How to set up reporting systems

After months of negotiations and due diligence, the deal is finally done. You are now the proud owner of a business 2,000 km away. If you have not done this before, you are about to find out what it is like to live on a plane. Managing a subsidiary at that distance is no trivial task. You are about to find out why time zones make life difficult and why face-to-face meetings really are important.

The vast majority of entrepreneurs work physically close to their staff. They see them on an hourly or daily basis. They have regular interaction with them over activities and issues and deal with most situations through face-to-face interactions. When things need the personal touch, they visit the office/factory/site where decisions are needed and resolve the problem in close consultation with the employee/contractor/supplier or customer.

Now, lets put 2,000 km between you and the problem. You now have to rely on others to tell you what is happening. You can’t physically examine the situation unless you get on a plane and spend a day or so travelling. Even so, you can’t be doing that every other day or week without something breaking. Then there is the problem of trust. If you don’t visit on a regular basis, can you really be sure you know what is going on?

Basically it gets down to reporting systems. You need to have sufficient data to be able to judge whether things are going according to plan and whether problems are being identified and rectified. While you can have endless phone calls, you really need information on a regular basis to show you the state of play but also to indicate trends which may cause you to initiate action.

Many business owners are satisfied with conventional monthly financial reports for the business they operate on a daily basis but they are inadequate to monitor the future of a distant business. Financial reports show you what happened and may indicate a trend, but they are often weeks behind actual events and due to aggregation of data, often hide problems at a more detailed level. What you really need are activity reports and trend data. It is important to have current information on what is happening in the business on a daily, weekly and monthly cycle. Activities such as leads, orders, shipments, project milestone completions, approvals, prospect tracking and so reflect not only what is happening but also what is likely to happen. It is important to be able to predict from current data and trends where the business will be in a week, month, quarter and a year in the future.

If you have competent staff at the distant location, you don’t need to micro manage but you do need to monitor and provide advice and assistance when it is needed. For you to be confident that you can manage at a distance and not have to spend your time on the phone or plane trying to ascertain what is going on, you do need to put in place an activity and financial reporting system which identifies where you need to take action. Don’t do this by trial and error. Have this ready to go as soon as the deal is done.

Tom McKaskill is a successful global serial entrepreneur, educator and author who is a world acknowledged authority on exit strategies and the former Richard Pratt Professor of Entrepreneurship, Australian Graduate School of Entrepreneurship, Swinburne University of Technology, Melbourne, Australia.