow a persistent state, collaborative real-time environment for multi-users requiring access to documents or projects. Document management and single source data available for reuse by applications and other users, reporting, and performance management becomes routine, reducing the potential and threat of data corruption.

The shortfalls, particularly for governments, is that using a large commercial cloud infrastructure and service provider such as Microsoft may require physically storing data in location outside of their home country, as well as forcing data into a multi-tenant environment which may not meet security requirements for organizations.

Cloud computing offers an additional major feature at the SaaS level that will benefit nearly all organizations transitioning to a mobile workforce. SaaS by definition is platform independent. Users access SaaS applications and underlying data via any device offering a network connection, and allowing access to an Internet-connected address through a browser. The actual intelligence in an application is at the server or virtual server, and the user device is simply a dumb terminal displaying a portal, access point, or the results of a query or application executed through a command at the user screen.

Cloud computing continues to develop as a framework and toolset for meeting business objectives. Cloud computing is well-suited to respond to rapidly changing business and organizational needs, as the characteristics of on-demand access to infrastructure resources, rapid elasticity, or the ability to provision and de-provision resources as needed to meet processing and storage demand, and organization’s ability to measure cloud computing resource use for internal and external accounting mark a major change in how an organization budgets ICT.

As cloud computing matures, each organization entering a technology refresh cycle must ask the question “are we in the technology business, or should we concentrate our efforts and budget in efforts directly supporting realizing objectives?” If the answer is the latter, then any organization should evaluate outsourcing their ICT infrastructure to an internal or commercial cloud service provider.

It should be noted that today most cloud computing IaaS service platforms will not support migration of mainframe applications, such as those written for a RISC processor. Those application require redevelopment to operate within an Intel-compatible processing environment.

Broadband Factor

Cloud computing components are currently implemented over an Internet Protocol network. Users accessing SaaS application will need to have network access to connect with applications and data. Depending on the amount of graphics information transmitted from the host to an individual user access terminal, poor bandwidth or lack of broadband could result in an unsatisfactory experience.

In addition, BCDR requires the transfer of potentially large amounts of data between primary and backup locations. Depending on the data parsing plan, whether mirroring data, partial backups, full backups, or live load balancing, data transfer between sites could be restricted if sufficient bandwidth is not available between sites.

Cloud computing is dependent on broadband as a means of connecting users to resources, and data transfer between sites. Any organization considering implementing cloud computing outside of an organization local area network will need to fully understand what shortfalls or limitations may result in the cloud implementation not meeting objectives.

The Service-Oriented Cloud Computing Infrastructure (SOCCI)

Governments and other organizations are entering a technology refresh cycle based on existing ICT hardware and software infrastructure hitting the end of life. In addition, as the world aggressively continues to break down national and technical borders, the need for organizations to reconsider the creation, use, and management of data supporting both mission critical business processes, as well as decision support systems will drive change.

Given the clear direction industry is taking to embrace cloud computing services, as well as the awareness existing siloed data structures within many organizations would better serve the organization in a service-oriented framework, it makes sense to consider an integrated approach.

A SOCCI considers both, adding reference models and frameworks which will also add enterprise architecture models such as TOGAF to ultimately provide a broad, mature framework to support business managers and IT managers in their technology and business refresh planning process.

SOCCIs promote the use of architectural building blocks, publication of external interfaces for each application or data source developed, single source data, reuse of data and standardized application building block, as well as development and use of enterprise service buses to promote further integration and interoperability of data.

A SOCCI will look at elements of cloud computing, such as virtualized and on-demand compute/storage resources, and access to broadband communications – including security, encryption, switching, routing, and access as a utility. The utility is always available to the organization for use and exploitation. Higher level cloud components including PaaS and SaaS add value, in addition to higher level entry points to develop the ICT tools needed to meet the overall enterprise architecture and service-orientation needed to meet organizational needs.

According to the Open Group a SOCCI framework provides the foundation for connecting a service-oriented infrastructure with the utility of cloud computing. As enterprise architecture and interoperability frameworks continue to gain in value and importance to organizations, this framework will provide additional leverage to make best use of available ICT tools.

The Bottom Line on ICT Modernization

The Internet Has reached nearly every point in the world, providing a global community functioning within an always available, real-time communications infrastructure. University and primary school graduates are entering the workforce with social media, SaaS, collaboration, and location transparent peer communities diffused in their tacit knowledge and experience.

This environment has greatly flattened any leverage formerly developed countries, or large monopoly companies have enjoyed during the past several technology and market cycles.

An organization based on non-interoperable or standardized data, and no BCDR protection will certainly risk losing a competitive edge in a world being created by technology and data aware challengers.

Given the urgency organizations face to address data security, continuity of operations, agility to respond to market conditions, and operational costs associated with traditional ICT infrastructure, many are looking to emerging technology frameworks such as cloud computing to provide a model for planning solutions to those challenges.

Cloud computing and enterprise architecture frameworks provide guidance and a set of tools to assist organizations in providing structure, and infrastructure needed to accomplish ICT modernization objectives.

Role of Budgeting in Planning, Control, and Resource Allocation Process in UAE Companies

Budget

Before understanding the key concepts of budgeting, it is important to understand the meaning of budget. A budget is used to make a documentation of the translation of plans into money. So, the amount of money that needs to be spent in the planned strategies of the company would lie under the budget of that company. These planned strategies include the expenditure that a company incurs and also the income that the company predicts to make. So, in other words, a budget helps one to make an estimation of the amount of money that would be required for the company to handle the projects undertaken by it. It must also be understood that a budget is not made permanently. There are conditions under which a company can make changes in the budget and go as per as the needs of the market. As for example, if a company sees that the use of computers is not as had been planned in the budgeting; it would either replace it with something or not make any investment at all in the field. This is where the utility of controlling comes into the picture. Other than this a budget is also significant from other perspectives. If one talks about the resource allocation, budget has an equally important role to play in it. The reason for the same is that let’s say that a company has budgeted that it can afford a certain amount of power supply for a certain project that is conducted in a village. Under the conditions, the amount of human resource that would be required to carry out the project can be determined from the budget itself. Normally a budget is of three types. They have been mentioned as follows:

Survival Budget: This form of budgeting is important in the boundary conditions. It estimates the minimum resources so as to complete a particular project. So, if a company has a look at the survival project, there is one obvious analysis that can be done. This is that under the most optimistic of the situations, the resources allocated would be sufficient. There would be very little margin of error under the conditions.

Guaranteed Budget: This budget is formulated when there is a guarantee of a particular amount of income at the time of formulation of budget. So, when a budget is made from this perspective, this income is taken into consideration. If somehow, the debtors are not able to provide the income that the company used as guarantee before making the budget, it would have to switch over to the survival budget formation.

Optimal Budget: The third form of budget is the optimal budget. This budget is used under the conditions when there is extra money in the company accounts or else the company feels that it could raise extra money from the market. So, if the position of the company is good then this form of budgeting can be applied. As for example if we consider a very famous company in the infrastructure sector, Emaar, we would find that the company has the ability to raise a lot of extra capital from the market. So, Emaar can hope to use it in utilizing the money to plan a few more interesting projects like it had made the longest mall in the world and the tallest tower in the world. Both these projects were outcomes of an optimal budget made by the company.

Budgeting Responsibilities

Owing to the circumstances under which a budget is fruitful, the organizations should be highly selective in handing over the responsibilities of making the budget. There are a few pre-requisites of making a budget. They are as follows:

The concerned employee should have a clear understanding of the company’s values, strategies, and plans that lie in the near future.

The employees must know the importance of cost-efficiency and cost-effectiveness.

Also, the concerned employee must have knowledge about the resources that would be used to generate and raise funds.

The above pre-requisites are essential for the company if they have the motive of using budgeting in the planning, controlling and resource allocation purposes.

So, it is generally recommended that a company has a budgeting team that has an optimal size so as to prevent any discrepancy with the formation of the budget. Under all situations where the concerned members of the finance department have difficulties in planning the budget, they would have to consult the board of members for the same. For a situation like this to arise, the planning in the company must certainly have been wrong. So, we can see that the new planning would depend solely on the fact that budget allows the same to happen. Under all other conditions, the estimated plan would have to change. (Budgeting, 2010)

Role of Budgeting in Planning

Here we are taking the telecommunication giant, DU into account to understand the role played by budgeting in the planning process. It was only about a couple of years ago that the company introduced its new plan. This new plan was about introducing the pay-by-the second plan amongst the services of the company. This was done as per as the optimal budget plan of the company. DU had formulated a budget where it got the option of introducing a new facility with the extra money that it hand in hand. As the company analysis shows that DU was climbing the ladders of success even then, so this was certainly a major step in the making. Moreover, the funds that had been allocated in the budget were enough for the fact that the company could start this service any time it wanted. So, it chose the time when the nearest rival company Etisalat had screwed up its plans after introducing the Blackberry services. As an optimal budget is that which allows the time for starting a new investment, this was just the time and DU made the most of the opportunity. Today this plan is among the most revenue-fetching plans that the company had ever introduced in its services. So, budget played an extremely important role in the planning of this success of the firm. Had the company planned to use the extra money as a surplus or retained or reserve, it would never have been able to introduce this service. So, one can see the importance of making the right budget at the right time can help in planning for great successes in a company. There are other examples also where one can see the planning being aided by preparation of budget. The tourism department of Abu Dhabi was guaranteed of the fact that it would have a considerable amount of income from the flourishing tourism in the country due to the onset of some of the most peculiar activities in the country. Under the situation, the department used the guaranteed budget to enhance the cultural activities of the country. A number of museums have been renovated because of a planned budgeting under the guaranteed budget plan. The department had planned that with the money they would have from the already existing resources in tourism, it would evoke a cultural feeling in the country and its natives, It has been able to do it successfully as per as the statistics of the museums of the region are concerned. So, once again we see that budgeting has helped in planning of such an important landmark in the country.

As in general one can say that budgeting is about aiding a company to make plans for the future. It is that process where a company can be assured of the fact that it would have enough money so as to carry out the requisite projects. We are all acquainted with the fact that the world is about competition as of today. Every company needs to plan new projects so as to show its core competency. Under the conditions, no company can automatically start investing on its research and development. It has to come through a substantial degree of planning which could only be possible after the budget of the company allows it to do so. In all other situations it would finally have to terminate the services with an excess of demand or supply.

There are also other instances where a company can use the principles of budgeting in order to carry out its planning. This can be seen in the case of training. Every planning of training has to be supported by budget. This is one of the foremost criteria of training. There are a number of instances in the country where the Government is implementing programs like Emiritzation. If the budget of the company does not support such plans they would certainly not be executed. The loss can be huge under the conditions. The first case would be a monetary loss as an incomplete training would actually be of no used as it would be insufficient to fulfill the company’s criteria. If some small companies do place employees with an incomplete bit of training, it would make the company even smaller!

So, we can see how budgeting governs this chain of planning which of not executed in a suitable manner could bring about adverse results. (The Importance of Budgeting, 2010)

Role of Budgeting in Controlling

As in the case of planning, budgeting also has a special role to play in controlling of an organization. We have seen that a plan would simply lay the conditions of taking on a particular activity. What follows is its controlling in the implementation phase. Let’s say that a company wishes to promote its products or services in the trade fare of Dubai. This is one of the places where controlling comes into play with respect to budgeting. Dubai Trade Fare is one of those occasions when a number of companies use the best of means to promote their products. With an adequate amount of control, the companies would never be able to compete in the pool of so many. So, a budgeting has to be done to choose the HR and marketing department which would be responsible to control the scenario.

Without a proper budgeting in this respect, the company would make inefficient decisions and after a while, there would be no control over the promotional measures of the company.

There are also a number of chances where a company goes with leisure expenses. It does increase the value of the company for a particular period of time but after a while there has to be an end to it. Now, with a planned budget under the conditions, the companies would be able to restrict themselves from over-spending as the budget would not suit their expenditure. This requires the company to make a survival budget. As we can see a survival budget would certainly take care of the budgeting requirements of the company. If the employees are aware of the fact that they would not be able to complete their respective projects with the type of expenditure they are doing, they would certainly shift to other economic reasons. This way a company can also control the activities of the employees. Once a planned budget is produced the whereabouts of the employees can also be checked as they would be on a hire. The amount of time given to them in the budget would be fixed. If they are unable to finish their respective works in this stipulated time they would see the effect on their salaries or wages. So, this way, the company’s activities, employees, time and money can all be under control with the introduction of budget in the company’s financial plan. The company would certainly become more efficient if it works in a controlled manner. So, this would be for the mutual benefit of both the employees and the company as well. (Controlling a Budget, 2010)

Role of Budgeting in Resource Allocation

A company’s success is highly dependent on the resource allocation. This has to be done optimally so as to complete a certain project. The law of economics suggests that a company has the least resources and has to make the most of it. So, only an appropriate resource allocation would help this happen. This would be in terms of human resource, raw materials, equipments, money, time and all other attributes that take for making a project successful. Here again, the budgeting of the company plays an important role to play. The reason for the same is that in all the sectors that have been talked about here, only a planned budget could decide the maximum a company can afford. Let’s say that ADNOC has the plan of staring a new subsidiary. Under the conditions, it would have to make a budget where the company could allocate the amount of human resources in order to make this happen. Not only this, there are a series of activities that would have to be done in the process. Much of the time, there would be two processes going on and at times even one. So, a planned budget would estimate the amount of money that the company can afford throughout the process. Based on this, the processes would have to be allocated in a manner where the company can make the best use of the human resource available. If ADNOC has 200,000 AED for the purpose, and there are 10 slots, rather than allocating 20,000 AED per slot, the company would have to see the priorities of each slot. If a particular slot requires double the number of processes than the others, the resources would have to be allocated accordingly for the same. Now this can only be possible with an appropriate amount of budgeting. If the budget of the company does not allow double resource allocation for a particular slot because of other activities, then the company would have to come up with other alternatives. Had there been an inability of a budget, the company would allocate double resources and finally land up with none available for a process that has little requirement. So, we can see that even the process of resource allocation requires budgeting to a large degree.

Talking about the company Emaar, as per as the organizational size of the company, there has to be a proper budgeting done. The reason for the same is that every department requires an adequate amount of human resource and funds. If the company’s budget for a particular project is 200 million AED, the company would also have this budget divided into different departments. Every department would have to use only the allocated funds to support its human resource and all other requisites prior to conducting the project. If the construction department spends so much that the company is not able to use any funds for its advertisement, in this world of competition, even a company like Emaar would have to bow down to others in the league. There are so many options that people have for residents that promotion under forced conditions could change every profitability ratio of Emaar. So, here again we see the hierarchy that could be affected because of the inappropriate use of resources that would result from the non-availability of a budget that could suit the purpose. (The Basic Budgeting Problem, 2010)

Conclusion

So, one can see that a budgeting process has a number of utilities in the projects of a company. This could be from the perspective of planning, controlling or resource allocation. Every company has the desire to be at the top. Finance has a special role to play in the same. Te steps of laying down an appropriate budget are as follows:

Firstly, the concerned person should lay down all the places of investment with respect to a particular project.

Next, make an estimation of the unit cost of every product that would be manufactured in the process.

Next, analyze the resources that would be sufficient to provide for the unit costs found.

Next make a proper budget format so that it is clear to all the departments and they the amount of allocation for them in all the respects.

It is also advisable to make notes so as to be able to explain the budget better.

Next, it is required to take a feedback on the budget so as to see whether it is applicable to all the departments or not. If not, then it would have to be re-planned.

Finally, make the final documentation so as to be able to help in planning, controlling and resource allocation as has been suggested earlier.

With all the above processes followed, a company can afford to perform all the financial activities in its respective projects. It must be remembered that only a systematic design of budget as has been concluded could be used for the mentioned cause.

Common Mistakes When Planning Your Medical Spa

Everything starts with a business plan: If you don’t have one. Write it. A good business plan will help you get a handle on all of the things that get glossed over in the excitement of starting a new business. It’s also a usual requirement for getting financing.

Remember that this is a medical business and comes with special requirements. Non-physicians can not employ physicians, medical oversight, HIPPA compliance, and a host of other regulatory issues need to be addressed. Play fast and loose with these rules and you’re asking for trouble. (One of our local competitors in Utah was not providing adequate physician oversight. The state walked in one day, confiscated all of their technology and patient records and closed them down.) All lenders want to know how you’re going to handle these issues. ADVERTISEMENT

Financing is easy. Financing smart is hard: Speak the words “medical spa” as a physician and you’re everyone’s best friend. Banks, lenders, technology companies will all have big smiles on their faces and papers in their hands, ready to lend money or finance everything you need. If you’re not a physician it’s going to be harder.

If you need money or a line of credit for needs other than technology, a bank will probably be your first stop. Banks will provide the best rates but are the most rigorous in investigating borrowers and have the least tolerance for risk. Banks will require that you have spotless credit and that the entire loan is secured. In most cases, everyone who owns 10% or more of the business will be personally responsible for the loan and have to provide two or more years of tax returns. Be prepared for a blizzard of paperwork. Banks will want to see financial statements, cash flow, a business plan (although they don’t read it), and have a little visit.

The bank is going to want to know what the funds are intended to be used for. They want to see tangible assets that have a market and can be sold if the business fails or you can’t make the payments. They don’t want to hear that you need more money for marketing and advertising or salaries that don’t have any resale value.

The money that banks will lend you will take the form of a loan, or a line of credit. Loans have a set schedule and payments. A line of credit is somewhat different. The idea is that the bank extends a line of credit that you may draw on. Interest is paid only on the amount of money that is used. However, banks usually require that the entire balance is paid off and unused for one month every year to ensure that the business is liquid. If you can’t meet this requirement, the entire line reverts to a loan.

Some bankers are helpful and some are not. In one instance a branch manager told one of our accountants that wanted some information that “he didn’t need our business and we could just live with that”. Avoid these types if you can. A friendly banker can go a long way in securing loans and providing a little flexibility if things don’t go exactly as you planned. If you find a great banker, send him a Christmas card and some cookies once in a while.

If you are in the fringe of what a bank can tolerate risk wise, they will often suggest or apply on your behalf for an SBA (Small Business Administration) loan that’s partially guaranteed by the government. (sba.gov/financing)

Half of something is better than all of nothing: If you’re going to need more money than you have in assets, you still have a couple of options. These involve partnerships, joint-ventures, venture loans or equity.

Most start-ups involve some form of equity trade. Partnerships are a good example. Sweat equity in the early stages provides ownership in lieu of payment or salary. It’s very common for entrepreneurs to take little or no money, sometimes for years, until the business is on its legs. Sweat equity at this stage usually extends only to the founders but may extend to badly needed partners. When we started Surface, I took more than an 80% reduction in income.

Equity: The simple rule is; the more money you need and risk you entail, the more equity you’re going to give up.

Angels: This is the first stop for most entrepreneurs. Angel financing (also called seed money), is usually raised from friends and family or “high net-worth” individuals. In some cases you may find “Angel Groups” that meet together and look for investments. Angels are usually found a the early stages of a business and are often bought out when larger investors come in.

Venture Debt: A recent surge in venture debt has made its way into the market and is worth discussing. Venture debt is basically a venture loan. The lender charges a higher interest rate than banks are allowed to (often around 14%) and accepts more risk in return. In addition, you will have to give up a small percentage of your company in what are called warrants. This small percentage (usually less than 5%) allows the lender to share in any potential upside. Venture debt is worth considering if you’re sure of success and you don’t want or need to give up a large equity position in you company. But you’ll still be personally responsible.

Venture Capital: When most people think of raising large amounts of money, they’re thinking of venture capital. For most start ups, venture capital is not an option. VC money has some downsides though. It is hard to get and extremely expensive. When you add up the entire enchilada, you’re looking at about 80% compounding interest each year in return for that money. VC’s are looking for an investment term of three to five years and a ROI (return on investment) of 700% or more. Whew. You’re also going to loose complete control of your company and have someone constantly looking over your shoulder. There are cases where this actually makes sense. Many VC are extremely well connected and bring these resources to the table.

So, now you’ve got the money you need. What are you going to do with it?

Most medical spas have grown out of an existing physician practice. The idea of having technicians producing revenue, low additional overhead, increased patient flow, and the feel that “I could do that” is attractive to a large number of doctors who are tired of the grind of medicine. (We’ve been approached by a surprising diversity of physicians looking to enter this market including; anesthesiologists, cardio-thoracic surgeons, and even podiatrists.)

Multiple Locations: After some initial success, many physicians and MedSpa owners attempt to open additional locations. (For some reason, these second-clinic startups are often opened by a relative, usually a wife or daughter.) These second locations never achieve the success of the first clinic for a very simple reason; their a completely different animal. If you’re thinking of opening multiple locations you’re work load just tripled. Multiple location sites are outside the abilities of most physicians and involve a much greater financial risk. Staffing and human resources, legal issues, medical oversight… most fail within the first year.

Successful multi-location practices are built around systems. If your first clinic doesn’t run without you there, you’re not ready for a second. Expanding to fast is a sure why to overextend your resources. Then you’re in big trouble. If you’ve closed a second clinic, lenders are going to be very wary of lending you money.

The Turn Key Solution: Franchises and consultants love to drop this phrase. The idea is an attractive one. Experts will guide your steps to financial glory. Marketing, financing, training, everything will be delivered in a nice little box with a bow on top. But, knowing a number of franchise owners and the problems they’ve encountered, I would give this advice; beware.

The current crop of franchises have a lot of problems. (One of them in California was shut down for selling medical practices to non-physicians. They’ve since reopened and are among the most aggressive advertisers.) Franchises are attractive because they claim to have all the answers. If you’ll just write the checks all of your troubles will be over. Not so fast. What you’ll really get are some manuals, pre-written scripts for sales, and bad ad-slicks. You’ll also get: locked into specific technologies that might be second-tier (the franchise gets kick-backs), spend money you could use elsewhere, and pay royalties on all of your income. (The franchises that offer a flat fee are an even worse idea. They have absolutely no motivation to help you.)

Big dogs eat little dogs. The next five years will see dramatic and disruptive changes in this marketplace. Large, well-financed medical businesses with smart physicians and high-quality care are going to open up next door to you. (You’re the corner store, they’re Wal-Mart) These businesses will be category killers and if you’re not well established with a broad market presence and multiple revenue streams, you’ll be gone.

The $80,000 towel dryers. Choosing the right technology is one of the things that will let you move ahead a step, or put you in cement boots where you stand. I always think of the way one physician described the pair of IPLs [Intense Pulsed Light devices] that he’d bought; as $80,000 towel dryers. Before you decide on which system to buy you’re going to need to crunch the numbers. How many shots will the IPL heads last for until they need to be rebuilt? How much support is included? What kind of training is provided? Does the device work better than its competitors? Before you sign your next few house payments away, make sure of your technology decisions.

Buy or lease. Leasing is the best way to go if you want to pay for your equipment as you use it while preserving your capital. Many of the technology companies have delayed payment plans as long as six months. Buying used equipment is often the best way to save money if cash flow is not an issue. (We purchase used medical lasers and IPLs online from a broker we trust and sometimes negotiate with our buying power for other physicians.) You can often save up to 40% off the price of a new machine if you have the cash on hand.

Don’t guild the lily: Cash flow is a problem many start-up medical spas face. Revenues and growth projections are commonly exaggerated in the excitement of a new business. Before you invest in embroidered leather treatment tables, make sure you can pay your bills. One medical spa startup spent $350,000 on build out and didn’t have any money left to attract patients. They were out of business in four months.

A few simple finance rules:

o The Golden Rule is actually translated as: He with the gold makes the rules.

o You will end up being personally responsible for the money: Physicians sometimes think that they can use equity in their medical practice or future earnings as security. Nope.

o Be frugal: Take only the amount of money you need. It’s tempting to take as much money as you can get. Don’t. All the money you take will come with strings attached.

o Take enough money: Lenders hate it when you need additional money. They worry something’s going wrong in the original plan.

o Sometimes you can’t get there from here: Competition is fierce. If your market is already “owned” by a competitor, think carefully before going into debt to compete in a market you can’t win.

Tighten your belt: Financing is like anything else. In order to really find the best solutions you’re going to need to do some research. Find a mentor, someone who’s done it before and knows what to avoid. And remember, the most common reason that businesses fail is not lack of capital, its poor decision making.

Resource links for all of the businesses and information discussed in this article are available online at MedicalSpaMD.com

The CEO’s Guide To Succession Planning – Managing Risk & Ensuring Business Continuity

Introduction

Once reserved for the upper echelons of senior management, and often viewed as replacement planning should catastrophe strike, today’s succession planning is being redefined. The discipline has broadened in both breadth and scope to become a central component of board-level strategy.

Succession planning focuses on managing risk and ensuring continuity across all levels of the organization – risk of untimely departures of critical personnel, risk of retirees taking their skills and knowledge with them and leaving nothing behind, and risk of losing high value employees to competitors. It does so by helping your business leaders to identify top performers within the organization, create dynamic “talent pools” of this critical talent that other leaders can leverage, and prepare and develop these high performing employees for future roles.

If this was easy, everyone would be doing it. The problem that exists today is that succession planning is barely automated, let alone optimized. This CEO guide provides five key tips for jump starting your succession planning efforts.

1. Automate and Reduce Costs

Today’s succession planning efforts are characterized by fragmented, inconsistent, paper-based processes. Indeed, 67% of companies are still primarily paper-based, according to a global survey conducted by SumTotal.

Conventionally, business and HR leaders will spend weeks or even months manually scouring different parts of the organization for information needed to build lists and pools of nominees and successors for specific job families or positions. The information required to generate the lists often includes self assessments, past performance appraisals (often paper-based), and 360 feedback. After a lengthy period of information gathering and aggregation followed by manual analysis (e.g., nine-box, gap analysis), the results are printed and collated into large three-ring binders for use in executive planning meetings. This time-consuming, inefficient, and costly process is still commonplace today.

To effectively transform succession planning from a manual, paper-based process to one that is systematic and technology-enabled, CEOs must focus on laying a solid foundation supported by strong executive leadership.

Program & Process Foundation

  • Establish dedicated management function (e.g., program management office) with CEO-sponsored executive leader or council (with senior representation from line-of-business, geography, and corporate HR)
  • Define core succession process along with key constituents and tasks at each step of the process; Clearly articulate touch points to other business processes (e.g., performance management, career development)
  • Understand implications of change with emphasis on managers & employees
  • Align program with broader business strategy
  • Determine initial scope (e.g., enterprise-wide, divisional)
  • Define processes independent of technology

Technology Foundation

  • Must support and enable key processes
  • Must integrate learning and development
  • Must link seamlessly to other business processes, especially performance management
  • Must be flexible and configurable to meet unique needs
  • Must centralize and consolidate key information and data
  • Must be easy for managers and employees to use

2. Drive Succession Planning Deeper into Your Organization

Many CEOs still view succession planning as replacement planning to designate successors in the event of a catastrophe befalling senior company leaders. Indeed, succession planning penetrates only the highest levels of the organizational hierarchy, according to survey data. Only 35% of companies currently focus their succession planning efforts on most critical roles within the organization.

Yet a most dramatic transformation is underway: 65% of the organizations surveyed plan to extend succession planning to all critical positions within the two years. Applying succession planning beyond the top layers of management is critical to retaining high performers across all levels of the organization and mitigating the risk of untimely departures of personnel in high-value positions.

The key to extending succession planning into the organization is to provide career development planning to employees. Indeed, fully 97% of business and HR leaders believe that a systematic career development process positively impacts employee retention and engagement. These leaders also believe that providing career advancement opportunities as well as dedicated development planning to employees are the two most important mechanisms for retaining high performers.

Retaining existing employees not only has the potential to minimize the effects of talent shortages, it also provides significant and tangible cost savings (since replacement costs range from 100%-150% of the salary for a departing employee).

3. Establish Dynamic Talent Pools to Improve Pipeline Visibility

Centralized talent pools provide CEOs with global visibility into their talent pipeline and overall organization bench strength. They provide a mechanism for ensuring that the organization’s future staffing plans are adequate, thereby reducing risk and ensuring continuity. To be truly effective, talent pools need to be dynamic in nature. For instance, if an employee is terminated, that person should be automatically removed from existing successor pools. Alternatively, if an employee closes a key skill or certification gap that had previously kept her from being considered as a successor, the pool should be updated appropriately. Talent pools that are inaccessible or not up-to-date are of little use to decision makers.

A key element of making talent pools accessible is in-depth searching for talent exploration. A talent pool is not much good if managers cannot easily view, track, update, and search for potential successors. Dynamic talent pools should take the guess work out of succession planning by aligning employee assessments, competencies, development plans, and learning programs. Proactive system monitoring ensures that as employees learn and grow, talent pools are dynamically updated to reflect the changes. It is this element in particular – supported by robust reporting and analytic capabilities – that helps CEOs make more objective staffing decisions and better plan for future staffing needs.

4. Promote Talent Mobility to Retain High Performers

Industry analyst firm Bersin & Associates defines talent mobility as “a dynamic internal process for moving talent from role to role – at the leadership, professional and operational levels.” The company further states that “the ability to move talent to where it is needed and by when it is needed will be essential for building an adaptable and enduring organization.”[1]

Talent mobility is:

  • A business strategy that facilitates organizational agility and flexibility
  • A mechanism for acquiring and retaining high performing and potential talent
  • A recruiting philosophy that favors internal sourcing over costly external hiring
  • A method for aligning organizational and individual needs through development
  • A proactive and ongoing approach to succession planning rather than a reactive approach

A systematic talent mobility strategy enables business leaders to more effectively acquire, align, develop, engage, and retain high performing talent by implementing a consistent, repeatable, and global process for talent rotation. Without a cohesive talent mobility strategy, CEOs face several risks:

  • Focus on costly external recruiting vs. internal sourcing
  • Wrong hires (cost can be 3-5x person’s salary)
  • Increased high performer churn
  • Reduced employee engagement
  • Reduced flexibility as business conditions change

CEOs should consider the following integrated processes – and a complete technology platform to support them – to promote and enable talent mobility:

  • Current workforce analysis:Includes detailed talent profiles, employee summaries, organization charts, competencies, and job profiles.
  • Talent needs assessment: Assess employees on key areas of leadership potential, job performance, and risk of leaving.
  • Future needs analysis:Development-centric succession planning to create and manage dynamic, fully-populated talent pools.

5. Integrate Succession Planning to Broader Business Processes

Succession planning is not a silo. It implicitly relies on other talent processes and data, especially assessments that provide a performance and competency baseline. Yet unlike a performance management process, which can be executed in a relatively self-contained fashion (assuming it has access to core employee data), the same is not true for succession planning.

Succession planning requires foundational data (e.g., competencies, job profiles, talent profiles, and employee records) and inputs (e.g., appraisals, feedback). Outputs include nominee pools, successor pools, development/learning plans, and reports. To facilitate the level of integration required to get succession planning right, a single, natively-integrated technology platform that centralizes key talent processes and information is required. With this single platform, the time to develop succession plans can easily be reduced from weeks or months to mere hours. The benefits can be significant: reduce costs, reallocate personnel from tactical activities to more strategic endeavors, and mitigate the risk of untimely departures of essential personnel.

Additionally, a single technology platform promotes the linkage of learning and career development to succession planning. By bridging these processes, nominees who are not ready for advancement can be assigned detailed development plans that guide them to improve the competencies and skills required for new job positions. Learning paths and specific courses can be established for employees to facilitate their career growth. By providing learning opportunities and development plans to employees, CEOs can take a more active role in promoting employee growth, retention, and engagement.

Finally, with a single system of record, reporting and analysis is vastly improved, since all relevant talent data resides within a single data structure. Strategic cross-functional metrics can be readily established (e.g., measure the impact of learning and development programs on performance). Reporting and analysis are key to the CEO’s success in managing employee resources and implementing strategies that support corporate objectives and initiatives.

Conclusion

Organizations can realize significant efficiency gains and cost savings by moving from a manual, paper-based succession process to one that is fully technology-enabled. The shift to a single technology platform facilitates extending succession planning deeper into the organization, since a well-architected solution seamlessly links succession to career development and learning. A complete platform improves senior management’s global visibility into the talent pipeline and bench strength, and promoting talent mobility to retain high performers becomes a viable engagement strategy. Succession planning, done correctly, is all about process and supporting technology integration. Without integration, succession planning becomes just another organizational silo.

Endnotes

[1]Lamoureux, Kim. “Talent Mobility: A New Standard of Endurance.” Bersin & Associates, November 30, 2009.

The Importance of Succession Planning

Business Continuity Planning

The Disaster Recovery Journal (DRJ) defines Business Continuity Management (BCM) as “A holistic management process that identifies potential impacts that threaten an organization and provides a framework for building resilience with the capability for an effective response that safeguards the interests of its key stakeholders, reputation, brand and value creating activities. The management of recovery or continuity in the event of a disaster. Also the management of the overall program through training, rehearsals, and reviews, to ensure the plan stays current and up to date.” (n.d.) Within the scope of BCM comes succession planning, defined by DRJ as “A predetermined plan for ensuring the continuity of authority, decision-making, and communication in the event that key members of executive management unexpectedly become incapacitated.” (n.d.)

The Importance of Planning

Why are these planning aspects critical to businesses and governments? Planning to do business during a crisis is critical to being able to perform essential functions during and after the crisis. The prognosis for those without a plan is certain business death:

Of businesses without a disaster recovery plan:

> 80% will fail in just over a year,

> 43% will not even reopen,

> 93 percent that experience a significant data loss are out of business within five years according to the U.S. Bureau of Labor. (Hatter, 2004)

Clearly, the evidence supports the need for a business to be prepared for disasters. The question then becomes, “What is a disaster?” DRI International offers the following as the definition of a disaster: “A disaster is a sudden, unplanned calamitous event that creates an inability on an organizations part to provide the critical business functions for some predetermined period of time and which results in great damage or loss.” (2006)

Implied in the DRI definition is the loss being to an “unacceptable” level. If a sudden, unplanned event occurred that prevented the business from performing critical business functions and was going to result in a loss of fifty million dollars due to law suits, but the company carries insurance for one hundred million dollars, the loss may not be “unacceptable”. The loss has been mitigated with the insurance; however, the company may now be battling a public relations issue related to the law suit. As pointed out in a Harvard Business Review, “Companies sometimes misclassify a problem, focusing on the technical aspects and ignoring the issues of perception.” (Augustine, 2000)

Utilizing this definition of disaster opens the planning paradigm to many different scenarios outside the traditionally defined natural, manmade, technological, and terrorism events. Suddenly the definition of disaster allows for more varies considerations, including product recall; class action and individual law suits; and executive defection, resignation, termination, arrest, contract expiration, or death. All of these items can create “an inability on an organizations part to provide critical business functions…which results in great damage or loss.”

Denial

The definition of disaster also helps mitigate another phenomenon in crisis response: denial. As Augustine points out, “This stage of crisis management is often the most challenging: recognizing that, in fact, there is a crisis.” (Augustine, 2000) Setting a quantifiable threshold for “unacceptable” loss allows executives to discern that there is a crisis situation that requires a response. It is only when the crisis is acknowledged that the inevitable effects can be mitigated.

Succession Planning

Wikipedia defines succession planning “as the process of identifying and preparing suitable employees through mentoring, training and job rotation, to replace key players such as the chief executive officer (CEO) within an organization as their terms expire.” As explained in this statement by Brent Filson, “It’s a common occurrence, a CEO leads a company to record earnings, retires and in just a couple of years, those once high-flying earnings are dropping like shot ducks. Observers blame the new leadership team. But most likely the observers are wrong. It’s not just the new leaders who are screwing up. Instead, it was most likely the former CEO… So when a decline follows the departure of great leaders, the safe bet is that those “great” leaders haven’t hired and developed leaders – and so really weren’t great at all, no matter what results they got.” (Filson, n.d.) A trait of excellent military leadership requires the leader to develop the personnel below him to ascend in to the position the leader occupies so the leader is free to move up the ranks, or so the subordinates are capable of handling battlefield situations if the leader is incapacitated. A military unit should not have the survivability of a snake, where cutting off the tail is not a problem, but cutting off the head (leader) results in the death of the unit.

Development of the next generation of leader is a paramount task. “It is instructive here to recall that Noah started building the ark before it began to rain.” (Augustine, 2000) Prior planning prevents poor performance. Without the proper methodology being utilized to prepare for personnel turn-over or unavailability, the corporation can be sent into panic hiring, can fail to continue to implement strategic plans because of the loss of a key individual, and multiple other pitfalls because they were not ready.

Short Term Needs

Planning must account for short time frame notification items. What does the company do when two executive VPs are killed in a plane crash? Who has been groomed and is ready to be “acting” in their place until they can be either ramped up to the permanent replacement or until an executive search reveals the best candidate? When a top executive resigns and moves to a competitor, has the company already instituted a program to ensure that individuals know that strategic plans, customer accounts, and other vital critical business information is in fact the exclusive property of the company and had these key individuals sign off on non-disclosure agreements? If they had not done this prior to hiring the defecting manager, are they prepared to ensure that incoming key personnel are required to affirm their loyalty in exchange for the position?

Mid-Range Needs

Personnel will retire. The text gives the example of GM and their planning process. Any company that is not preparing a like plan for grooming and testing the capabilities of personnel who may be tapped to be the top executive must seriously consider how prepared they really are to do business. Failing to plan is, in effect, planning to fail.

Retirements with long lead windows give companies ample time to try people in the proposed position, to be more closely mentored, or to be given charge of substantially more responsibility to see how they are able to handle the situations that they will be confronted with when they are given the nod.

Long Term Needs

The United States is entering an era where the baby-boomer generation population will begin to affect balance in the worker availability pool. Starting in 2010, the demographic growth-rate balance starts to shift, and by 2015, the 65-and-over age group starts to grow at a faster rate than the 20-to-64 age group.” (Allier, J.J. and Kolosh, Keneth, 2005)

“Organizations that understand the immediacy of the baby boom exit and thoughtfully prepare for it will be in the best position to achieve unmatched success.” (Allier, J.J. and Kolosh, Keneth, 2005) The authors offer questions businesses should be asking themselves to prepare for the coming demographic change. Some of them are:

> What are your company’s demographics (age, gender, position, years in position and anniversary date)?

> What are your company’s retirement policies? Is early retirement encouraged or discouraged?

> What mechanisms and programs must be put in place now to capture key competencies and critical work knowledge of employees who will be retiring?

> Will your organization need to increase its reliance on new immigrants?

> If your organization is offshoring, what is the age breakdown of your overseas partners?

> Will your offshoring partners face a labor shortage that may impact their ability to provide services?

(Allier, J.J. and Kolosh, Keneth, 2005)

Allier and Kolosh also point out that businesses need to position themselves to deal with the needs of an aging population. There may be a need for unique skill sets and competencies, as well as a need for new or modified product designs to be marketed to the aging population. These issues tie back into business continuity planning. To continue to be competitive in the future, businesses have to prepare for the shifting change in the average age.

Not Just for Executive

When developing succession plans, it is important to remember that the scope should not be narrowly focused to just the executives of the corporation. Steve Nelson, the MSPB’s policy director, said, “Succession planning is often focused on top leadership when we need to be looking at critical skill areas at all levels.” (Welles, 2006) Marta Brito Perez, associate director of human capital leadership and merit system accountability at OPM, said, “Succession planning has nothing to do with age. Succession planning is just identifying high-risk jobs and how to fill them.” (Welles, 2006)

The Process

The process of succession planning entails assessing what positions are critical to have a succession contingency plan. The positions are assessed, and then the skill sets of the candidates that could fill these positions are assessed, factoring in the time frame that would be required to get them up to speed for the position. A training program must then be implemented to ensure that there is progress in bringing these individuals closer to a more immediate insertion rate in case a planned position turns over. This will ensure a more seamless transfer for the person in waiting and provide a measure of corporate stability in a challenging time.

Summary

Succession planning is one piece of the overall business continuity planning process. It is a piece that cannot be over looked. Ignoring succession planning will leave the company without properly developed managers and key personnel to fill the shoes of those who leave for whatever reason.

References

(2006). BCP 501: Business continuity planning review 2006. Washington, DC: DRI International.

(n.d). Business continuity glossary. Retrieved May 1, 2007, from Disaster Recovery Journal Web site:

Allier, J.J. and Kolosh, Keneth (2005, June). Preparing for baby boomer retirement. Retrieved May 13, 2007, from Web site clomedia

Augustine, Norman (2000). Harvard business review on crisis management. Boston, MA: Harvard Business School Publishing.

Filson, Brent (n.d). A different leadership yardstick. Retrieved May 1, 2007, from emergingleader

Hatter, Dave (2004, August 6). Without a disaster recovery plan, your business at risk. Retrieved May 12, 2007, from Cincinnati business courier Web site:

Welles, Judy (2006, May 22). Welles: Successful succession planning: Be prepared by matching talented employees to leaders before those leaders depart. Retrieved May 3, 2007,

Important Facts about Strategic Planning

Every person has a goal; regardless of what areas of their lives it is being associated. A goal will remain a goal unless it was successfully achieved. Many would ask why some people are successful and some are not. Well, the answer lies on strategic planning.

Strategic planning is the process of developing strategies and defining objectives to reach a particular goal or set of goals. If you labeled your planning as “strategic” then you must expect that it would perfectly operate on a grand scale. It will achieve success in a broader field.

It is very different from “tactical” planning which focuses more on individual detailed tactics of activities. “Long range” planning however projects current programs and activities into a modified outlook of the outside world where it describes the phenomenon that will likely occur.

Strategic planning is creating more desirable results in the future through influencing the external world, and adapting current actions and programs to achieve a more favorable result in the outside environment.

There are different reasons why most people are doing strategic planning.

1. To acquire the capability in obtaining the desired objectives.

2. To fit well on both the organization’s core competencies and resources, and to the external world. Make sure that your plans are appropriate and feasible.

3. To acquire the capability in providing competitive advantage that is sustainable within the organization.

4. To prove that it is flexible, dynamic, and adaptable even to changeable situations.

5. To be sufficient in providing favorable results without cross-subsidization.

These advantages will not be realized without its methodologies. Strategic planning depends on STP (three-step process) process. “S” for situation where it was been thoroughly evaluated, “T” for Target where goals and objectives are defined, and “P” for path where the routes of goals and objectives are clearly mapped.

However another alternative approach can also be used. It is known as the Draw-See-Think-Plan procedures. “Draw” creates the desired image and achievements. “See” evaluates current situation and detects gaps between ideal situation and current situation. “Think” develops specific actions that must be done to bridge the gaps between ideal situation and current situation. “Plan” lists down required resources for the execution of activities.

Strategic planning is also considered a set of creative and logical steps.

1. It clarifies the objectives to be achieved. These objectives are ranked according to the level of its importance. It can either be TRO (Top Rank Objective), 2nd Rank Objective, 3rd Rank Objective and so on. The lower rank objectives answers the “How” question while higher rank objective answers the “why” question. However TRO is exempted because the objective here is defined.

2. It gathers and analyzes the information. It includes internal assessment on resources, and external assessment which include environmental scanning. Morphological analysis is used by both internal and external assessments. SWOT analysis can also be incorporated to assess the aspects of environments and organizations that are essential in achieving the strategic plan objectives.

3. It evaluates objective feasibility in the SWOT view. SWOT is the acronyms which stands fro Strengths, Opportunities, Weaknesses, and Threats.

4. It develops strategy involving SWOT.

5. It develops action programs creating a more attractive strategy.

To summarize everything, strategic planning provides overall strategic direction on the core management of the company. It gives a more specific direction in areas such as marketing strategy, financial strategy, human resource strategy, organizational development strategy, and deployment information technology strategy to achieve success.

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