Difficult economic contexts, every time, put distances between entrepreneurs and differentiation, through competitive advantage, can become one of the most important development levers. Any market correction, whether due to socio-political, fiscal or legislative causes, pales in comparison to "white swans" or "black swans" (cf. Nicholas Nassim Taleb) - exceptional (economic) events caused by factors that can be anticipated – white swans, or exceptional circumstances – black swans, which are almost impossible to anticipate. Therefore, the various approaches to the theory of economic cycles have a common element: cyclicality is an unbeatable constant of private economic life. Periods of contraction, recession, inflation, stagflation or even financial crisis are not exceptions, but constants determined by certain internal or external conditions of different markets.
Well, in this context, as entrepreneurs, the natural question arises – what do we do and how do we react in challenging economic situations? How do we prepare, how do we anticipate, how do we get things in order in our own companies? Also, another natural question from the perspective of evolution, is how do we hide this type of exposure of our businesses, more directly, how do we survive (crises)?
Well, the entrepreneurship market and by extension the management consulting market abounds with theories, entire libraries, authors, practitioners, influencers or gurus who live, abundantly, charmingly and inspirationally, from this segment of business literature. Things, obviously in this area, are divided, not all authors are equal and, of course, not all conjectures that remain after going through a shelf of business literature are invalid. But the central element of business literature of inspirational/motivational origin remains its deep emotional/affective substrate; we rarely speak, in contemporary management, of rational, pragmatic approaches, carefully oriented towards horizons defined by numbers, weights, percentages, processes, objectives and know-how coming from the grassroots - that is, from everyday work at the entrepreneurial level, SME or corporate. That is, the day-to-day work, down to the smallest detail, through which we pursue the profit and economic stability of companies.
Just as accounting is the generally accepted form of communication, verification and reporting to financial authorities, company financial management is oriented towards addressing, regulating and internally amplifying the company's processes, revenues and profits. Since in the absence of competent and genuine financial management, skillfully oriented towards the control of expenses and income, entrepreneurship can very easily become a game of chance. But randomness and chance produce, in most circumstances, chaos - the main enemy of any organization.
Controlling expenses, by using AMF is clear, direct and classified in an intuitive way; thus, the expenditure heading is structurally declined as follows:
Expenditure budget structure
List of expenses
Cost/unit structure & graphical analysis
Within the Expense Budget Structure, they can be structured and customized according to the needs of the company and the organizational chart. Thus, we can have a basic structure of expenses, organized in 3 large sections –
a. Administrative expenses
b. Operating expenses
c. Wages
or we can diversify and customize the categories of expenses so that they perfectly reflect the specifics of the organization down to the smallest detail.
The AMF software application gives you total customization flexibility, the editing functions are friendly, easy to access and use even with minimal training.
The list of expenses represents a particularly important section within the AMF. In this section, each expense of the company is organized according to: category, cost, supplier, description of the expense, invoice number, tax receipt, invoice value/voucher without VAT, VAT amount, invoice total, invoicing date, Month and the year. For maximum flexibility, each expense on the Expense List is accompanied by Edit and Delete options.
Cost structure/unit & graphical analysis
Although it seems an exotic section, the stake of this column is particularly important as it gives us, instantly, a clear percentage structure of each cost associated with each category of expenses; also, to the right of the section, these percentages are visually represented by comparative graphs as clear as possible, and comparative graphs over time of these costs/unit.
Another particularly important element, from a managerial perspective, is the factor of evolution over time that these indispensable visual elements offer us. In this way we can follow the evolution over time of the Main Structure of expenses as well as the Stratification of the categories of expenses.
In general, the fundamental economic philosophy assumes that the more abundant the income, the better it is for the organization. Well, just as the expenses are structured, within the AMF, in the 3 big categories – Expense budget structure, Expense list and Cost/unit structure & graphic analysis, similarly, the incomes are approached through the prism of the 3 perspectives:
The structure of the income budget is particularly important as it offers us an intuitive and quick organization of income sources; and the main argument of this organization is the fact that not all products and services provided by companies generate equal income, on the contrary.
For example, through the flexibility offered by the AMF we can organize the income in 3 large sections: income from the main activity (which can be declined in products and services), income from the secondary activity (which can also be quantified down to the smallest detail ) and Other income (spare parts, adjacent activities, rented machinery, etc.). Of course, in the income section as well, the customization possibilities of Adaptive Management Financial are extremely generous, with each user having the possibility to generalize numerous categories and subcategories of income.
Similar to the expenditure control section and within the Revenue Budget Structure the software application uses the algorithm of differentiating between: Planned Income (Plan), Realized Income (Actual) and the difference between the two. Practically every category of income and every individual income can be analyzed objectively, noting the difference between what we set out to achieve and what we actually achieve, expressed in numbers.
The list of incomes, similar to the List of expenses, is structured comprehensively, according to:
The business management literature approaches competitive advantage, along with differentiation, in various ways. We can talk about competitive advantage in management, at the level of superior features of a product or service as well as we can open the topic of differentiation from the perspective of branding or organizational culture.
From AMD's perspective, through the Adaptive Management Financial software application, strategic management relative to the real-time figures generated by any company, represents the ideal platform through which we can generate differentiation and, consequently, competitive advantage. And this is due to the fact that this approach is determined by the comparative analysis of expenses and income; being connected, in real time, to the image of the company expressed in numbers and percentages, we can obtain the important indicators through which we can generate real value for our customers. And the value offered and felt by customers will have, regardless of the notoriety of the brand and the organization, also an important financial component.
Differentiation and competitive advantage
The business management literature approaches competitive advantage, along with differentiation, in various ways. We can talk about competitive advantage in management, at the level of superior features of a product or service as well as we can open the topic of differentiation from the perspective of branding or organizational culture.
From AMD's perspective, through the Adaptive Management Financial software application, strategic management relative to the real-time figures generated by any company, represents the ideal platform through which we can generate differentiation and, consequently, competitive advantage. And this is due to the fact that this approach is determined by the comparative analysis of expenses and income; being connected, in real time, to the image of the company expressed in numbers and percentages, we can obtain the important indicators through which we can generate real value for our customers. And the value offered and felt by customers will have, regardless of the notoriety of the brand and the organization, also an important financial component.
Competitive products and services are primarily financially efficient even if, for example, in the case of high-end or premium products, the differences between production costs and marketing value are significant. Thus, although it may sound cold, one of the most important principles of contemporary management is the correct and parsimonious management of resources, thereby reducing waste, of whatever nature it may be. However, reducing waste and eliminating financial chaos are the practical foundations on which our team has built Adaptive Financial Management.
In conclusion, differentiation and competitive advantage, from the perspective of modern financial management, are achieved, at the root, through the correct understanding and daily management of the ratio between expenses and income. Because that's how we really know, our position in the market, the vulnerabilities that affect our activity, the areas of growth and development as well as the map of strategic decisions that will lead us to long-term profit.
