Early Warning Signs Of A Troubled Business Part VI
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- Risk Analysis and Management
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Overview: Increases in operating and overhead expenses, whether in a profitable or unprofitable environment, could indicate a lack of controls. Controlled increases in expenses, in line with a strong flexible budget, are probably a good sign, as long as there is a good system of checks and balances. Uncontrolled increases without comparisons to budget or last year/same period are signs of being out of control. Expense controls must be in place to allow a proper understanding of how the business is performing. The key to keeping operating and overhead expenses on target is to have a budget; flexible if possible. When everyone knows that a detailed study of expenses is an on-going policy and procedure, they become much more aware of how they spend your money. A simple reminder of periodically questioning expenditures usually accomplishes this.
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Format: HTML | Date: Jan 2003 | Pages: 1
