You're probably familiar with Maslow's Hierarchy of needs from Business 101.  Humans have a basic need for food, warmth and shelter.  Until they have fulfilled those needs, they cannot think about other things.  Once they have fulfilled these basic needs they can start to move up the scale.  Next come Security needs, and then the need for Love and Affection.  As they fulfill these needs and move up the list, they want to achieve and feel more Self Esteem.  At the top of the pyramid is Self-Actualization.  Maslow describes self-actualization as a person's need to be and do that which the person was "born to do."  

The Hierarchy of Needs is a good metaphor for a business.  The business hierarchy of needs is simpler with just three levels.  In order for any business to progress and really take flight, it is necessary to evolve through each level. The first level of business needs is the Basic Infrastructure: 

Basic Infrastructure

Collections: Is cash coming in on time?  Are collection activities automatic and efficient?  Are you measuring and controlling receivables and being aggressive in taking action?

Payables: Are you managing Payables correctly?  Taking advantage of free vendor credit, and maximizing discounts available for accelerated payments?  Are you using electronic tools to stay on top of purchases?

Payroll and Benefits: Are you in outsourcing payroll and ensuring that taxes are paid in a timely manner?  If handling in-house, have you evaluated the risk you are taking vs. the cost of a service?  Are you providing a competitive benefits package?

Book-Keeping:  Is you accounting system working efficiently?  Is it providing you with the basic information on revenue and profitability?  Can you analyze profitability by product or region?  Is your book-keeper competent and honest?  Who is watching over your accounting system? What is your upgrade path?

Financial Control: Are you confident that opportunity for theft is minimal?  Are parts of transactions split between staff?  Are all books and records reconciled on a regular basis?  Do you have documented procedures?

Sadly, many companies don't have the basic financial infrastructure under control.  This is like building a house on sand.  B2B CFO has heard many tales about companies that "crash and burn" at critical times like growth, acquisition and exit, because of employee theft, inadequate financial information, failure to pay payroll taxes, or collapse of an overloaded accounting system.  For those who have satisfied the basic need of core infrastructure they can move up to Controllership issues...

Controllership

The next level of business needs are what we call controllership functions. 

Cash: Are you planning cash flow?  Do you anticipate cash needs?  Are your lines of credit adequate?  Have you "termed" debt correctly matching short and long term needs with appropriate debt formats? 

Profitability:  Have you benchmarked profitability?  Do you know the profitability of each product/ region/ rep?  Do you understand your direct costs and overhead and the effect on profitability?  Is your pricing model tied in to your quoting and accounting system?

Budgets:  Do you prepare an annual budget?  Do you prepare a rolling forecast? Are you measuring Revenue and costs against budget and taking corrective action?

Productivity:  Do you manage key metrics for your business - both financial and non financial?  Do you set targets for improvement and monitor trends and progress with Dash Boards?

Again, the percentage of companies that take an active role in Controllership is smaller than it should be. Many operate on a very basic level and attempt to wing it when faced with these issues.  Sadly, this is where companies can face fatal issues - when cash runs out, when the company finds out its key products are actually causing the company a loss, when deals are lost because of the lack of forecasting and realistic pricing capabilities.  So far, the company has been looking backwards.  Stopping at this point means the company is not really influencing its destiny, not achieving self-actualization which in the business world means growth, profitability and value. So we come to the highest level of the Business Hierarchy...

Strategic Control

To achieve Strategic Control a company needs to focus on Planning, Strategy and Execution

Planning: Does the company prepare action plans?  Is the company award of industry benchmarks, SWOT analysis, market share, core competencies?  Does the plan show scenarios for acquisition strategies? For Exit Planning?  Is the company forecasting future growth possibilities, capital needs, and road blocks?

Strategy: Can the company move from Vision to Projects and Initiatives?  Has the company mapped out the Current vs. the Desired state and the path to get there?

Execution: Can the company communicate the plan to stakeholders?  Are procedures in place to track the plan with regular reviews and updates?  Does the plan have accountability for milestones, performance measurements and goals?

Only the top performers reach the highest level of company performance.  These are the companies that survive in down times, and thrive in growth times.  These are the companies that produce the highest Exit value for the owners.  These are the companies that have their own experienced