1. Doc. Ing. Karel Havlíček, Ph.D., MBA CHANGES IN THE BUSINESS MANAGEMENT PROCESS OF SME´s 26.05.2016 Prague, IMECS Innovation Management, Entrepreneurship and Corporate Sustainability

2. 2 Specifics of SME´s A different system of relations with the owners (Owners involved in the operational management) A different process management system (Universal staff – overlapping/mixing activities) A different financing system (Balance sheet – intuitive management of fin.sources) A different system of managing financial results (Optimization) A different system of financial planning (P/L, C/F)

3. 3 World changes in the last 20 Years New economic superpowers New economic superpowers World economic crisis World economic crisis Tourism developement Tourism developement ICT developement ICT developement Adaptation life style/business/public/ activities Adaptation life style/business/public/ activities New challenges New threats Karel Havlíček

4. 4 4 Geopolitical world Local political influence Economic world Supranational institutional influence 20th century 21st century Finance transfer Knowledge transfer Global view Karel Havlíček

5. 5 5 R&D-Business Relation Environment Responsibility Speculation Transaction Individual Winner From finance to knowledge WALL STREETSILICON VALLEY 20th century21st Century Transfer of finance Transfer of knowledge

6. 6 30 years in the development of small and medium producers 1990-2000 Product (physical) Product (physical) Finance 2000-2010 2010-2020 Product + Service Product + Service Product + Service + Knowledge Product + Service + Knowledge Marketing Innovation Local markets Local markets European markets European markets World markets World markets Karel Havlíček

7. 7 Strategic plans Operative plans Strategic controlling Operative controlling Risk management Strategic goals Operative goals MANAGEMENTCONTROLLING Adaptation in Business Karel Havlíček

8. 8 Controlling & management accounting Financial accounting Revenues Costs Cash inflow Cash outflow Assets Liabilities Equity Opportunity costs Opportunity revenues Direct method – FA Indirect method– MA Free cash flow The real value of assets Lease transaction Real WC budget Management accounting Karel Havlíček

9. 9 Key ratios of strategic controlling Controlling balance sheet optimisation Controlling of ownerships ratios Controlling of investment decisions Controlling of debt optimisation Controlling of company value Balance rules ROE, ROI, ROS, ROA, EVA Evaluating and forecasting of the company value Method of evaluating investments Key indicators of indebtedness (Times interest earned ratio )

10. 10 Key ratios of operational controlling Controlling of free cash flow Controlling of operational ratios Controlling of calculations Controlling of short-term debts and relationships with financial institutions Controlling of direct financial risks Evaluation and forecasting of future value of FCF Liquidity ratios, activity ratios Evaluation and management of currency, interest, share, commodity and credit risks Setting, evaluating and arrangement of calculation methods Balance sheet optimisation (short-term debts/current assets), diversification of risks

11. 11 Failure of controlling in SMEs Long-term performance failure Corporate crisis Stages of crisis: Strategy crisis Profitability crisis Liquidity crisis Loos of confidence Threat in the form of crediting fixed assets 1.Operational restructuring 2.Financial restructuring Immediate performance failure Operational crisis Stages of crisis: Failure of operational activities Defects in WS management Threats of solvency Threat in the form of crediting current assets Operational restructuring SCOC Karel Havlíček

12. 12 Absence of controlling has a major impact on long-term and short-term performance of SMEs Interdisciplinary approach based on Management - Controlling The basis of controlling in SMEs is management accounting Controller = Coordinator in business process management Controlling application strengthens the credibility of SMEs Conclusion Karel Havlíček

13. 13 Karel Havlíček: Small Business. Management & Controlling, April 2014 www.manageremnt-controlling.cz www.manageremnt-controlling.cz Karel Havlíček