FiscalDoctor® Asks Companies: What Is Your Embarrassment IQ?
Boston – Some level of Bernie Madoff-type misplaced trust and unknown risks exist in almost every business. These hidden risks can cause embarrassment and a bad public image at the least – and have a multimillion-dollar negative impact on the bottom line at the worst, according to Gary W. Patterson, FiscalDoctor®.
For businesses to have peace of mind in the upcoming new year, they need to ask two critical questions, according to FiscalDoctor®:
- What is the potential cost of what you don’t know?
- What is your Embarrassment IQ?
“Businesses need to stick out their balance sheets and cough,” said Patterson, an expert on risk management and author of the new book, “Stick Out Your Balance Sheet and Cough: Best Practices for Long-Term Business Health.”
“Too many CEOs, boards of directors, and other executives are taking far greater risks than they realize. What they don’t know can definitely embarrass them, and cost millions of dollars in lost business and lawsuits,” said Patterson, FiscalDoctor® (www.fiscaldoctor.com)
“Executives and corporate board members are beginning to emphasize risk management equally with corporate governance. They have no desire to be featured in a future article in The Wall Street Journal about some ignored, formerly invisible risk that explodes at the worst possible time,” said Patterson.
Companies need to regularly gauge their Embarrassment IQ and determine the greatest areas where hidden risks may lurk. These are, according to Patterson:
- Inaccurate or unrealistic financial statements, budgets, or revenue projections
- Hidden problems with the quality of products or services
- Untracked or out-of-control costs or inventory
- Unanticipated problems affecting your biggest customers
FiscalDoctor® prescribes that companies ask the following questions to assess their Embarrassment IQ and unforeseen risks:
- What is the cost of what you don’t know? “Companies need to check their vital signs and diagnose problems before unpleasant side effects show up on their balance sheets. A thorough corporate check-up helps identify internal problems such as inventory mismanagement, outdated and incomplete financial reports, and false accounting assumptions. Potential concealed external forces could include misleading the market, losing competitive advantage, and missing golden opportunities,” said Patterson.
- Is your business painting an overly optimistic picture to your customers, vendors, or financing sources? “These are likely warning signs that something may be amiss with revenue, profitability, costs, corporate leadership, and other critical areas,” said Patterson.
- Who are your company’s 10 top customers both in terms of revenue and profitability? “Like a well-kept family secret, companies often can’t accurately identify their top 10 customers and largest contributors to their profitability. As their businesses have grown and become more complicated, they may lack the necessary information systems to determine this. However, companies need to be aware of not only their biggest customers, but how much they are actually contributing to the bottom line,” said Patterson.
- How will your company be affected by possible declining profitability at your top customers? “Businesses need to understand that their top 10 customers will change over time. So, they must continuously analyze customer data to ensure that they are serving the right 10 best customers at all times, and recognize that adjustments will have to be made to those that fall off the ‘A list,’” said Patterson.
- How aggressively have prestigious business providers and financial consultants sought your business? “The answer to this question will provide insight into your company’s reputation among those who not only want to do business with the biggest or best-known companies, but want to be associated with them, too,” said Patterson.
- Are you in a position to seize market opportunities? “Great companies are born and rise to the top in economic times like these. Financial rewards go to leaders who are willing to forge ahead with their vision of prosperity, and have the capability to take advantage of the unbounded opportunity this economy presents,” said Patterson.
FiscalDoctor® offers services from a financial assessment identifying issues for resolution to a comprehensive financial management review for creating a roadmap to achieve corporate vision and goals. For more information, please visit www.fiscaldoctor.com
About Gary W. Patterson, FiscalDoctor®
Gary W. Patterson, FiscalDoctor®, has more than 30 years of top management experience helping over 200 companies in manufacturing, technology, wireless, service and distribution in companies from start-ups to Inc 500 to Fortune 500. Several reached 10 times compounded annual growth in revenue. Patterson is the author of “Stick Out Your Balance Sheet and Cough: Best Practices for Long-Term Business Health” (http://bit.ly/7EovsT) and speaks on enterprise risk management, risk analysis, corporate governance, leadership, and the bottom-line impact of going green.
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