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 .

Innovation is always about doing something different. It can be a new product, service, or even a new process to support one of those. The problem with innovation is that it requires the innovator to step into the unknown. If one is to be innovative, they have to take risks and there is a chance those risks do not payoff. Being innovative requires one to take a gamble on something with hope that it will pay off. The difference between gambling and innovating is innovation management.   The process of decision-making and innovation are similar in the sense that each process should have structure and a method of selection based off of risks. However, they are overly different as it relates to how it should be done.   The process of decision-making should, for the most part, be strategically aligned with the organization’s objectives. As briefly mentioned in Managing Innovation , general decision-making process can be thought of as “a simple matter of selecting amongst clearly-defined options” (Bessant, 2016, p. 330). Depending on the culture and management structure of an organization decisions can be made by using risk assessments/analysis. Of course, if there is a project with high uncertainty decision-making gets to be more difficult. Top management or leaders can make better judgements, in a general sense, when a risk (positive or negative) exists and it flows through an already established decision-making process.   The process of innovation is much more complex. Innovation is change. Innovation is uncertainty. Therefore, building a climate and culture within an organization that is designed to adapt to those constant changes either before, during, or after compels an organization to develop the capabilities and capacities to keep up. Depending on the innovation type, whether it be ‘incremental’ or ‘radical’, organizations should develop the capability to manage both kinds of innovation (Bessant, 2016, p. 74). For example, if a decision needs to be made for a ‘do what we do better’ (incremental) project then the risk in making a decision can be easier because the information would be there as it may be a more routine situation. As opposed to a ‘do different’ (radical), hardly any information is available at the outset and comes in as the project begins and progresses. This is a totally different ‘animal’ (if you will) than just having a simple, generic decision-making process or flow chart to help managers or leaders follow when they need to make a “general” decision.   To keep the balance of managing risk while continuously innovating, innovation management should be established. It becomes critical for the process of innovation if an organization is to be successful in the long-term. One way is to build a portfolio and spread the risk. It is stated “…the question of which  projects and the subsidiary one of ensuring balance between risk, reward, novelty, experience and many other elements of uncertainty” (Bessant, 2016, p. 338). So, portfolio management and project management skills, tools and techniques along with innovation management would prove to be more effective than just general management practices. Risks are something that can be calculated. Even in gambling, there are odds to just about anything. Innovation management is about calculating those risks and making wise decisions on whether to move forward with an idea or if it is time to cut ties and move on to another project.   The role of external contacts (or external networks) becomes critical for many reasons. External contacts provide an option for an organization to develop a relationship by partnership; collaboration; and competitiveness. Even in business, external contacts or networks can share and compete in the same breadth. Networks can allow organizations to share the risk by sharing resources; information systems; knowledge; and expertise. If the appropriate agreements are made, they can share the benefits of their working together by means of being innovative. Outside sources of input can be a better tool than a research and development department. “In a recent IBM survey of 750 CEOs around the world 76% ranked business partners and customer collaboration as top sources for new ideas whilst internal R&D ranked only eighth” (Tidd & Bessant, 2016, pg. 277). Going out and getting new ideas from outside of the normal operating space is going to produce better results than just sitting inside trying to think of something without outside input. 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 .

Why Budgeting is Essential for Organizations Budgeting is a critical component that all organizations cannot afford to ignore. Information collected to develop a reliable budget comes from various parts of an organization. Data from human resources, operations, marketing, research and development (R&D), finance, and accounting management all contribute to the creation of a credible budget. At its core, budgeting serves as a tool for both personal and business finance. Without this essential tool, unfounded estimations can lead to poor financial decision-making. Establishing goals that are Specific, Measurable, Assignable, Realistic, and Time-related (SMART) to a cash budget can empower decision-makers to make better short-term and long-term financial and strategic decisions. How Budgeting Impacts Cash Flow A firm creates value for shareholders or owners by generating more cash flow than it needs to pay bills and invest in new current and fixed assets (Zutter, 2019, p. 156). Therefore, if an organization can identify and invest optimally and sustainably in marketable securities or assets equivalent to their fixed assets, they can potentially see significant benefits. Particular attention is given by financial managers and decision-makers to planning for cash deficits and surpluses. The cash budget, often referred to as the operating budget, typically covers a period of one year or less. Preparing three-year cash budget plans is an impressive goal! Although uncommon, this strategy is an effective financial approach sought by some organizations. It goes beyond the basic concept of maintaining 'six months of emergency funds' , offering financial stability and flexibility. This enhanced strategy enables better decision-making regarding the quality of life for individuals or organizations. The Evolution of Financial Planning In summary, cash budgeting helps decision-makers project and better manage their capacity to meet obligations. While some individuals believe that having six months of emergency funds is sufficient, today's economic landscape suggests otherwise. It may now be prudent to start retaining enough resources to cover all expenses for one full year. Challenges in Budgeting Wise managers often agree that budgeting can be both challenging and frustrating. However, finding an effective solution tailored to the organization's needs is essential for success. It is crucial to create and implement a budgeting plan with SMART objectives, aligned with both short- and long-term goals. Doing so can yield significant profits and create added value. Tips for Effective Budgeting Gather Input from All Departments : Ensure collaboration across all areas of the organization. Each function can provide insights that contribute to a more informed budget. Monitor and Adjust Regularly : Budgets should not be static. Regularly review and adjust based on performance and changing circumstances. Set Clear Objectives : Establish objectives that are both achievable and measurable. This clarity will help guide financial decisions. Utilize Technology : Leverage budgeting software or tools that can streamline the budgeting process and improve accuracy. Communicate with Stakeholders : Keep lines of communication open. This transparency is key to successful budget implementation. By following these tips and strategies, organizations can improve their budgeting processes. This will lead to better financial management, permitting enhanced growth and stability over time. Conclusion In conclusion, budgeting is more than just a number-crunching exercise. It is a strategic tool that can positively influence an organization's future. With careful planning, collaboration, and regular review, organizations can better navigate economic uncertainties. Remember, the right budgeting practices foster not only profit but also tangible value for your stakeholders. References Zutter, S. B. (2019). Principles of Managerial Finance, 15th edition. New York, NY: 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 .

While the concept of setting goals seems straightforward, it can be challenging for leaders and managers. SMART goals are often confused with SMART objectives, but they have distinct differences. Goals are typically long-term, while objectives are usually short-term. Both must adhere to the SMART criteria. Understanding SMART Goals and Objectives Specific. A specific goal defines an observable action, behavior, or achievement. It should also include a rate, number, percentage, or frequency for better clarity. Measurable. There must be a system or method for tracking and measuring the specific actions or achievements the objective focuses on. Assignable. Objectives should be structured so that individuals can realistically achieve them. They must also be clear and delegated properly within the team. Realistic/Relevant. Employees must view the objectives as significant to the organization. It's crucial that they feel they can influence or change the outcome. Time-related. Every objective should have a specific deadline for completion, such as a particular date or timeframe within which the goal should be reached. Specific Measurable Assignable Realistic/Relevant Time-Related Examples of SMART Goals in Action For instance, consider a construction company aiming to build a new home. While "building a home" may be a goal, it lacks specificity. A clearer goal would specify whether it will be a single-family home, multi-family dwelling, townhouse, or condo. The measurable aspect would detail that it needs to be a two-story building with three bedrooms and two bathrooms. Such a project is assignable to the construction team, realistic in terms of demand, and time-related, requiring completion within a year. Setting Personal and Professional Goals Another example can pertain to personal development goals, such as becoming more punctual at work or school. This goal is simple but important. It can be made SMART by specifying the steps to achieve punctuality, measuring improvements in attendance, assigning goals to oneself, ensuring that the need for punctuality is relevant, and setting a timeframe for improvement. Benefits of Implementing SMART Goals Clarity and Focus : By clearly defining goals, teams can focus their efforts on what truly matters. Motivation : SMART goals can motivate team members to achieve their objectives by providing them with clear benchmarks. Enhanced Performance : With measurable steps outlined, it's easier to track performance and adjust strategies as needed. Improved Accountability : Assigning specific goals enhances personal accountability among team members. Long-term Success : When goals are realistic and time-bound, they contribute to the long-term success of an organization. In summary, SMART goals are instrumental in shaping the strategic direction of an organization. When challenges arise, revisiting these structured goals can help management stay aligned with their overall objectives. Conclusion SMART goals set the foundation for all initiatives within an organization. They clarify expectations and drive performance. By adhering to these principles, teams can not only achieve their targets but also foster an environment of success and collaboration. References Zutter, S. B. (2019). Principles of Managerial Finance, 15th edition. New York, NY: 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 .

Risk management might sound a little intimidating at first, but it’s actually one of the most helpful—and even exciting—parts of running a project or business. Why? Because risks are part of everyday life. Some bring challenges, and others bring great opportunities. The key is learning how to handle both. What Is Risk Management? At its heart, risk management is about being prepared. It means looking ahead, thinking about what might go wrong or  right, making a plan, and protecting the project’s success. Most teams have a dedicated person for this role—a risk manager—who helps guide the team through any bumps in the road. What Does Risk Management Involve? Risk management includes: Identifying risks  – the good (opportunities) and the bad (threats) Evaluating how likely they are and how much they could affect the project Making a plan  to deal with those risks Taking action  to reduce problems or take advantage of opportunities Keeping track  of everything and making changes as needed As stated in the PMBOK® Guide – Seventh Edition , a “risk management plan is a component of the project, program, or portfolio management plan that describes how risk management activities will be structured and performed” (Project Management Institute, 2021, p. 186). In simple terms: the goal is more success, fewer setbacks. It’s a Team Effort Risk managers don’t work alone—they team up with everyone involved in the project. Some risks are: Accepted (you live with it) Avoided (you prevent it from happening) Reduced (you lessen the impact) Transferred (you hand it off, maybe to a legal team or insurance company) And not all risks are bad! Positive risks—like a new chance to grow sales—can turn into big wins if planned for properly. Why Team Input Matters One of the smartest parts of risk management is listening to your team. The people doing the work often spot potential problems early or offer simple solutions. Including their feedback from the beginning can save time, money, and stress. It’s also smart to include contingency planning—a backup plan in case something unexpected happens. Why Learn Risk Management? In a fast-changing world, knowing how to manage risk helps you stay calm, think clearly, and make smart choices. It’s a skill that can boost your confidence and help you grow your career—especially in jobs where things change often. Want to learn more? Explore certificate and degree programs at your local community college or university. And if you want to go even further, consider earning the PMI Risk Management Professional (PMI-RMP)  certification to strengthen your skills and stand out. References A Guide to the Project Management Body of Knowledge (PMBOK Guide) -- Seventh Edition and the Standard for Project Management.  (2021). Newtown Square: Project Management Institute. PMI Risk Management Professional (PMI-RMP)® . (2025, June 30). Retrieved from Project Management Institute: https://www.pmi.org/certifications/risk-management-rmp 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 .

Budgeting is a component that all organizations cannot afford to avoid or ignore. Information collected to develop a reliable budget comes from various parts of an organization. Information from the human resources, operations, marketing, research and development (R&D), finance, and accounting management functions all play a part in the creation of a good, reliable budget. At any rate, it is used as a tool to help in personal and business finance. Without this tool, unfounded estimations can be made. Establishing goals that are specific, measurable, assignable, realistic, and time-related (or SMART) to a cash budget can be performed which will allow decision makers to make better short-term and long-term financial and strategic decisions. By generating more cash flow than it needs to pay bills and invest in new current and fixed assets, a firm creates value for shareholders or owner’s (Zutter, 2019, p. 156). So, if an organization can identify and invest in an optimal, sustainable amount in marketable securities that are equivalent to their fixed assets that are contribute to their core competencies they can potentially see benefits. Particular attention to planning for cash deficits and surpluses is given by financial managers and other decision makers. Which places a spotlight on the opportunity to also plan the budget to include a way to address fixed expenses. In fact, some may argue this is the better of the two between regarding the marketable securities approach. Either way, the fixed assets or fixed expenses concept, has the potential to improve working capital among other things. And the marketable securities concept can be applied in both personal and business finance. The cash budget, or operating budget, is generally one year or less. Estimating total income and expenses for a full 12-month period may seem like a daunting task but favor leans to eliminating if not reducing waste. And waste includes time, not just money. Good financial decision-making warrants exploration of the12-month budget forecast approach for any organization or individual. Taking it further, preparation of 3-year cash budget plans is something to be achieved! In most organizations, it is required at the C-suite level. While it is not unheard of, it is an effective financial strategy that some organizations seek beyond the ‘six-months of emergency funds’  concept. Which may provide an individual or organization the financial stability and flexibility to make better decisions regarding the quality of their life or organization. In summary, cash budgeting helps decision makers better manage their ability to satisfy their financial and strategic obligations. Some have heard six months of emergency is sufficient. But, as we know, times have changed. It may now be reasonable to begin retaining enough money to pay all expenses for one full year. Wise managers can agree budgeting can be challenging and even frustrating but having an effective solution that best fits the organization’s needs is tantamount! Create and execute a budgeting plan with SMART objectives that are aligned with the organization’s short- and long-term goals. This will bring benefit in the form of value or profit…or both!   References Zutter, S. B. (2019). Principles of Managerial Finance, 15th edition.  New York, NY: 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 .

Project team member describing a project A passing grade on an exam, an increase in profits, championship celebrations, vacations, cruises, colonizing Mars, improved quality, family gatherings, newly built venues, or residential buildings—all these are outcomes or results of projects. But what exactly is a project? What Is a Project? According to A Guide to the Project Management Body of Knowledge’s 7th edition , a project is defined as “a temporary endeavor undertaken to create a unique product, service, or result” (PMBOK Guide -- Seventh Edition and the Standard for Project Management, 2021, p. 4). Projects have a clear start and end date and are not ongoing. They can last from several weeks to several years and may consist of one phase or multiple phases. Strategic management (projects) cannot be implemented without business management (operations). While top-down and bottom-up approaches can be used independently, they work best when aligned, especially from an organizational perspective. The top-down approach often relates to project direction and strategy, while the bottom-up approach is closely tied to business operations and day-to-day decision-making. Together, they create a more balanced and effective way to manage both projects and the overall business. In the context of family, projects are a spouse to operations, and operations are a spouse to projects. They are married and in it together. One is not more important than the other. The Nature of Projects Projects imply action. You can think of projects as verbs. Developing, designing, testing, identifying, modifying, expanding, and divesting represent actions taking place. These verbs are utilized in a temporary context against a requirement, task, or responsibility. Examples of Projects Projects can encompass a wide variety of activities. Here are some examples: Executing a strategic plan Identifying and targeting a market segment Developing a new mobile app Implementing a new methodology Finding a new doctor Completing coursework towards a degree Selecting a new business location Hiring new staff Shopping Constructing a new residential condominium Creating a new division within the organization Projects can be anything. However, the level of detail in a project can be a game-changer. Projects can lead to high or low morale, happy or unhappy stakeholders, wealthier clients, satisfied customers, reduced waste, and lower costs. “Projects drive change in organizations. From a business perspective, a project is aimed at moving an organization from one state to another state in order to achieve a specific objective" (PMBOK Guide Sixth Edition, 2017, p. 6). Figure 1-1: From Current State to Future State Figure 1-1 illustrates an organization at its current state with only three divisions seeking to undertake a project to create a new division, its future state. The perceived benefit is that the new division will bring value (or generate revenues) and better efficiency for the organization and its affected stakeholders. Project Activities and Deliverables Project activities, also known as work packages, are the tasks needed to achieve the project deliverables. Project deliverables can be thought of as pieces of a puzzle. Like a puzzle, all pieces must fit for the puzzle to be completed. The same concept applies to projects. Completing deliverables on time and under budget is considered a project success. In the case of the new division project, success would mean launching the division by the agreed-upon deadline without exceeding the allocated budget. Meeting both time and cost goals is a clear indicator that the project was effectively managed and achieved its objectives. However, does a completed project guarantee excellent or even good quality? Of course not. That’s where the triple constraints theory becomes crucial. Figure 1-2: Triple Constraints Theory Understanding the Triple Constraints Theory See Figure 1-2 for the Triple Constraints Theory. What you do or do not do in a project (scope), project budget (costs), and how long it takes (time) all influence the quality of a project. These three elements are known as the triple constraints, and they impact the quality of results, services, or products. Trade-offs must be made. An extension of time may require additional funding; lowering the project budget may mean reducing the scope; or low quality may necessitate additional scope. These decisions depend on the client or customer's requirements and budget allocated for the project. Projects can be a match made in heaven, a total nightmare, or somewhere in between. Good strategic planning and execution lead to effective selection and implementation of projects. Careful consideration of these relevant constraints during projects is critical for success. The Importance of Quality Quality brings value. Business value creation is derived from projects. Value can be strategic, financial, tangible, or intangible. Most organizations strive for a combination and a healthy balance between them all. Many factors can spark a project. External drivers, macroeconomic conditions, the need for improvements, regulatory and legal requirements, demands from clients or customers, political changes, social needs, environmental considerations, or economic changes can all be factors in deciding to launch a project. The key point is that projects are initiated to address issues, resolve problems, execute plans, meet social or regulatory requirements, satisfy stakeholder needs, or respond to what 'sparked' the project in the first place. Resources and Time Management Projects utilize time and resources, such as money and people. Because projects are temporary and have a defined start and end point, the time and resources needed are also temporary. Once the project is finished, these resources are released back to operations. A common misconception is that the same people in operations work on projects with the expectation of at- or above-average performance results. In practice, projects are separated into project teams with specific roles and responsibilities. Day-to-day titles and responsibilities are non-existent on a project team, while project roles and responsibilities govern the culture and norms of projects. The reality is that humans can reach burnout sooner than machines or automation. Low morale and declining mental or physical health can also be significant issues. Projects help to support, attack, protect, and improve situations that need attention. They can be predictive or uncertain. The Role of Project Management Projects can be conceived and executed by any individual, team, or organization. The effectiveness and efficiency of these projects can determine success or failure. Project management is essential and naturally comes into play during the project process. The application of project management is where the fork in the road becomes most apparent. “Project management is the application of knowledge, skills, tools, and techniques to project activities to meet the project requirements" (PMBOK Guide Sixth Edition, p. 10). Most organizations seek certified project professionals who can apply project management knowledge, tools, and techniques to support or drive change. Stakeholder buy-in, understanding roles and responsibilities, governance, and oversight are crucial for a successful project. Certified project professionals initiate, plan, execute, monitor, control, and close out projects, increasing the likelihood of achieving success. Transitioning to Operations Once the project is finished, the results can be incorporated into the organization’s operations as seamlessly as possible, and the resources are released back to their normal duties. As we progress into the second half of the decade, we are likely to see an increase in projects. More projects are being implemented to find and reduce waste, achieve cost savings, and improve business processes. While operations are here to stay, automation is being pushed by organizations, freeing up resources for projects. The best thing organizations can do is embrace this inevitable change and find a way to coexist with the onset of artificial intelligence and automation. After all, projects that focus on optimizing automation and artificial intelligence alongside human resources will have greater leverage than organizations focusing solely on one area. Conclusion Understanding the intricacies of projects is essential for any organization aiming for success. Projects are not just tasks; they are strategic endeavors that drive change and create value. By effectively managing projects and considering the triple constraints, organizations can achieve their objectives and thrive in an ever-evolving landscape. References A Guide to the Project Management Body of Knowledge (PMBOK Guide) -- Seventh Edition. (2021). Newtown Square: Project Management Institute. A Guide to the Project Management Body Of Knowledge Sixth Edition. (2017). Newtown Square: Project Management Institute. 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 .

A risk manager conducting a team meeting on potential risks and opportunities for the company. Risk management might sound intimidating at first, but it’s one of the most helpful—and even exciting—parts of running a project or business. Why? Because risks are part of everyday life . Some bring challenges, while others present great opportunities. The key is learning how to handle both effectively. What Is Risk Management? At its core, risk management is about being prepared . It involves looking ahead, considering what might go wrong or right, making a plan, and protecting the project’s success. Most teams have a dedicated person for this role—a risk manager —who helps guide the team through any bumps in the road. What Does Risk Management Involve? Risk management includes several critical steps: Identifying risks – the good (opportunities) and the bad (threats) Evaluating how likely they are and how much they could affect the project Making a plan to deal with those risks Taking action to reduce problems or take advantage of opportunities Keeping track of everything and making changes as needed As stated in the PMBOK® Guide – Seventh Edition, a “risk management plan is a component of the project, program, or portfolio management plan that describes how risk management activities will be structured and performed” (Project Management Institute, 2021, p. 186). In simple terms: the goal is more success, fewer setbacks. It’s a Team Effort Risk managers don’t work alone—they collaborate with everyone involved in the project. Some risks can be: Accepted (you live with it) Avoided (you prevent it from happening) Reduced (you lessen the impact) Transferred (you hand it off, perhaps to a legal team or insurance company) Not all risks are negative! Positive risks—like a new chance to grow sales—can lead to big wins if planned for properly. Why Team Input Matters One of the smartest aspects of risk management is listening to your team . The people doing the work often spot potential problems early or offer simple solutions. Including their feedback from the beginning can save time, money, and stress. It’s also wise to incorporate contingency planning —a backup plan in case something unexpected happens. Why Learn Risk Management? In a fast-changing world, knowing how to manage risk helps you stay calm, think clearly, and make smart choices . It’s a skill that can boost your confidence and help you grow your career—especially in jobs where things change frequently. The Benefits of Effective Risk Management Effective risk management can lead to numerous benefits, including: Increased Project Success Rates : By identifying and addressing risks early, teams can enhance their chances of project success. Improved Resource Allocation : Understanding risks allows for better allocation of resources, ensuring that time and money are spent wisely. Enhanced Team Collaboration : Engaging team members in the risk management process fosters collaboration and strengthens team dynamics. Greater Stakeholder Confidence : A well-managed project instills confidence in stakeholders, leading to better relationships and support. How to Implement Risk Management in Your Projects Establish a Risk Management Framework : Create a structured approach to identify, assess, and manage risks throughout the project lifecycle. Conduct Regular Risk Assessments : Schedule periodic reviews to evaluate new risks and reassess existing ones. Engage Stakeholders : Involve stakeholders in the risk management process to gain diverse perspectives and insights. Document Everything : Keep detailed records of identified risks, assessments, and actions taken to manage them. Review and Adapt : Continuously monitor the effectiveness of your risk management strategies and make adjustments as necessary. Conclusion In conclusion, risk management is an essential component of successful project management. By understanding and implementing effective risk management strategies, teams can navigate challenges and seize opportunities. Want to learn more? Explore certificate and degree programs at your local community college or university. If you want to go even further, consider earning the PMI Risk Management Professional (PMI-RMP) certification to strengthen your skills and stand out. References A Guide to the Project Management Body of Knowledge (PMBOK Guide) -- Seventh Edition and the Standard for Project Management. (2021). Newtown Square: Project Management Institute. PMI Risk Management Professional (PMI-RMP)® . (2025, June 30). Retrieved from Project Management Institute: https://www.pmi.org/certifications/risk-management-rmp 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 .