Internal controls need to support the growth of your business.

As a business experiences rapid growth their internal controls and operational processes must be assessed to ensure that they sustain and support this growth.  Company's cannot afford to get by without taking a 360 look at the business from the ground up.  With growth comes more sales, more volume, bigger contracts, and more complex operational issues.  As your business is making that transition, you will want the internal controls foundation to ensure that the business can operate on it's own without significant issues arising on a day to day basis.

Many private businesses start out as family business and over time have developed a successful product of service.  In the early stages operating the day to day business through trail & error, and experience is what develops their competitive advantage over time.  However, there comes a time when they need to get serious about protecting and sustaining the business over a long period of time.  This is a transitional stage when the  business grows to size where additional growth can be both a success or a huge failure.  

As the business grows larger, it is every so more important to have internal controls and processes in place as each component of business must work together.  

The following components are critical:

  • Ensure the IT system is sufficient for the business size at the moment and make upgrades accordingly to improve the administration and financial reporting process.
  • Management monthly reviews of financial statements and Key Performance Indicators (KPIs)
  • Developing a plan to execute the targets and goals for the KPIs.
  • Internal control assessment for each cycle of the business: i.e. Sales, marketing, finance, IT, management, and strategy.
  • Developing internal controls that respond to internal control deficiencies identified in the assessment process.
  • Annual Budget process that plans for the next fiscal year.  Quarterly updates to the budget and monitoring the progress to budget is a must. 
  • Action plan:  Furthermore, analyzing the progress throughout the year and factoring into the company's action plan to make necessary changes is the difference between a good year and poor year.

I will leave you with a quote from Dr. Leo Buscaglia " To know and not to do is not to know"

For more information, please contact an MP Group Advisor below.

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