Question

What non-financial information is needed for the analysis of business expansion without increasing risk? What sources of the information would strengthen the making of the decision?

Answer 1

Answer for the question = non-financial

information is needed for the analysis of

business expansion without increasing risk?

What sources of the information would

strengthen the making of the decision ,

are as follows :

meaning of non financial information in business

• In the business environment, investors and regulators rely on various tools to gauge nonfinancial information.

• The arsenal available to these groups consists of two categories: internal and external. Internal information relates to such data as human resources management objectives, governance policies and management’s strategic vision.

• Corporate observers may use this organic information to identify effective internal controls, as well as to uncover improper and otherwise inappropriate business methods -- such as fraudulent or illegal activities.

• External information comes primarily from the marketplace and concerns everything from competitors’ moves and lending conditions to business legislation

non financial information needed for business expansion and its role in business decision making are as below :

• Running a business isn't just about the Benjamins. When you make plans or decisions for your company, you need financial information, but nonfinancial information is often important as well.
• Examples of nonfinancial information include your company's environmental impact, the effect on housing and roads and cases of discrimination.
• Even so, looking at examples of financial data and nonfinancial data show that there's a difference.
• Financial data examples include advertising costs, sales revenue, employee compensation and the value of assets.
• Examples of nonfinancial information include environmental impact, your relationship with your vendors, diversity in the workplace and social responsibility.
• They may have financial impacts, but it's impossible to quantify them purely by assigning them a dollar figure.
• The focus of any business decisions is usually profit and loss. How much will it cost us?
• What are the potential rewards? What's the risk of loss?
• However, there are also times when nonfinancial information is required for an investment decision.
• Non financial data is also important for internal decision making.
• Cutting employee benefits and bonuses might improve your bottom line in the short term, but if it damages employee morale and loyalty, it'll hurt in the long run.

• Measuring whether sales revenue rises or falls between this quarter and the last is simple. Measuring customer loyalty, employee commitment or environmental impact takes more work, but it offers rewards are as follows :

• 1.Improved management decisions.
• 2.Better stakeholder confidence.
• 3.Increased credibility within the community.
• 4.A lower risk of problems.
• 5.Improved operations.
• 6.Greater access to capital, as you're seen as a safe, reliable investment

• Nonfinancial information is as important as financial information in the decision-making process.

• Both pieces of data contain valuable insights that can yield interesting results if used correctly.

• To make a decision, businesses often rely on PDCA analysis or adopt specific steps.

• These include clearly defining the problem, evaluating potential alternatives, choosing the best option based on existing alternatives, monitoring implementation strategies and

• checking progress periodically. PDCA (plan, do, check, act) helps a company take a thorough look at its operating processes and come up with better ways to accomplish specific tasks and eliminate money-losing activities.

Three non financial factors affect the value of vusiness are , :

• it's important to maintain a focus on the non-financials that can make or break a company's sellability. Here are three non-financial factors to consider, whether you are the business owner or a potential buyer.

1. A strong management team

• Take time to consider whether the business would come to a standstill without the owner's involvement. What percentage of involvement would be required from the owner for it to continue to generate its historic cash flow?
• As I noted in my example above, the reason some companies don't sell is that they are entirely dependent on one person.
• If the owner is the entire company – the "hub" of the wheel – then the wheel is easily broken once he or she leaves. All the spokes (the other stakeholders, partners, employees, etc.) crumble without the hub holding them together.
• Instead, if an owner puts a strong management team in place, it directly impacts the health of the business.
• It becomes easier to train the new owner on the inner workings of the business from a day-to-day standpoint and ensures the longevity of the business if key employees stay on with the firm.
• It's vital that owners, in particular, take time to evaluate this early. However, one-third of business owners have not considered management succession because they've been so focused on the day-to-day aspects of their businesses. Only 25% of them are confident that their management teams would be successful without the owner's involvement.
• As an owner, start by evaluating your employees and determining how you can cover vital responsibilities in your absence.
• Some selections might be obvious: a one-level promotion for all key employees, for example.
• But there also might be wider gaps that you’ll have to get creative to fill. In some cases, you might have to bring in outsiders: board members, accountants, or personal contacts who have the appropriate experience.
• Without these considerations, you're only selling a job, not a company.

2. Diversified human capital risk

• When a company is dependent on any one customer, employee, or supplier, it can be equally detrimental.
• For example, if a single client provides more than half of an owner's income, the owner becomes more of a contractor than a business owner.
• Plus, it poses a huge risk if a client stops requiring the business's services for any reason.
• One common issue is when a company is overly dependent on a few key employees.
• My company was tasked with selling a drilling business in which two key employees were not tied down with any type of "golden handcuffs." This presented an issue when trying to sell the business, as the buyer had no guarantee whether the employees would stay on with the company post-sale. This is a common problem — in one study, 33% of acquired workers left within the first year of a company's sale.
• As an owner, reduce your dependency on any one employee, customer, or supplier.
• If you have key employees, research ways to put those "golden handcuffs" on so they stay. If you have a customer that is more than 10% of your business, it's time to diversify. Or if you are tied to a supplier, consider whether you can you diversify that dependency among a group of suppliers.

3. Growth potential for customers, markets and products

• While financial statements can be indicative of a company's growth potential, there are a number of non-financial elements that can paint a clear picture of its future (or lack thereof).
• Ask, "What is the growth potential of the company?" If someone took over the company, could he or she expand it? Would it be possible to duplicate the business model in another city or state?  
• Potential investors or buyers want to be able to see a clear growth strategy in the business plan, including expansion in customer base, markets and potentially even products.
• Then, they want to see how this will impact sales and the bottom line.
• It's hard to weigh financial and non-financial issues. If a company is not making any money, it definitely isn't going to have much value.
• But, too often, owners of financially successful companies don't realize they're actually unsellable because of a non-financial issue.
• By keeping these factors in mind, owners can steer clear of the "glider path" trap, and buyers can watch out for it as a red flag.
• If the company isn't actively growing, it can only glide for so long before it falls back to the ground.

sources of information would strengthen the decision making in business , are :

• Your decisions will be based on the information that you handle in the decision-making process.

• How you can decide if you don’t have the right information, in the right form on the right place?

• You need information sources reliable to make a right decision for your small business.

• Information is one of the most important resources for your company.

• If in the past, we talk only about human, financial and material resources, today we cannot exclude information as a resource. Information is something that creates knowledge in your business, and knowledge increases your business potential energy.

• Let’s talk about possible information sources that you can use in your decision-making process.

1. Information Sources Located In Your Business :

• A good starting point in getting information for business decision is your own business.
• If your business collects, classify and store data in any useful format, the process will be much easier.
• However, if your company has big amounts of data, where some of them are unwanted or useless, it can be a time-consuming process to find something relevant to the specific decision making process.
• Many times, you can find and get some useful data from your colleagues, but it depends on a good cooperation between them.
• On a different hierarchical level, there are different data.
• You need to implement a systematic approach for collecting, classifying and storing useful data in your business.
• Use following information sources for your decision making process that are inside your company:
• Internal statistics
• IT department
• Finance department
• Sales department
• Colleagues

2. Information Sources Located Outside Your Business :

• Your business is not the alone in the galaxy called as a market.

• Many different entities will be there that have the power to influence your business decisions.

• Because of that, you can’t base your decisions only on your internal information sources.

• Useful ideas, worth data and contributions can come from outside your business.

• There are many experts, many individual sources and world wide web that can be useful for your business.

• Use following information sources for your decision making process that are outside your company:

• Family
• Friends
• Contacts
• Competitors
• Stakeholders
• Events
• Publications
• Press Releases
• Consultants
• External Researchers
• Universities
• Media
• Internet
• Social Media
• Research publications
• Industry news
• Researchers
• Business library
• Market research
• Internal formal communication tools
• Internal informal communication tools
• Meeting minutes

Hope you understand non financial information needed analysing business expansion without incresing risk .and sources of information would strengthen decision making.

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