Credit cards can be an effective financial tool to creating, building, and sustaining income and wealth. Of course, there are pros and cons to every financial opportunity but if an individual or organization can leverage their allotted credit limit that is suitable for their financial situation there can be an immediate increase of cash! Now, what is done with the increased amount of cash is another story. General, more talked about, information is the known principle of keeping your spending rate less than 30% of credit limit per credit card. Behind the Market.  More than 30% pay down their credit card balances only to make charges soon after. This is a no-no. It is best if the individual or organization can pay off the credit card balance until they have saved, in cash, the exact amount of the possible credit limit. With the Market.  Using your personal credit card or your organization's credit card at the beginning of the billing cycle but paying less than 100% of the charged balance will allow increased use of cash. Financial diligence is needed to remain liquid and financially positioned to partially cover the billing cycle's charges. Ahead of the Market. Paying off the entire credit card balance before the end of each billing cycle creates a good track record for you and tells creditors great things about your financial practices. You are able to pay what you borrow! Chances are when you need funds you will have immediate access to your credit limit and the credit limit (ceiling) may also be increased! It's a "win-win" situation. If/when your credit limit is increased, you will be able to increase your 30% credit spending rate for the particular credit card(s). This is a tough strategy but very much worth it. The last key piece is to replenish the credit limit amount or do not make any future charges until you have the equal amount of your credit limit in cash. Having credit cards (or credit) is about having leverage. Increasing your savings accounts even by minimal amounts will help you "retain your earnings" while you leverage for a better financial position to make asset purchases, pay expenses, and invest. Meet Nikia Smith , Director of Project Management Office (PMO), driving success at Business and Wealth Generations. With over a decade of advisory expertise, Nikia orchestrates strategy and operations, spearheading growth and innovation. Beyond his professional endeavors, Nikia actively participates in his community, having served on the Board of Directors at the Project Management Institute Florida Suncoast Chapter in different roles for several years. Recognized for his contributions, he received the PMI Florida Suncoast Chapter Award in 2018 for significantly boosting membership and retention and was also selected to attend the 2019 PMI North America Leadership Institute Meeting in Philadelphia. Nikia holds a bachelor’s degree in management and organizational leadership with a focus on Project Management, alongside several business certificates from St. Petersburg College. He is also certified in CAPM and PMP by the prestigious Project Management Institute. For collaboration opportunities, reach out to Nikia at info@thebusinesswg.com .

Have you ever felt like when you take a step or put a foot forward, you move two or more steps backward? Most of us have experienced financial hardships a time or two in our lives or in our businesses. And we also all have experienced getting out of a financial rut, so to speak. But falling back into a financial hardship can be devastating, frustrating, and depressing. So, what can you do to help cut down on how many times these financial hardships occur? There are a few financial concepts and principles that you can learn to help you professionally, as well as personally, as you restructure for a better financial position! Credit Rating. Limiting your overall debt (risk) to less than 30% of your total assets will certainly give your credit score a boost. The further decrease in overall debt that an individual or organization goes, percentage-wise, the better. Increased investments in income-generating assets with higher returns than you or your organization's cost of capital will create long-term value, income, and a competitive advantage (professional or personal). If you can pay debt down to 20% or less, chances are you will enjoy favorable credit ratings and scores. Return On Equity. Equity isn't just the stock market. Retained earnings is equity. So, an organization can increase their ROE by keeping their income (earnings) in the business from period-to-period. Whether it is on a week-to-week, month-to-month, year-to-year, etc. basis. Line-of-credit is considered equity too....until is used....then it becomes a liability (debt). However, maintaining and increasing equity can help an individual or organization improve their purchasing power. Some organizations use the strategy of building up there equity so it can be used to address any debt, minimizing the need to use cash-on-hand. Little to No Debt . All debt is not bad debt. Good debt exists too. When a situation prevents an individual or organization from satisfying their debt obligations, then paying down debt with low principal amounts and/or high interest rates becomes an effective financial strategy. This approach can be applied to loans as well as credit cards. As mentioned earlier, credit card balances are a form of debt as the credit card holder is responsible to pay off their balance(s) from use of the line-of-credit. In some cases, good management that seeks low-interest rates and low principal debt can be just as good as no debt at all. Hence, good debt! Increasing Income (Revenues).  This can be TOUGH. While it is easy to say, it is a challenge in practice. Why? Because to increase income there are several things that could happen. An increase in sales (revenues) must occur. To increase sales, it is best if an organization has competence in their operations or their product/service offerings. Another tried and true method is cutting expenses. Cutting expenses leaves income on the table. These things can happen in sequence, simultaneously, or independently. Interest income derived from compounding interest is also another form of (increasing) income. Good savings account management habits allows from the accrual of compounding interest to contribute to higher savings amount which can be used or invested at any time. Regular, consistent deposits. Weekly deposits will allow an organization to position themselves effectively with creditors. A general rule of thumb is to deposit at least twice per week. But, the more the merrier. In providing access to equity and debt capital, creditors love to see money being earned and deposited. For the performing organization, it shows commitment to increasing assets, which in turn, allows their retained earnings to increase on a stable or upwards trend. Withdrawals and increasing expenses, for sure, lets a creditor or investor see that the organization’s income is inconsistent, or their operations are not efficient. And, in their eyes in some cases, means financially unsustainable. Making sure your financial position is a competitive advantage is critical to your professional and personal success! Be wise, be cautious, be intentional about repositioning or restructuring for a better financial position! Meet Nikia Smith , Director of Project Management Office (PMO), driving success at Business and Wealth Generations. With over a decade of advisory expertise, Nikia orchestrates strategy and operations, spearheading growth and innovation. Beyond his professional endeavors, Nikia actively participates in his community, having served on the Board of Directors at the Project Management Institute Florida Suncoast Chapter in different roles for several years. Recognized for his contributions, he received the PMI Florida Suncoast Chapter Award in 2018 for significantly boosting membership and retention and was also selected to attend the 2019 PMI North America Leadership Institute Meeting in Philadelphia. Nikia holds a bachelor’s degree in management and organizational leadership with a focus on Project Management, alongside several business certificates from St. Petersburg College. He is also certified in CAPM and PMP by the prestigious Project Management Institute. For collaboration opportunities, reach out to Nikia at info@thebusinesswg.com .

Leaders and managers set the stage for their organizations during the strategic management process. As Benjamin Franklin once said, “If you fail to plan, you plan to fail.” But having a plan in place does not mean that there aren’t areas of concern. Areas of concern can live in your mind rent-free, not just professionally but from a personal point of view as well. Leaving areas of concern in one’s mind can become complex and get complicated, if it goes unchecked and undocumented. An effective method to address or “check” these areas of concern is to create a “worry list”. Yes, that is correct. In simple terms, make a "worry list". After leaders and managers develop or refine their vision, mission statement, objectives, and strategy, naturally they think about relevant scenarios or obstacles that may hinder their pursuit towards their stated vision, mission statement, and objectives. Compiling a “worry list” that sets forth the strategic issues and problems a company faces should embrace such language as “how to…”, “whether to…”, and “what to do about…”. The purpose of compiling a worry list is to create an agenda of items that need to be addressed in crafting a set of strategic actions that fit the company’s overall situation (Thompson, 2020-2021, p. 98). There are several methods a leader or manager can approach the task of creating a worry list. During this discussion, we will focus on the most effective method by means of focusing on the organization’s internal and external environments. This information can be derived from the SW OT analysis, or the o pportunities and t hreats. Getting a good understanding of what obstacles or competitive challenges stand in the way, figuring out the organization’s problems or shortcomings that need to be addressed, determining which of the obstacles or competitive challenges block the organization’s ability to improve their competitive position in the market and boosting their financial performance, establishing relevant combination of strategic actions that will offer and position the organization in the best path to competitive advantage, and analyzing exactly what specific problems or issues warrant first priority attention by leadership developing strategic actions in the future. Each level of management has a role to play in ensuring that all of these align with the organization’s vision, mission statement, and objectives. This is important to designing a strategy that best fits and moves everyone towards the vision of the organization. It is further stated, "a strategy is neither complete nor well matched to the company's situation unless it contains actions and initiatives to address each issue or problem on the "worry list" (p. 98).   What does a “worry list” look like then? See one example of a "worry list" shown in Figure A  below.   Figure A. Example - Worry List for XYG, LLC Bear in mind, there’s no right or wrong way to design or refine a "worry list". Worry lists can be developed in a Word document, a slide presentation, on a whiteboard, on a department's bulletin, or using other software and methods. The key is to make it simple and clear as if someone new reviewing the list can understand it. They can be simple, or detailed. I would not recommend it becoming so complex to where a good strategy cannot be formulated. In other words, you don’t want to worry about the “worry list”. The "worry list" should serve as a reference for leaders or managers to help prevent a strategy from going off course. And, if or when it does, they can look to the "worry list" for redirection or guidance.   So, when crafting a "worry list" think about as many potential areas of concern or scenarios as possible. It is better to identify and document early-on or as the strategy is executed it provides more or better information that can be addressed. As a result, leadership can focus on the task at-hand and be sure they have captured what needs to be addressed to ensure the strategy is not off course or can get back on track. It does not serve a leader or manager to constantly think about the same thing if or when they have already identified the root issue. During the upcoming strategic planning session, whatever needs to be addressed can be addressed with the appropriate solution(s). This is a useful tool for both professional and personal scenarios. References Thompson, A. A. (2020-2021). Strategy: Core Concepts and Analytical Approaches, 6th Edition. McGraw-Hill Education. Meet Nikia Smith , Director of Project Management Office (PMO), driving success at Business and Wealth Generations. With over a decade of advisory expertise, Nikia orchestrates strategy and operations, spearheading growth and innovation. Beyond his professional endeavors, Nikia actively participates in his community, having served on the Board of Directors at the Project Management Institute Florida Suncoast Chapter in different roles for several years. Recognized for his contributions, he received the PMI Florida Suncoast Chapter Award in 2018 for significantly boosting membership and retention and was also selected to attend the 2019 PMI North America Leadership Institute Meeting in Philadelphia. Nikia holds a bachelor’s degree in management and organizational leadership with a focus on Project Management, alongside several business certificates from St. Petersburg College. He is also certified in CAPM and PMP by the prestigious Project Management Institute. For collaboration opportunities, reach out to Nikia at info@thebusinesswg.com .

Quality is the ability of a product or service to meet customer needs (Jay Heizer, 2017, p. 217). There are costs associated with quality. Costs associated with quality are broken up into four categories. These costs are the cost of quality (COQ) and they reflect prevention costs, appraisal costs, internal failure costs, and external failure costs. Prevention costs  are the costs associated with ensuring staff is well-trained and educated on the policies and procedures of the organization and its relevant processes. These costs are geared towards reducing the potential for defective services or parts. It is better to invite the production department to the meeting at the beginning of an initiative or project so they can provide their valuable, front-line input than to not invite them and provide no input. Staff should be empowered to provide their knowledge and expert advice on their craft. Appraisal costs  are the costs associated with testing, hiring of evaluators and inspectors. These costs are related to evaluating products, processes, parts, and services. In the construction field, developers routinely run into appraisal costs to ensure they are in compliance with regulatory requirements. Internal failure costs  are costs associated with rework, downtime, and scrap. These costs come from defective parts or services before delivery to the customer. A pizza delivery service may notice that the pizza a customer ordered is not what the delivery driver has on-hand. This may cause the correct pizza to be re-made, causing rework. External failure costs  are that occur after deliver of defective parts of services to the customer. This can be returned merchandise at a local retail store for defective clothing. This can also be a liability issue, which in some cases lead to court litigation. For example, a restaurant can serve customers food that contains salmonella or the customer may receive their dish with hair in their food. The customer received their service or product but it was faulty. Stakeholders in the quality management field believe that the cost of quality is only a fraction of the benefits. What Philosopher Philip B. Crosby meant when he stated, “What costs money are the unquality things – all the actions that involve not doing it right the first time” , is that quality is free (Jay Heizer, 2017, p. 219). How does an organization know if they are designing quality accurately? They should define their scope so that a quality can be measured and conformed to the stated requirements. Requirements are scope. Quality is an extension of scope. Quality must meet the customer’s needs, or their scope of requirements. With that in mind, it is good management and fiscally responsible to apply preventive and appraisal measures prior to the delivery of the product or service.   Although costs from quality can be wide-ranging, the organization’s reputation is at stake. The service or product should be well enough to meet the customer’s needs or ‘be able to sell itself’ without a need to be marketed. This is the point where the benefits outweigh the costs of poor quality. Product liability can be on the hook for faulty products or services that are liable for damages or harm resulting from their use. Global implications also play a role in an organization and its costs. Price expectations, the perception of what quality is, and design may be a standard in the United States but may not be the same in another country. The need for management to accept responsibility for building good systems, improving quality through top-management commitment, support, and involvement in quality efforts; integrated processes for cross-functional teamwork; and improving the cost of poor quality are different aspects of thought-leadership several philosophers have believed in and put into business practice. Improving quality by lowering rework, lowering warranty costs, and increased productivity can reduce costs over time. Quality can also be improved by improving response (delivery) time, reputation, and incorporating flexible pricing options for the organization’s customer base. Self-promotion is not a substitute for quality products (Jay Heizer, 2017, p. 17). Performing one task or the other will improve profits, but performing both at the same time can compound positive outcomes of improved quality! References Jay Heizer, B. R. (2017). Operations Management: Sustainability and Supply Chain Management, 12th Edition.  Pearson.   Meet Nikia Smith , Director of Project Management Office (PMO), driving success at Business and Wealth Generations. With over a decade of advisory expertise, Nikia orchestrates strategy and operations, spearheading growth and innovation. Beyond his professional endeavors, Nikia actively participates in his community, having served on the Board of Directors at the Project Management Institute Florida Suncoast Chapter in different roles for several years. Recognized for his contributions, he received the PMI Florida Suncoast Chapter Award in 2018 for significantly boosting membership and retention and was also selected to attend the 2019 PMI North America Leadership Institute Meeting in Philadelphia. Nikia holds a bachelor’s degree in management and organizational leadership with a focus on Project Management, alongside several business certificates from St. Petersburg College. He is also certified in CAPM and PMP by the prestigious Project Management Institute. For collaboration opportunities, reach out to Nikia at info@thebusinesswg.com .

If you are a parent, you are an operations manager. If you oversee the bills in a home, you are an operations manager. Or if you do something as routine as driving a car, you are an operations manager. Operations are a continuous process…that involves efforts like that of a parent. Setting aside the time, nurturing with love, and using available funds to care for a child(ren). To mature and develop, a child must have the appropriate structure along with managers (parents/guardians) who encourage them to be successful in their lives. When they are not productive or trending in the right direction, their managers will guide and help them to reduce, if not, eliminate situations that do not add value to their lives. As a business leader, performing operations management can be thought of in the same way. Leadership and management that wants to increase profits and reduce expenses via efficient, targeted operations will benefit by adopting the ‘parent-child’ concept. In other words, an organization cannot operate to its full potential without three core management functions. I think of the three core functions of marketing, operations, and finance as the “time, love, and money” parent-child concept. Businesses need that tender loving care, just as children do. As recently mentioned in 3 Core Management Functions of a Sustainable Organization , they are the main management functions all organizations perform to create their goods or services and they are necessary for the organization’s survival. In this discussion, we will go a bit more in-depth and focus on one of the three central core management functions: operations management. There are ten strategic operations management decisions that an operations manager is responsible for are: 1.       Design of goods and services 2.       Managing quality 3.       Process and capacity strategy 4.       Location strategy 5.       Layout strategy 6.       Human resources and job design 7.       Supply chain management 8.       Inventory management 9.       Scheduling 10.   Maintenance (Jay Heizer, 2017, p. 8) Have you had any experience with either one of these ten decisions? Possibly more than one? Does any of these decisions remind you of something you perform at your job? If you have experience running an organization, you may have been exposed to these ten management decisions, or realities, that operations managers deal with. These decisions should be considered, evaluated, and applied favorably and effectively. Neglect can lead to missed opportunities, wasted time, frustration, aggravation, …. the whole gambit. Aspiring or current operations managers have ten major decisions to make and attempt to synchronize them in a manner that reduces costs and increases productivity. This is in addition to collaborating with the marketing and financial managers as each manager jockey for funding for resources and funding for their respective functions. For instance, an operations manager may need to increase sales to a target rate that is too high for the marketing department to maintain demand at a high level and the funding may not be approved by the finance department. Procurement managers may need to know details of the product or service when furnishing contract agreements or making purchase orders. Operations managers will have to work closely with procurement managers once the service or product has been developed and tested, so knowing what the organization can distribute within required delivery or response times becomes critical. This can sometimes be the difference between gained or lost market share. A good operations manager will develop a game plan or strategy for the function that steers the organization in a direction that leads to competitive advantage. Competitive advantage implies the creation of a system that has a unique advantage over competitors (Jay Heizer, 2017, p. 36). The key to the operations management function achieving competitive advantage is to win on cost, differentiation, and response (delivery) time. These are strategic concepts that if applied can lead to competitive advantage over competitors. The organization that provides uniqueness, are able to spread their costs, and speed up their response times can create a sustainable competitive advantage. Designing operations that beat expectations internally and externally will not go unnoticed by management and the organization’s customer base. Improving quality through continuous improvements, hiring skilled and experienced staff, compliance with requirements of the client, reducing expenses, and improving productivity can widen the gap of the sustainable competitive advantage and increase profits the organization will enjoy! Remember, all organizations need an operations function, but they may almost never be the same. Be unique. Seek differentiation. Keep your costs relative to quality of the product or service, and in line with the market.     References Jay Heizer, B. R. (2017). Operations Management: Sustainability and Supply Chain Management, 12th Edition.  Pearson. Smith, N. (2024, April 22). 3 Core Management Functions of a Sustainable Organization. Saint Petersburg, Florida, USA. Smith, N. (2024, August 3). Strategy: A Pathway to Organizational Success. Saint Petersburg, Florida, USA. Meet Nikia Smith , Director of Project Management Office (PMO), driving success at Business and Wealth Generations. With over a decade of advisory expertise, Nikia orchestrates strategy and operations, spearheading growth and innovation. Beyond his professional endeavors, Nikia actively participates in his community, having served on the Board of Directors at the Project Management Institute Florida Suncoast Chapter in different roles for several years. Recognized for his contributions, he received the PMI Florida Suncoast Chapter Award in 2018 for significantly boosting membership and retention and was also selected to attend the 2019 PMI North America Leadership Institute Meeting in Philadelphia. Nikia holds a bachelor’s degree in management and organizational leadership with a focus on Project Management, alongside several business certificates from St. Petersburg College. He is also certified in CAPM and PMP by the prestigious Project Management Institute. For collaboration opportunities, reach out to Nikia at info@thebusinesswg.com .

In order to contrast the values of leadership and followership for innovation, we need to first define and understand the two. According to Managing Innovation , the two market strategies are defined as the following: Innovation ‘leadership’ – where firms aim at being first to market, based on technological leadership. This requires a strong corporate commitment to creativity and risk taking, with close linkages both to major sources of relevant new knowledge, and to the needs and responses of customers. Innovation ‘followership’ – where firms aim at being late to market, based on imitating to competitor analysis and intelligence, to reverse engineering (i.e. testing, evaluating, and taking to pieces competitors’ products, in order to understand how they work, how they are made and why the appeal to customers), and to cost cutting and learning in manufacturing (Bessant, 2016, p. 179). In the case of innovative leadership, it can be thought of as being the true entrepreneur of a product/service by being the first to do it. Whether it be a sole proprietorship or partnership it takes a committed leader/leadership to have the confidence to take risks; whether they are opportunities (positive) or threats (negatives). Having a good risk management plan would help this type of market strategy. In the other case of innovative follower ship, it can be pictured as coming into a market late and then finding a way to capitalize on what is already out there. Capitalize by refining the product/service with a more robust competitive advantage than the originator or the last refined competitor. In each of the two strategies, one common denominator is and should always be is differentiation and low-cost product or service. If an organization can sustain those two, they will for the most part stay in the game of competition so that they can invest and reinvest to make what they are trying to be innovative with better, cheaper, and more efficient. Being able to invest or reinvest in the either of the four kinds of breakthrough areas would be of an organization’s best interest. Briefly mentioned, the four kinds of breakthrough areas are: Technological breakthrough: A new technology that ends up dominating the incumbent technology. Business model breakthrough: A new way to create value through exploitation of business opportunities. Design breakthrough: A new way to design a product without changing it profoundly. This is related to the interface between the product and the customer, which is an important factor of adoption. Process breakthrough: A new way to do things (manufacturing, logistics, value chain, etc.) (p. 181). The business model breakthrough would be the most promising as you can always tailor your business or organization to support that kind of breakthrough more frequently by positively promoting business opportunities internally and externally. References Bessant, J. (2016). Managing Innovation: Integrating Technological, Market, and Organizational Change.  John Wiley & Sons Ltd. Meet Nikia Smith , Director of Project Management Office (PMO), driving success at Business and Wealth Generations. With over a decade of advisory expertise, Nikia orchestrates strategy and operations, spearheading growth and innovation. Beyond his professional endeavors, Nikia actively participates in his community, having served on the Board of Directors at the Project Management Institute Florida Suncoast Chapter in different roles for several years. Recognized for his contributions, he received the PMI Florida Suncoast Chapter Award in 2018 for significantly boosting membership and retention and was also selected to attend the 2019 PMI North America Leadership Institute Meeting in Philadelphia. Nikia holds a bachelor’s degree in management and organizational leadership with a focus on Project Management, alongside several business certificates from St. Petersburg College. He is also certified in CAPM and PMP by the prestigious Project Management Institute. For collaboration opportunities, reach out to Nikia at info@thebusinesswg.com .

Running an organization is somewhat intuitive. There are the norms of selling, purchasing, advertising, and so on. Operating an efficient organization is not so intuitive. There are certain fundamentals that must be respected, or an organization will not survive. We’ve recently discussed finance and an organization’s overall financial health. Alongside finance, is its counterpart, strategy. In this blog, we will discuss strategy and why it is important. Strategy helps managers and leaders, organization’s senior leadership (C-level/Board) answer what the future direction of the organization should be, what the actual plan is for operating the organization and towards producing good outcomes, what performance targets (key performance indicators) they should set, and how the mission or objective will be executed. You can think of strategy as finances’ alter ego. Finance, at its worst, should support the organization’s strategy. At best, finance should increase the wealth and value of the organization’s owners and its stakeholders. Finance and strategy are ‘night and day’, so to speak, but together they display signs of good management to internal and external stakeholders of the organization. Management needs both for a successful outcome.   Figure 1.1 Good Management = Strategy + Finance   So, what is strategy? Strategy is the competitive moves and business approaches that managers employ to attract and please customers, compete successfully, pursue opportunities to grow the business, respond to changing market conditions, conduct operations, and achieve the targeted financial and market performance (Thompson, 2020, p. 2). Strategy answers the how . Crafting a strategy forces management to think about how they are going to capitalize on opportunities to grow their business, how the company will meet or beat their stated performance targets, how  they will manage each management function of the organization (sales dept., finance, marketing, etc.), how  they will beat rivals or compete with them, how to address business and financial decisions based on the ever-changing market and economic conditions in the best way, how  to position the organization in the market in relation to competitors, and how  the organization will attract and satisfy its customer base. Strategic plans are the plans that management departments or managers craft their operational plans around. Marketing develops a marketing plan that supports the marketing components that address all marketing aspects of the strategy. This is applied to each management function of the organization: finance, human resources, etc. Managers and leaders document their strategies in several ways. Analyses such as the commonly referred SWOT analysis are used to craft strategies. Visual maps are an effective method. Strategy maps is the simplest method. Management will develop a strategic plan or even hire a consulting or advisory firm to facilitate their strategic efforts. But, why is strategy important? It allows managers to be intentional towards their strategic and financial goals. A good, effective strategy shows a pathway to success…that can be measured and tracked for performance. In conclusion, a strategy without a finance component is simply an idea (or a dream). And financing without an established strategy to achieve an organization’s performance targets can cause unnecessary spending, low profit margins, low employee morale, and/or a host of other problems. Successful leaders and managers monitor these financial and strategic targets on a weekly basis, to ensure the organization or division are on track to meet or beat quarterly performance targets during each quarter, or annually, for strategic and financial strategies to ensure the organization are pace to achieve the organization’s overall goals.   References Thompson, A. A. (2020). Strategy: Core Concepts and Analytical Approaches, 6th Edition.  McGraw-Hill Education.   Meet Nikia Smith , Director of Project Management Office (PMO), driving success at Business and Wealth Generations. With over a decade of advisory expertise, Nikia orchestrates strategy and operations, spearheading growth and innovation. Beyond his professional endeavors, Nikia actively participates in his community, having served on the Board of Directors at the Project Management Institute Florida Suncoast Chapter in different roles for several years. Recognized for his contributions, he received the PMI Florida Suncoast Chapter Award in 2018 for significantly boosting membership and retention and was also selected to attend the 2019 PMI North America Leadership Institute Meeting in Philadelphia. Nikia holds a bachelor’s degree in management and organizational leadership with a focus on Project Management, alongside several business certificates from St. Petersburg College. He is also certified in CAPM and PMP by the prestigious Project Management Institute. For collaboration opportunities, reach out to Nikia at info@thebusinesswg.com .

Have you ever thought of something, and it slipped out of your mouth before you could stop yourself? Sent an email to a boss or colleague or a text message to a family member or friend that may have been delivered differently if a little bit more thought or time had been given? Chances are you have, if you’re human. The better question is do you execute a process or system of thinking about how you communicate the information you are sending, or received? Keep in mind that communication is verbal and non-verbal. Speaking, laughing, gesturing, emailing, debating, the list goes on and on. Communication is a complex process of encoding and decoding messages (information, ideas, and feelings) (Snyder, 2016, p. 4). It is tough, to say the least. Because we are social and emotional beings from different backgrounds and experiences, it becomes challenging to send the right messages in the way they may have been intended or receive messages in the way they may been expected to be received. Leaders and managers have a duty  to be cognizant of being good, effective communicators. I believe we can agree, leaders have followers. But the idea that being a good, effective communicator rests solely with leaders and managers is a delusion. Followers have the same duty . A model that has worked well throughout my professional and personal life is the ACE model. The acronym, ACE, stands for ‘Analyze, Compose, Evaluate’. See Figure A: The ACE Model. Analyzing  an idea, information, or feelings allows a leader or manager to break down the communication to its roots, or base. Does it need to break down to a detailed, granular, or microscopic level? It depends. Communication could be high- or low-level, general or specific, short or long, clear or unclear, so on and so forth. There are plenty of tools and techniques at one’s disposal that can be deployed to address or attack communication. The point here is to be sure that attention is provided to the idea, information, or feelings. Composing  the message that you intend to send to the receiver may sound like, “duh”, but unless you are flawless in delivering messages in the appropriate tone and delivery there’s room to improve by drafting what you are saying, about to say, or about to do. Good practice is to introduce the content and get it out of your mind and make it something you can see or touch, such as an email or by paper format. Evaluating  is last, but critical, as this is the “filter” aspect of the model. This is the time to change, revise, or clean up what is about to be communicated. This is the step that we all wish we could be better at, or that infamous moment we sometimes wish we could get back. Although we feel the message needs to be said we all must be conscious of what is communicated and how it is communicated. The old saying, ‘sticks and stones may break my bones, but words will never hurt me’, gives way for the wrong impression of how impactful, long-lasting words can be. While words will not break bones, they may most definitely hurt an employee, supervisor, or stakeholder. And words last longer than broken bones. Broken bones heal, whereas words stain. Business professionals and leaders must be careful and intentional when communicating. Bad communication can lead to disengagement, lack of motivation, being canceled, or worse! Figure A: The ACE Model This three-step process is simple, straightforward, and highly effective. It is a flexible communication process that can be applied to any situation, from “email messages to formal business presentations” (Snyder, 2016, p. xviii). In a personal setting, this can also be applied to your personal relationships with a relative, friend, or a hater. Regardless of the communication, positive or negative, it is best if it is well-thought out. Of course, a leader or manager may not always have the time to break down each situation every time. So, the recourse is to adopt the ACE model into a habit. There is potential to gain a lot of insight or answers, internally or externally, without asking questions by applying this model. In terms of value, time and patience are the cost. The return is worth it. Personally, I use the ACE model along with the five-why analysis ( who, what, when, where, why , and sometimes how ) on a regular, routine basis. The results and outcomes I have experienced I can say have been favorable. They may not have been to my liking, but for the most part, they have been favorable. Don't believe me? Try using the ACE model for a half-day, full day, full week, or to a specific communication! I would be interested in hearing from you. References Snyder, B. S. (2016). Business Communication: Polishing Your Professional Presence, 3rd Edition.  Hoboken: Pearson.   Meet Nikia Smith , Director of Project Management Office (PMO), driving success at Business and Wealth Generations. With over a decade of advisory expertise, Nikia orchestrates strategy and operations, spearheading growth and innovation. Beyond his professional endeavors, Nikia actively participates in his community, having served on the Board of Directors at the Project Management Institute Florida Suncoast Chapter in different roles for several years. Recognized for his contributions, he received the PMI Florida Suncoast Chapter Award in 2018 for significantly boosting membership and retention and was also selected to attend the 2019 PMI North America Leadership Institute Meeting in Philadelphia. Nikia holds a bachelor’s degree in management and organizational leadership with a focus on Project Management, alongside several business certificates from St. Petersburg College. He is also certified in CAPM and PMP by the prestigious Project Management Institute. For collaboration opportunities, reach out to Nikia at info@thebusinesswg.com .

If you have past or current experience as a manager or leader in an organization, chances are you are aware of the challenges of leading and/or directing individuals, teams, management functions, or entire organizations. On the other hand, if you do not have experience or are interested in what managers and leaders perform collectively, you should be exposed to the three management functions that are needed to run an organization efficiently and effectively. Marketing, operations, and finance are the core management functions of any sustainable organization. These three management functions are  necessary for survival. Marketing is responsible for creating demand. Other responsibilities of a marketing role could be customer retention, branding, or sales. Operations, also called production or manufacturing, is responsible for designing, developing, and delivery of the solution, service, or product. And, finance, is responsible for monitoring the organization’s financial health, paying the organization’s bills, and collecting money for the organization. Figure A, below, displays the central idea of a sustainable organization and its management components for long-term survival. Figure A. Core Management Functions of a Sustainable Organization Performing marketing, operations, or finance well separately can be satisfying for the short-term. But combining all three management functions together that creates a synergy can propel and allow an organization to pursue and achieve the goals they established in their strategic or business plans. While synergy between the three core functions can be cultivated to become a competitive advantage all by itself, few organizations can perform the three management functions with key performance indicators and target rates that are just above or below their industry averages that remain favorable to the organization. While profit is the idea, the key is to create or improve value and business performance by performing all three management functions together effectively and efficiently. This is the ultimate business challenge for any organization. When this ‘togetherness’ happens, management creates the ability for the organization to position themselves to improve their earnings or profits and be capable to reinvest into their employees, equipment, quality, services, or products in an intentional manner. Management produces favorable results, monthly or annually, gaining competitive advantage by consistently providing value or returns to its stakeholders (customers, clients, local community, etc.). Management that shows good governance, has the right organizational culture, conducts effective planning, forecasts accurately, works well together at all levels, provides training, recruits or hires the right personalities for their culture, invests in facilities and equipment that produces value first, and schedules work and effort responsibly are attributes of a well-run organization. Although they are hard to lead or direct, these concepts are most definitely achievable. A solid, repeatable value-chain process that includes marketing, operations, and finance will support an organization and its long-term survival efforts. Organizations are increasingly using project management concepts, tools, and techniques to help them achieve results. Experienced operations managers are ripe candidates to become project managers as they perform similar tasks of a project manager. Project managers have become indispensable post-pandemic as organizations seek to adapt and change with today’s times. Reduction of costs, speed to market, implementing change are just a few reasons that organizations are looking to specialized project professionals to assist them as they seek to develop plans or adapt to changes within their organization. Outsourcing to a project management office (PMO) or hiring a certified project professional to develop a project plan that an organization can use as a business roadmap or guide to help them to a achieve organizational goals has become a popular approach. This approach allows the client organization to focus on their day-to-day responsibilities while the supplier organization assists by developing plans that comply with the client organization's business requirements. In all, these three management functions have an immediate and direct impact on an organization’s business performance and financial health. Other management functions (human resources, distribution, etc.) are important but they are indirect and pose a delayed effect on the organization. This does not give the decision makers the ‘green light’, so to speak, to make sub-par decisions because they may feel the impact is not immediate. Due diligence and vigilance to the organization’s staff, finances, goals, and objectives will help cement a foundation. Good management = Strategy + Finance!   References Jay Heizer, B. R. (2017). Operations Management: Sustainability and Supply Chain Management, 12th Edition.  Pearson. Meet Nikia Smith , Director of Project Management Office (PMO), driving success at Business and Wealth Generations. With over a decade of advisory expertise, Nikia orchestrates strategy and operations, spearheading growth and innovation. Beyond his professional endeavors, Nikia actively participates in his community, having served on the Board of Directors at the Project Management Institute Florida Suncoast Chapter in different roles for several years. Recognized for his contributions, he received the PMI Florida Suncoast Chapter Award in 2018 for significantly boosting membership and retention and was also selected to attend the 2019 PMI North America Leadership Institute Meeting in Philadelphia. Nikia holds a bachelor’s degree in management and organizational leadership with a focus on Project Management, alongside several business certificates from St. Petersburg College. He is also certified in CAPM and PMP by the prestigious Project Management Institute. For collaboration opportunities, reach out to Nikia at info@thebusinesswg.com .

Before we discuss the differences between the three permanent accounts in accounting, we should be exposed to, if not aware of the basic accounting equation. The basic accounting equation is the standard by which all organizations must follow under the U.S. financial system and helps determine the financial health and (business) performance of an individual or organization. The basic accounting equation is Assets = Liabilities + Equity (Tracie Miller-Nobles, 2018, p. 57). The four financial statements: Income (Profit-Loss) Statement, Statement of Retained Earnings, Statement of Financial Position (Balance Sheet), and Statement of Cash Flows all share in relevant information that are obtained from the asset, liabilities, and equity accounts. Together, the financial statements provide a clear picture of an individual’s or organization’s financial health and (business) performance. The simplest idea and explanation are to increase assets at a rate (say, 3%) that is higher than both liabilities and equity (say, 1% and 2% respectively) including inflation. Easier said than done, of course. But, if increasing assets at a higher (and more frequent rate) can be done, an individual or organization will definitely increase their value...aka their wealth! 3%  ↑ = 1% ↓ + 2%   ↕ Assets Assets are economic resources that are expected to benefit the business in the future – something the business owns or has control of that has value (p. 57). They are the central core of a financial portfolio. Assets are cash, treasury bills, accounts receivable, art, equipment, financial assets, foreign currency, land, buildings, furniture, fixtures, appliances, cars, boats, natural resources, bonds, cryptocurrency, 401(k) and 457 retirement accounts, insurance, and more. Some assets decrease (depreciate) in value, while others increase (appreciate). But all of which are assets an individual or organization owns, sells, or liquidates to receive income or earn a return on it. In concept, assets can be viewed as ‘return’. Increased returns can provide an individual or organization the capital they may need to make capital investments. The ‘free game’ regarding assets is to possess long-term, value-generating assets with a higher return than any and all liabilities. This rule of thumb is applied to both short-term and long-term perspectives.   Liabilities Debt is liabilities. Liabilities are accounts payable, notes payable, mortgage, bonds means that there are obligations to be made to a creditor. Debt is borrowed money (loans), promises to pay, amounts that are owed but not yet paid, obligations to provide services or products for cash already received. The borrower (debtor), in general, will repay the initial amount including a concentrated amount or rate. In concept, liabilities can be viewed as ‘risk’. Increased debt can hinder an individual or organization from achieving sufficient cash flows, favorable interest rates, and in some cases may lead an individual or organization towards insolvency (bankruptcy). Return   = Risk   + Fluctuations The ‘free game’ regarding liabilities is to hold long-term (fixed) debt with the overall interest rate on all debt to be less than the return the organization is receiving for their asset accounts, if or when debt is necessary. If debt is preferred or needed, keep the overall debt-to-assets ratio under 30%. A debt-to-assets ratio under 20% has little to no impact on credit rating. This rule of thumb is applied to both short-term and long-term perspectives.   Equity Equity are revenues, expenses, stock, retained earnings, credit cards, paid-in capital, owner's capital. Revenues increase assets (net worth, or wealth). Expenses decreases assets. Increasing retained earnings display consistency and promotes financial stability for an individual or organization. The key to equity is reducing, if not eliminating, expenses to the optimal amount. In turn, this may provide an opportunity for increased free cash flows to increase assets. In fact, paying expenses in advance can be classified as prepaid expenses which are considered assets. Every management decision affects an individual or organization's financial capabilities. It is prudent and wise to have a good understanding of you or your organization's financial position (balance sheet). The key to equity is to carry-over earnings from cycle-to-cycle at a stable, increasing rate while reducing expenses. It can be argued the most efficient way to increase assets is to eliminate debt altogether and make investments in assets that produce a higher rate of return than equities. A  ↑ = L ↓ + E   ↕ The overall ‘free game’ is to increase assets at a rate that is higher than both liabilities and equity. If this can be done, an individual or organization will undoubtedly increase their value...or their net worth!   3   % ↑ = 1% ↓ + 2%   ↕   Then, it becomes a matter of preference of cashing in on the returns, allowing unrealized gains to climb, or allowing interest to be compounded! References Mayo, H. B. (2016). Basic Finance: An Introduction to Financial Institutions, Investments, and Management, 11th Edition. Boston: Cengage Learning. Tracie Miller-Nobles, B. M. (2018). Financial & Managerial Accounting, 6th Edition.  Pearson Education. Meet Nikia Smith , Director of Project Management Office (PMO), driving success at Business and Wealth Generations. With over a decade of advisory expertise, Nikia orchestrates strategy and operations, spearheading growth and innovation. Beyond his professional endeavors, Nikia actively participates in his community, having served on the Board of Directors at the Project Management Institute Florida Suncoast Chapter in different roles for several years. Recognized for his contributions, he received the PMI Florida Suncoast Chapter Award in 2018 for significantly boosting membership and retention and was also selected to attend the 2019 PMI North America Leadership Institute Meeting in Philadelphia. Nikia holds a bachelor’s degree in management and organizational leadership with a focus on Project Management, alongside several business certificates from St. Petersburg College. He is also certified in CAPM and PMP by the prestigious Project Management Institute. For collaboration opportunities, reach out to Nikia at info@thebusinesswg.com .

What do you do with the 4 financial statements once they’ve all been updated, reconciled, and audited? The next best action to take is to analyze the information in preparation for business and financial decision-making. There are several methods in evaluating financial statements. For the sake of our discussion, we will focus on the two common methods that are used in practice. The two common methods of analysis are the ratio analysis and the Dupont System of Analysis. The ratio analysis is the basic method and the Dupont System of Analysis is the more complex method of the two. Short-term (less than one year) and long-term (more than year) approaches must be considered by management. Both analyses will help an individual or organization gain better insight on their current financial situation. Method #1: Ratio Analysis The basic ratio analysis uses several ratios to show the value of each measure. Plotting the data on a graph, trend lines can be displayed to show which direction the measure is trending. Whether the trend lines are trending upwards or downwards. Liquidity , activity , debt , profitability , and market ratios  when combined provides the decision-makers (internal or external) to make conscience, well-informed business and financial decisions. Separately, they allow the decision maker to make direct, targeted adjustments. Some ratios may not need to be improved and can wait for the next quarterly or annual review, while others may require action. Liquidity Ratios Liquidity ratios reflect a firm’s ability to satisfy its short-term obligations as they come due (Chad J. Zutter, 2019, p. 92). There are several liquidity ratios: current ratio, cash ratio, working capital, and quick ratio. Liquidity ratios are relevant and have importance because forecasts can be executed in a manner where the financial manager can determine if they will have sufficient funds to pay their obligations within one year. A financial manager can stay ahead of the curve by addressing any liquidity problems before the situation gets out of hand. The most predominantly used liquidity ratios, are the current ratio and the working capital ratio. They are simple and straight to the point. If an individual or organization wants to know if they are sufficiently liquid and can pay their obligations within the year, they can refer to the liquidity ratios to get quick feedback. Activity Ratios Activity ratios measure the speed with which various asset and liability accounts are converted into sales or cash (p. 94). Inventory turnover, average collection period, average payment period are activity ratios that can help the financial manager figure out how efficient they are operating along several areas. Such as collections and inventory management. If we were to think in terms of competitive advantage good management will keep a pulse on these operational viewpoints. Activity ratios can lead to management to making changes in their payment plans, credit term agreements, or warranty agreements. The activity ratios can and should be used as a competitive advantage. Favorable client payment options and good credit terms can be the difference between increased and decreased market share so management will monitor these ratios. All four activity ratios provide information that the financial manager or outside investor can gauge to determine if the firm are making inroads in terms of a) how fast the organization is collecting money owed to them in a reasonable time frame, or b) by how fast their sales are converted into cash. While all of the activity ratios are relevant and have importance, the total asset turnover ratio is the ratio you’d want to stay on top of. If a financial manager or investor are interested in monitoring whether the organization’s operations are financially efficient in using their assets to generate income, they will want to pay close attention to the total asset turnover ratio. Debt Ratios The debt position indicates the amount of money the firm uses that comes from lenders (p. 99). Debt ratio, debt to equity ratio, and times interest earned (or interest coverage) ratio are the three debt ratios that are evaluated. These three debt ratios are important to any organization, especially if their financial objective is to improve credit rating. Good management will focus their attention to these ratios and stay on top of them. While keeping the debt ratio and debt-to-equity ratios under control, management will center their focus on the long-term debts that commit them to contractual debt payments for any time period over one year. This is the focus of the interest coverage ratio. The interest coverage ratio measures the organization's ability to make its contractual obligations. These type of contractual debt payments can be a business loan that is 2, 5, or 10+ years. In personal finance, this can be a 30-year mortgage loan or a 5-year car loan. At any rate, the organization should center their attention to those long-term debts where they are bound by agreement and keep the interest coverage ratio a high ratio. An example of an interest coverage ratio is 1.0. At worse, the value of an unfavorable interest coverage ratio value should hold steady if it is not increasing. Different industries have different industry averages but the organization should be aware of their particular industry average and make efforts to be above industry average. This diligence and action have the potential to ‘anchor’ the organization. In terms of dollar amounts, the greater the long-term debt amount, the greater the risk the borrower may not be able to make the contractual debt payments. From an investor’s standpoint, they pay close attention to this value because if an organization has to be liquidated and can't pay their debt obligations, they won't be able to pay them. Not all debt is bad debt though. Good debt exists too. Good debt is used when the organization has room to leverage assets with debt and it does not negatively impact the debt (debt-to-assets) ratio. Organizations are aware that it is cheaper to borrow capital in the form of debt rather than equity because the cost of debt is cheaper than the cost of equity. After all, interest expense is tax-deductible. This explains why most companies take the cheapest approach when raising capital by obtaining debt capital instead of equity capital. Debt financing (capital) is considered cheaper and less risky than equity financing. In some cases, some organizations will elect to obtain debt capital rather equity capital and pay the interest expense up front, lowering the principal. Any time the interest expense is paid up front that means the borrower will be paying less and the creditor will receive less. Possessing debt without interest expense to cover can be a deliberate strategy for an organization. This is the art of borrowing for less than quoted and investing the influx of immediate cash into value-generating assets. Regardless, organizations are bound by law to make good-faith payments to their creditors…as the borrower of funds...so the financial manager should exercise fiscal responsibility at all times under any financial strategy. As mentioned in Assets vs. Liabilities vs. Equity , whether the short-term or long-term perspectives are in question, the debt (debt-to-asset ratio) ratio should be consistently less than 30%. Management should strive to meet or beat that measure each period. If they are above 30%, management should take the necessary actions to make sure the measure is trending downwards. Profitability Ratios Profitability ratios enable internal and external stakeholders to evaluate the firm’s profits with respect to its sales, assets, or the owner’s investment (p. 103). Profitability ratios are what most individuals and organizations have been exposed to, heard of, or are familiar with. Gross profit margin, operating profit margin, net profit margin, earnings per share (EPS), return on assets (ROA), and return on equity (ROE) all show profitability and they all should trend upwards. The higher the ratios, those who have interest in or are affected by these profitability ratios will have something to smile about. Return on assets (ROA), or another commonly used term the return on investment (ROI), is the profitability ratio that attracts the most attention. Most individuals and organizations want to know if they are making money or returns on the assets they own or have invested into. Market Ratios Market ratios relate to the firm’s market value, as measured by its current share price, to certain accounting values (p. 110). Market ratios include price/earnings (P/E) ratio and market/book (M/B) ratio. These two ratios can be simplified to the following explanation. If an organization wants to determine what investors are willing to pay for each dollar of their earnings, they will pay close attention to the price/earnings ratio. The market/book (M/B) ratio looks at the market price of common stock of an organization and compares it against what the book value is (as of the value on the balance sheet). Ratio analysis is the most commonly used method because it is simple and provides valuable information. These ratios are included in benchmark analysis, time-series analysis, market analysis, or cross-section analysis. Each analysis has their own separate purpose so it depends on the decision-maker and the strategy or objective. Method #2: The Dupont System of Analysis The Dupont System of Analysis is used to “dissect the firm’s financial statements and to assess its financial condition” (p. 118). This analysis drills down to a level where the person evaluating the information can see visually what is driving and impacting the organization’s performance. Dupont puts together information from both the income statement and the balance sheet into a summary with measures of profitability, return on equity (ROE), and return on assets (ROA). The upper portion analyzes and summarizes activities from the income statement. And, just the opposite, the lower portion analyzes and summarizes activities from the balance sheet. If the organization wants to find the “bottleneck” or issue in what is driving the positive or negative performance the organization are seeking or experiencing, they may find the Dupont System of Analysis to be most effective. Targeting a specific business measure (sales, net profit margin, ROA, etc.) can help the organization match their actions with their intent. In conclusion, being exposed to the different financial ratios used in any type of analysis will allow internal and external stakeholders to make business and financial decisions that will bring value and profit to their organization. Microsoft Excel is not an accounting software it is an accounting system; but it is a very helpful tool. Use of Microsoft Excel can get you what you are looking for. There are plenty videos and examples on YouTube and other channels that has tutorials/etc. that can be learned on your own pace. If that is not the preferred approach, individuals and organizations can use accounting software, such as Wave or QuickBooks, to help them develop the financial statements with ease. All organizations should retain or outsource their accounting to a professional where audited statements can be obtained. A CPA not only does tax preparation but they can also prepare financial statements. A trustworthy, certified public accountant (CPA) is ideal as they can save an organization time and money by ensuring accuracy of the statements as well as ensuring tax benefits for the organization are identified and realized. In addition, they can produce specific, more detailed financial reports for their clients. The performing organization can use the financial report(s) as an input to other processes and activities, such as budget or annual strategy meetings. Whether the financial goals are short-term (within 1 year) or long-term (over 1 year), it is wise for management to use the information from these analyses by making the necessary adjustments and re-aligning their strategy and operations towards achieving the organizational goals!   References Chad J. Zutter, S. B. (2019). Principles of Managerial Finance, 15th Edition.  New York City: Pearson Education. Smith, N. (2024, March 28). Assets vs. Liabilities vs. Equit. Saint Petersburg , Florida, USA. Smith, N. (2024, April 2). The Purpose of the 4 Financial Statements. Saint Petersburg, Florida, USA. Tracie Miller-Nobles, B. M. (2018). Financial & Managerial Accounting, 6th Edition.  Pearson Education. Meet Nikia Smith , Director of Project Management Office (PMO), driving success at Business and Wealth Generations. With over a decade of advisory expertise, Nikia orchestrates strategy and operations, spearheading growth and innovation. Beyond his professional endeavors, Nikia actively participates in his community, having served on the Board of Directors at the Project Management Institute Florida Suncoast Chapter in different roles for several years. Recognized for his contributions, he received the PMI Florida Suncoast Chapter Award in 2018 for significantly boosting membership and retention and was also selected to attend the 2019 PMI North America Leadership Institute Meeting in Philadelphia. Nikia holds a bachelor’s degree in management and organizational leadership with a focus on Project Management, alongside several business certificates from St. Petersburg College. He is also certified in CAPM and PMP by the prestigious Project Management Institute. For collaboration opportunities, reach out to Nikia at info@thebusinesswg.com .

The four financial statements give individuals and organizations a window to "peer through to see what is inside the organization and how it is operating". It is hard to pay debt obligations or expenses effectively, grow, or invest if finances are not fully understood. Even if an individual or organization are not seeking to "get rich" it is still important to understand the financial pulse of the organization. The four financial statements that individuals or investors need to gain a better understanding of an organization’s business health are the income statement, balance sheet, statement of retained earnings, and statement of cash flows.   To address the financial statements, we must begin with the chart of accounts. The chart of accounts are the building blocks of the financial statements. It is absolutely critical that management keep a keen eye on developments in the chart of accounts. Placing limits and controls within the accounts can be the difference between profit and loss, cash flow, or credit rating issues. The chart of accounts essentially keeps a running tab of all the accounts (asset, liability, and equity) along with their account numbers.   Income Statement.  The income statement provides information about profitability for a particular period for a company. The formula to determine, Net Income, is                                                      Net Income = Revenues - Expenses The income statement is a bit straightforward since it only contains the two accounts, revenues and expenses only. Subtracting the expenses from revenues leaves the amount of income remaining, or net income. Another term that is commonly used for net income is profit. Either an organization are operating in gains/profit (+) or at a loss (-). In order for the organization to remain in operations and sustainable, the revenues need to be consistently greater than expenses. A loss here, a loss there leaves room for recovery. But not very many individuals and organizations can sustain operating at a loss. If or when there are two consecutive periods of losses, management should review their strategic and financial strategies and make necessary adjustments to get the lagging performance objectives (sales, profit margin, etc.) back on track. The key to ensuring an individual or organization uses the income statement as a competitive advantage is to focus on achieving total contribution where total revenues equal total expenses, preferably as early in the fiscal year as possible. Another way of thinking of it is finding the point, in dollars and units, at which costs equal revenue (Jay Heizer, 2017, p. 318). This is called break-even analysis!   Balance Sheet.  The balance sheet provides information about assets the company has as well as liabilities the company owes (Tracie Miller-Nobles, 2018, p. 19). It also allows decision makers to determine their opinion about the financial position of the company. Assets = Liabilities + (Owner's/Stockholder's) Equity If you like taking photos, you can relate to the balance sheet by thinking of it as a still photo or ‘moment captured in time’ of the organization's overall business health. The importance of the balance sheet is ensured both sides of the accounting equation are equal. One side will show exactly how much an individual or organization owns or has claims of assets, while the other shows the amount of leverage (or lack of) the individual or organization are using to support operations or performance...from period-to-period. If the balances are not equal, then there is an error that must be fixed. Overstating or understating values can lead to undesirable consequences, competitively and legally. The key to ensuring an individual or organization uses the balance sheet as a competitive advantage is to focus on achieving low overall debt and cost of debt while increasing their assets and equity accounts. This leads to great financial statistics, favorable lending rates, and good credit rating!   Statement of Retained Earnings.  The statement of retained earnings informs users about much of the earnings were kept and reinvested in the company (p. 19). The importance of the statement of retained earnings is to determine exactly how much the organization are keeping or retaining, from period-to-period. Retained Earnings, Beginning + Net Income (Loss) for the period – Dividends for the period = Retained Earnings, Ending (Tracie Miller-Nobles, 2018, p. 19) Knowing how much is being kept and reinvested back into the business matters. The most recent earnings figure should be equal to or greater than the last period. The key to ensuring an individual or organization using the statement of retained earnings as a competitive advantage is to focus on holding the previous period’s amount steady thereby increasing the amount each period on a consistent basis. A separate financial strategy that could be executed is keeping the previous period’s earnings (in dollars) equal to or greater than previous period’s expenses can be beneficial and lead to more paid-in capital from current and prospective investors. As we are aware, investors love to see returns! This displays good management decisions and can lead to great financial statistics, favorable lending rates, and improved brand reputation!   Statement of Cash Flows.  The statement of cash flows reports on an organization's cash receipts and cash payments for a period of time (p. 19). This allows people, like you and I, to view where management are spending cash. Cash are spent, generally, in three areas: financing activities, investing activities, and operating activities. Operating activities involves cash payments and receipts for expenses. Investing activities involves the purchase and sale of land and equipment for cash. Financing activities involve cash contributions by investors and cash dividends paid to the investors. If there is a need to see precisely where the money is spent or invested, evaluating the cash flow statement can help in making business and financial decisions.   The performing organization or investor can evaluate business performance of the performing organization at any time period, if they possess accurate and reliable financial statements. Audited financial statements are the preferred method for evaluation and analysis. Use of the generally accepted accounting principles (GAAP) in the audited financial statements are as equally important. A high return on assets (ROA) are what we all seek, whether that be personal or business finance! We want to make money off of the assets we’ve invested into. Investors or learners can view public organizations and their business’ performance by viewing their financial statements using their ticker symbol on the Securities and Exchange Commission ’s online platform.   In summary, a financial manager’s number one priority is to ensure he or she uses the statements as a competitive advantage as opposed to a competitive disadvantage with the objective to maximize the owner's (or shareholder's) equity. It is wise to use the financial statements to be proactive relative to the market, instead of reactive. In other words, stay ahead of the market instead of behind the market. When you’re ‘ahead’ of the market, you have time to make adjustments. When you are ‘behind’ the market the hole gets bigger, deeper, and longer to climb out of. Attention to detail on these statements can save in terms of time, effort, and money!   References Jay Heizer, B. R. (2017). Operations Management: Sustainability and Supply Chain Management, 12th Edition.  Pearson. Tracie Miller-Nobles, B. M. (2018). Financial & Managerial Accounting, 6th Edition.  Pearson Education. U.S. Securities and Exchange Commission . (2024, April 2). Retrieved from www.sec.gov   Meet Nikia Smith , Director of Project Management Office (PMO), driving success at Business and Wealth Generations. With over a decade of advisory expertise, Nikia orchestrates strategy and operations, spearheading growth and innovation. Beyond his professional endeavors, Nikia actively participates in his community, having served on the Board of Directors at the Project Management Institute Florida Suncoast Chapter in different roles for several years. Recognized for his contributions, he received the PMI Florida Suncoast Chapter Award in 2018 for significantly boosting membership and retention and was also selected to attend the 2019 PMI North America Leadership Institute Meeting in Philadelphia. Nikia holds a bachelor’s degree in management and organizational leadership with a focus on Project Management, alongside several business certificates from St. Petersburg College. He is also certified in CAPM and PMP by the prestigious Project Management Institute. For collaboration opportunities, reach out to Nikia at info@thebusinesswg.com .