Leveraging Financial Management in                          Driving Sustainable Growth for SMEs                           ...
There are 3 parts to the framework – A process cycle for financialmanagement, a questionnaire to assess process maturity a...
This Framework is designed to instill financial management best practicesthrough a holistic financial management system   ...
This Framework of models, questionnaires, and techniques, are designed tohelp SMEs partner with Deloitte and diagnose and ...
The Framework in           detail4   Growth Framework for SMEs – October 2012
A robust method for instilling financial management best practices to createa holistic financial management system        ...
Market leaders create more shareholder value than their peers throughdeveloping core competencies and exploiting their com...
A robust method for instilling financial management best practices to createa holistic financial management system        ...
The Business Model Canvas gives us a tool to visualize an SME’s businessmodel. Once visualized, we can create new strategi...
A robust method for instilling financial management best practices to createa holistic financial management system        ...
The goal setting process is a top-down process. Value drivers are identifiedand the business should identify strategies th...
A robust method for instilling financial management best practices to createa holistic financial management system        ...
Deciding how much debt to take on in the capital structure is a trade-offbetween risks and returns. The key is to strike t...
A robust method for instilling financial management best practices to createa holistic financial management system        ...
There are two dimensions to Control operations that SME’s should considerwhen appraising their businesses     Periodic ide...
A robust method for instilling financial management best practices to createa holistic financial management system        ...
The continuous improvement phase is a feedback loop that focuses effortson improvements, optimizations and stabilizing the...
Contact details17   Growth Framework for SMEs – October 2012
For further details, please contact: Keoy, Soo Earn (skeoy@deloitte.com)Seow, Tien Long (tseow@deloitte.com) Ryan, Izam (i...
Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited, a UK private company limited by guarantee, and its net...
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Deloitte leveraging financial management for growth

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A framework for introducing best practices in financial management, aimed at SME businesses.

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This presentation contains general information only and Deloitte is not, by means of this presentation, rendering accounting, business, financial, investment, legal, tax, or other professional advice or services.

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Transcript of "Deloitte leveraging financial management for growth"

  1. 1. Leveraging Financial Management in Driving Sustainable Growth for SMEs Planting the seeds today for a ripe harvest tomorrowDeloitte Southeast AsiaOctober 2012
  2. 2. There are 3 parts to the framework – A process cycle for financialmanagement, a questionnaire to assess process maturity and a maturitymodel to structure performance improvement plans Process cycle Assessment questionnaires Maturity model• We have developed a process cycle • A series of questionnaires that can • A model that plots an organization’s that describes best practices in be used as a diagnostic tool for a gap development from Initial start-up financial management. analysis. through to an Optimized state.• This provides a framework for • This focuses the attention on the • Used to develop a performance describing best practices with areas that need the most improvement plan for an organization common terminology. improvement. to move it from its current state • The questionnaire is read in through to desired state. conjunction with the Maturity model.1 Growth Framework for SMEs – October 2012 © 2012 Deloitte & Touche Financial Advisory Services Pte Ltd
  3. 3. This Framework is designed to instill financial management best practicesthrough a holistic financial management system 1. Diagnose current position 2. Innovate business model 6. Continuous improvement 3. Develop budgets and targets 5. Control operations 4. Capital decision2 Growth Framework for SMEs – October 2012 © 2012 Deloitte & Touche Financial Advisory Services Pte Ltd
  4. 4. This Framework of models, questionnaires, and techniques, are designed tohelp SMEs partner with Deloitte and diagnose and develop their business Diagnose current position Innovate business model Develop budgets and targetsThe best strategies are the ones Resource-based strategies The strategic direction plotted inwhich take advantage of the alone are insufficient to generate the business model is thencompetitive landscape and lasting growth. SMEs need to described in operational termsinternal competencies look to innovation to power and linked from operationalSome tools we use include: sustainable growth. levers to business value.• Porter’s 5 forces Some tools we use include: Some tools we use include:• SWOT analysis • Business Model Generation • Budget templates workshop • Enterprise Value Map• Cell-based growth strategies • Modeling “What-If” scenarios Capital decision Control operations Continuous improvementWith the budgets we are then Once the business model is SMEs need to periodicallyable to assess the viability of the operationalized, SMEs need to monitor the progress of theirbusiness. The business plan control their ongoing operations. businessesproduced can be used to seek Some tools we use include: Some tools we use include:additional equity financing (from • MARCI charts • The DMAIC performanceinvestors) or debt (hire improvement methodologypurchase, mezzanine debt etc)Some tools we use include:• Business plan templates3 Growth Framework for SMEs – October 2012 © 2012 Deloitte & Touche Financial Advisory Services Pte Ltd
  5. 5. The Framework in detail4 Growth Framework for SMEs – October 2012
  6. 6. A robust method for instilling financial management best practices to createa holistic financial management system 1. Diagnose current position5 Growth Framework for SMEs – October 2012 © 2012 Deloitte & Touche Financial Advisory Services Pte Ltd
  7. 7. Market leaders create more shareholder value than their peers throughdeveloping core competencies and exploiting their competitive positions(note: usually we only consider factors shaded in green in startup situations) What are the How can we known areas for better deploy improvement? resources? Is the business How do we define the market and competitive segment against peers ? These factors drive customers? our assessment of Where is the Are there adjacent industry markets we can heading? tap? Diagnose current position6 Growth Framework for SMEs – October 2012 © 2012 Deloitte & Touche Financial Advisory Services Pte Ltd
  8. 8. A robust method for instilling financial management best practices to createa holistic financial management system 2. Innovate business model7 Growth Framework for SMEs – October 2012 © 2012 Deloitte & Touche Financial Advisory Services Pte Ltd
  9. 9. The Business Model Canvas gives us a tool to visualize an SME’s businessmodel. Once visualized, we can create new strategic insights based on theindustry trend and the company’s competitive positionKey Key Value Customer Customerpartners activities propositions relationships segmentsWho are our “Key What key activities do What value do we What type of For whom are wepartners”, what “Key our “Value deliver to the relationship do our creating value?activities” do they propositions” require? customer? “Customer segments”perform and what “Key expect us to establishresources” do they and maintain?bring to our business? Key Channels resources Through which What key resources do channels do our our “Value “Customer segments” propositions” require? want to be reached?Cost structure Revenue streamsWhat are the most important costs inherent in our business For what value are our customers really willingmodel? Which “Key activities” / “Key resources” are the most to pay? What do they currently pay and how much wouldexpensive? they prefer to pay? What is the contribution of each stream to total revenues?Source: adapted from http://www.businessmodelgeneration.com/8 Growth Framework for SMEs – October 2012 © 2012 Deloitte & Touche Financial Advisory Services Pte Ltd
  10. 10. A robust method for instilling financial management best practices to createa holistic financial management system 3. Develop budgets and targets9 Growth Framework for SMEs – October 2012 © 2012 Deloitte & Touche Financial Advisory Services Pte Ltd
  11. 11. The goal setting process is a top-down process. Value drivers are identifiedand the business should identify strategies that maximize these drivers.Goals are then created to deliver these strategies. Shareholder Value Operating margin Revenue growth Asset efficiency Expectations (after taxes) (COGS) Cost Property, Price Selling, General Receivables Company External Volume of Goods Equipment Inventory Realization & Administrative & Payables Strengths Factors Sold & Plant Strategy Strategy Strategy Strategy • Broaden market • Increase efficiency • Divest idle assets • Negotiate exclusive base. Business through investment • Monitor inventory rights to use model may change in new production utilization on a unique IPR which to sell direct to methods and regular basis can differentiate the consumer technology business Goals Goals Goals Goals • Grow revenues at • Reduce average cost • Increase fixed asset • Secure exclusive 2% p.a. per unit to < $10 utilization by 10% rights by FY13 • Implement new • Reduce inventory direct sales days to < 24 days channel10 Growth Framework for SMEs – October 2012 © 2012 Deloitte & Touche Financial Advisory Services Pte Ltd
  12. 12. A robust method for instilling financial management best practices to createa holistic financial management system 4. Capital decision11 Growth Framework for SMEs – October 2012 © 2012 Deloitte & Touche Financial Advisory Services Pte Ltd
  13. 13. Deciding how much debt to take on in the capital structure is a trade-offbetween risks and returns. The key is to strike the right balance. • Appetite for • Alignment of risk capital ‒ Trade-off structure to between risk operating and return model ‒ Matching of cash flow profile between Capital Operations structure and Financing • Sources of • Taxes and funding cost of debt ‒ Hire purchase ‒ Is it better to ‒ Convertible substitute debt Equity for Debt?12 Growth Framework for SMEs – October 2012 © 2012 Deloitte & Touche Financial Advisory Services Pte Ltd
  14. 14. A robust method for instilling financial management best practices to createa holistic financial management system 5. Control operations13 Growth Framework for SMEs – October 2012 © 2012 Deloitte & Touche Financial Advisory Services Pte Ltd
  15. 15. There are two dimensions to Control operations that SME’s should considerwhen appraising their businesses Periodic identification of the Control environment sources of Value and their • This encompasses attached Risks management’s philosophy, the • Periodic update of the risk appetite organization structure and and profile of the business institutionalized processes Understanding of which Risks Control activities have the greatest Value impact • Controls should be designed to • This should take into account Control address the identified risks Upside Risks and Downside Risks Operations Prioritization and risk Controls monitoring and management strategy assurance • Develop a strategy for dealing with • Controls should be tested the risks – Mitigate, Assure, periodically Redeploy, Impact assess.14 Growth Framework for SMEs – October 2012 © 2012 Deloitte & Touche Financial Advisory Services Pte Ltd
  16. 16. A robust method for instilling financial management best practices to createa holistic financial management system 6. Continuous improvement15 Growth Framework for SMEs – October 2012 © 2012 Deloitte & Touche Financial Advisory Services Pte Ltd
  17. 17. The continuous improvement phase is a feedback loop that focuses effortson improvements, optimizations and stabilizing the business. Define Measure Analyze Improve ControlGoals, KPIs and Different reports and Root-cause analysis Monitor Find solutionsobjectives defined data are gathered performed improvementsGrow sales 2% • Sales reports • Poor customer • Print address of • Offer rebate• Implement direct showing sales awareness lead to new internet web redemption codes sales channel categorized by poor sales in new site on invoices to test take-up of strategy sales channel direct sales new sales channel channel.Increase margins • Sales reports • New brand • Reallocate sales• Reports are• Introduce new showing sales cannibalizes channel to reduce generated products with categorized by existing sales. cannibalization. periodically and unique branding brand name • Discounts accepted • Work with suppliers emailed out• Reduce average • Cost of sales at the cost of to identify ways to • Sales & Marketing cost per unit < $10 reports showing increasing lead reduce lead times and Vendors are Average cost per times required to explain unit sold variancesImprove Working • Inventory listing • Operations over- • Work with suppliers • Suppliers offer tocapital management • Fixed asset ordered products to identify ways to leave some• Reduce inventory utilization report because of reduce lead times consignment stocks days to < 24 days worsening lead • Order sufficient with logistics times spare parts and provider• Increase fixed asset utilization • Poor availability of consider buying • Regular inspection spares meant more maintenance and parts ordering assets were kept contracts by service provider16 Growth Framework for SMEs – October 2012 than needed. © 2012 Deloitte & Touche Financial Advisory Services Pte Ltd
  18. 18. Contact details17 Growth Framework for SMEs – October 2012
  19. 19. For further details, please contact: Keoy, Soo Earn (skeoy@deloitte.com)Seow, Tien Long (tseow@deloitte.com) Ryan, Izam (iryan@deloitte.com) Keoy, Soo Earn Seow, Tien Long • Has considerable • Key industries specialization professional experience in include: hospitality and due diligence, valuation, leisure, healthcare, market study, strategic value infrastructure assets , power consulting, corporate generation, financial governance advisory, institutions, consumer franchising & licensing products, retail and services,• Has over 20 years of • More than 12 years of advisory and intellectual manufacturing, trading and professional experience in financial advisory, public asset management distribution. the provision of auditing accounting and internal advisory. services, business, financial audit experience in and accounting advisory Singapore and UK. services. Ryan, Izam Deloitte • Izam is internally certified by Deloitte & Touche Financial Advisory Services Deloitte as a project manager and as a Lean Six 6 Shenton Way #32-00 Sigma professional. DBS Building Tower Two • Izam’s professional experience has been in Singapore 068 809• An ICAEW Chartered serving clients operating in Accountant, Izam has 6 technology, media, years of post qualified telecommunications and Tel: +65 6224 8288 experience gained across financial services. Fax: +65 6538 6166 transaction advisory, audit and in industry.18 Growth Framework for SMEs – October 2012 © 2012 Deloitte & Touche Financial Advisory Services Pte Ltd
  20. 20. Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited, a UK private company limited by guarantee, and its network of member firms, each of which is a legally separateand independent entity. Please see www.deloitte.com/sg/about for a detailed description of the legal structure of Deloitte Touche Tohmatsu Limited and its member firms.Deloitte provides audit, tax, consulting, and financial advisory services to public and private clients spanning multiple industries. With a globally connected network of member firmsin more than 150 countries, Deloitte brings world-class capabilities and high-quality service to clients, delivering the insights they need to address their most complex businesschallenges. Deloitte’s approximately 195,000 professionals are committed to becoming the standard of excellence.About Deloitte Southeast AsiaDeloitte Southeast Asia Ltd—a member firm of Deloitte Touche Tohmatsu Limited comprising Deloitte practices operating in Brunei, Guam, Indonesia, Malaysia, Philippines,Singapore, Thailand and Vietnam—was established to deliver measurable value to the particular demands of increasingly intra-regional and fast growing companies andenterprises.Comprising over 250 partners and 5,500 professionals in 22 office locations, the subsidiaries and affiliates of Deloitte Southeast Asia Ltd combine their technical expertise and deepindustry knowledge to deliver consistent high quality services to companies in the region. All services are provided through the individual country practices, their subsidiaries andaffiliates which are separate and independent legal entities.About Deloitte SingaporeIn Singapore, services are provided by Deloitte & Touche LLP and its subsidiaries and affiliates.© 2012 Deloitte & Touche Financial Advisory Services Pte Ltd

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