Technical success as an Alliance Partner is great, but ultimately you need to be financially successful to run and grow a business. In the end, financial management is just as important as good project management. And, failure to do so is often the primary reason for the demise of a small services business.
So, you need to implement adequate processes to manage, control, report, and plan your finances. They may not need to all be automated, but there at least needs to be defined business practices to ensure that they are handled consistently.
We’ve talked about a couple of the most important in the past:
- Project Cost Accounting – a vital step in an integrator’s ability to maximize the profitability. As your business grows, it becomes impossible to run the business from macro-level – simply tracking overall receivables and payables versus the total labor cost. You must be able to account for your finances on a project-by-project basis.
- Managing Cash Flow – perhaps, the most important financial practice. This is particularly true for smaller system integration companies that often operate business that are fairly low-margin and a large payroll. You can actually have a profitable business with significant revenue, still run out of the cash required to operate the business. And, that’s not to mention the cash needed to finance the growth of the business.
Over the next few weeks, we touch on other basic financial practices required to run a successful system integration business.