Statement of Financial Position(Balance Sheet): Importance and Format

 

Statement of Financial Position Overview:

A statement of financial position (formerly called a balance sheet) is a financial report about the financial position of an entity. It is a snapshot of the company’s financial condition at a specific moment in time (usually the month-end or year-end).

The statement of financial position is a detailed representation of the accounting equation. Let’s understand this equation.

This equation is the foundation of the double-entry accounting system. It ensures that the accounting equation always remains balanced. It also explains that all the resources (Assets) that an entity owns are financed through debt (liabilities) and equity (capital).

A statement of financial position is a historical report. It shows the actual position of accounts present on the day of the report. It is prepared at the end of the month, quarter, year, however, we can prepare at any particular date to show the financial position of the entity.

 

Components of the statement of financial position

The statement of financial position has three key components: Assets, liabilities, and equity.

Assets

Assets are valuable economic resources that a business entity owns for future economic benefits.

There are two types of assets based on physical existence. Tangibles (physical existence) and intangibles (non-physical existence).

We can further categorize assets into current and non-current assets. Current assets are those that are easily convertible into cash within a year, while non-current assets are not convertible into cash before a year.

A few examples of assets are cash, accounts receivable, office supplies, inventory, land or building, furniture, and goodwill.

 

Liabilities

Liability is a present obligation of an entity. It arises out of past transactions or events.

For instance, an account payable arises out of the past purchase of goods or services.

We classify it into current and non-current liabilities. Current liabilities are obligations due within one year while long-term liabilities are those that are due after one year.

A few examples of liabilities are accounts payable, wages payable, income tax payable, short-term loans, deferred tax liabilities, and long-term debts.

 

Equity

Equity (also called owner’s equity or shareholder’s equity) is the actual value of funds that owners of the entity invest in the business. It is the value after we deduct the liabilities from the value of assets.

We can classify the equity of the company into share capital, retained earnings, and other reserves.

 

Format of the statement of financial position

The format of statement of financial position is often presented differently under IFRS and GAAP.

Companies that follow IFRS, present statement of financial information under this order:

•  Non-current assets
•  Current assets
•  Equity
•  Non-current liabilities
•  Current liabilities

Under IFRS, companies list the current assets in the reverse order of liquidity.

While companies that follow GAAP, present the statement of financial position information in the order of liquidity:

• Current assets
• Non-current assets
• Current liabilities
• Non-current liabilities
• Equity

There is no specific format for a statement of financial position that must be used. However, there are two general formats: account format and report format.

Account format is of two columns displaying assets on the left column and liabilities and equity on the right column while the report format (often called traditional format) has only one column.

We have presented the formats below following the GAAP.

1-Account Format (As per GAAP)

2-Report Format (As per GAAP)

 

Which one is the better format? Well, it depends on the preference of the reader who reviews the document.

Report format is comparatively easier to read and fits well on the standard size of the paper, however, there is no restriction under IFRS or GAAP to use a specific format.

 

Importance

As per IAS 1, the statement of financial position is an important part of a complete set of the Financial Statements of an entity.

It is a financial document that keeps up-to-date to the owners and other stakeholders about the company’s financial standing.

Statement of financial position is particularly important to:

• Know the net worth of the business 
• Determine the working capital of the business
• See if the entity Can sustain future operations
• Defend from tax proceedings
• Identify the rate of dividend
• Know if your business qualifies for bank loans 

We can evaluate and track the financial metrics of the business entity with this document. It is an instrument that accountants or financial analysts use to make decision making for the business entity.

 

Total Quality Management - Meaning and Important Concepts

To understand the meaning of “Total quality management”, let us first know what does Quality mean?

Quality refers to a parameter which decides the superiority or inferiority of a product or service. Quality can be defined as an attribute which differentiates a product or service from its competitors. Quality plays an essential role in every business. Business marketers need to emphasize on quality of their brands over quantity to survive the cut throat competition.

Why would a customer come to you if your competitor is also offering the same product? The difference has to be there in quality. Your brand needs to be superior for it to stand apart from the rest.

Total Quality Management

Total Quality management is defined as a continuous effort by the management as well as employees of a particular organization to ensure long term customer loyalty and customer satisfaction. Remember, one happy and satisfied customer brings ten new customers along with him whereas one disappointed individual will spread bad word of mouth and spoil several of your existing as well as potential customers.

You need to give something extra to your customers to expect loyalty in return. Quality can be measured in terms of durability, reliability, usage and so on. Total quality management is a structured effort by employees to continuously improve the quality of their products and services through proper feedbacks and research. Ensuring superior quality of a product or service is not the responsibility of a single member.

Every individual who receives his/her paycheck from the organization has to contribute equally to design foolproof processes and systems which would eventually ensure superior quality of products and services. Total Quality management is indeed a joint effort of management, staff members, workforce, suppliers in order to meet and exceed customer satisfaction level. You can’t just blame one person for not adhering to quality measures. The responsibility lies on the shoulder of everyone who is even remotely associated with the organization.

W. Edwards Deming, Joseph M. Juran, and Armand V. Feigenbaum jointly developed the concept of total quality management. Total Quality management originated in the manufacturing sector, but can be applied to almost all organizations.

Total quality management ensures that every single employee is working towards the improvement of work culture, processes, services, systems and so on to ensure long term success.

Total Quality management can be divided into four categories:

• Plan
• Do
• Check
• Act

Also referred to as PDCA cycle.

Planning Phase

Planning is the most crucial phase of total quality management. In this phase employees have to come up with their problems and queries which need to be addressed. They need to come up with the various challenges they face in their day to day operations and also analyze the problem’s root cause. Employees are required to do necessary research and collect relevant data which would help them find solutions to all the problems.

Doing Phase

In the doing phase, employees develop a solution for the problems defined in planning phase. Strategies are devised and implemented to overcome the challenges faced by employees. The effectiveness of solutions and strategies is also measured in this stage.

Checking Phase

Checking phase is the stage where people actually do a comparison analysis of before and after data to confirm the effectiveness of the processes and measure the results.

Acting Phase

In this phase employees document their results and prepare themselves to address other problems.

MRP,MRPII and ERP

MRP stands for material requirements planning and deals with bringing in the right amount of raw material at the right time to support production. MRPII stands for manufacturing resource planning and builds on MRP by adding shop floor production planning and tracking tools. A third-generation system available at time of publication is called ERP, or enterprise resource planning, which integrates all departments of the business, not just manufacturing and purchasing.

MRP

Material Requirements Planning, or MRP, was developed in the 1970s to help manufacturing companies better manage their procurement of material to support manufacturing operations. MRP systems translate the master production schedule into component- and raw material-level demand by splitting the top level assembly into the individual parts and quantities called for on the bill of materials, which reports to that assembly, and directs the purchasing group when to buy them based on the component lead time which is loaded in the MRP system.

MRPII

Manufacturing Resource Planning, or MRPII, goes several steps beyond MRP. While MRP stopped at the receiving dock, MRPII incorporates the value stream all the way through the manufacturing facility to the shipping dock where the product is packaged and sent to the end customer. That value stream includes production planning, machine capacity scheduling, demand forecasting and analysis modules, and quality tracking tools. MRPII also has tools for tracking employee attendance, labor contribution and productivity.

ERP

A discussion of MRP and MRPII would be incomplete without mentioning Enterprise Resource Planning. ERP is the next evolution of the MRP system. While MRP helped companies plan material purchases, and MRPII added in-plant scheduling and production controls, ERP attempts to integrate the information flow from all departments within a company: finance, marketing, production, shipping, even human resources. While some argue that ERP does not deliver on its promise, according to an article on CIO.com, a properly set up ERP system allows better communication and monitoring than ever before, giving all departments access to the exact status of a customer order at any point in time.

Warnings

MRP, MRPII, and ERP are iterations of the same type of system: A software program that aims to help businesses better manage their costs, control inventory, meet customer delivery expectations, and track and improve their internal processes. However, according to an article by the Business Performance Improvement Consultancy, most implementations of any of the three systems fail to achieve the desired results. This is based primarily on a lack of proper training and understanding on the part of the business managers and the IT managers. A business manager with insufficient IT understanding may set the system up incorrectly, while an IT manager who does not understand the business needs may simply automate the current process flow without improving it. If you are contemplating implementing any of these systems, it is critical to make sure that business management and IT management are on the same page and that proper training has been invested in.

Company Secretary

Company Secretary

FUNCTION OF A COMPANY SECRETARY

A company secretary is recognizes as one of the principal officers of the company. The company secretary is the person who entask the compliance of the corporate laws. He is also responsible for managing the various statutory meetings of the company. The code of Corporate Governance which is now a part of the listing regulations of all Stock Exchanges sets various responsibilities of a company secretary in relation to compliance of corporate laws and code of Corporate Governances. The qualification of a company secretary was not previously defined under the Companies Ordinance, 1984 however, the code of Corporate Governance prescribes the qualification of a company secretary of a listed company. The knowledge and training makes a company secretary versatile to carry out various functions in finance, accounts, legal, administrative and personnel areas in addition to his own secretarial duties and responsibilities. In fact his role starts from the very moment when the idea of formation of a Company is conceived.


EMPLOYMENT PROSPECTS

Almost every kind of organization whose affairs are controlled whether by boards, councils or otherwise needs to appoint a secretary, by virtue of law, to manage the legal affairs independently. The position of company secretary is the key management position in a company. After the implementation of Code of Corporate Governance the employment prospects have very much enlarged. All listed companies have to appoint a company secretary who fulfills the qualification prescribed in the Code of Corporate Governance.

A qualified member of the Institute of Corporate Secretaries of Pakistan may, therefore, find an opening as a company secretary, assistant company secretary or an intermediate level administrative position depending upon the size of the organization. However after the attaining the position of a company secretary, he does not necessarily reach the zenith of his career but by virtue of his academic background, professional expertise he may aptly suited to become a member of the board or the governing body of an organization. Bureau of public enterprises, State Bank of Pakistan Government of Pakistan , Stock Exchanges, Nationalized Banks recommends the names of senior company secretaries on their panel for appointment as directors in public sector companies or as members of advisory committees. Many senior members have become chairman, managing directors and whole-time directors in many companies.

SELF-EMPLOYMENT (PRACTICE)

A member of the Institute of Corporate Secretaries of Pakistan may also practice as a practicing company secretary. However, the concept of a practicing company secretary is in initial stage of development but in the developed countries the practicing company secretaries are working successfully. A company secretary in practice may be called upon by the promoters to incorporate a new company or amalgamation, merger, reorganization or winding up of the company. He may act as an authorized representative of a company in respect of filing, registration, presentation, attestation, verification of documents (including forms, application and returns) by or on behalf of the company. He may also offer the serves as share registrar, issue house, stock broker, a secretarial auditor, a consultant or an adviser to a company on management affairs including any legal or procedural matter falling under the Companies Ordinance 1984. He may give consultancy on issues in respect of the rules or bye-laws of stock exchange, the monopoly control authority or under any other law for the time being in force.

Statement of Affairs Method for Calculation of Profit or Loss under Single Entry System

A trader may keep his accounting records under the single entry systemdue to lack of resources or expertise. However he would be equally eager to calculate his profit or loss from his business in comparison to a trader who keeps proper records under double entry system. In this post we will see how can this trader find out his profit or loss for a period (using the Statement of Affairs Method).

It is well understood that due to absence of proper records under the single entry system of accounting, it is not possible to prepare a Profit and Loss Account to ascertain the amount of profit or loss. So we will have to employ some other method to calculate profit or loss here. I will show you how its done. Just read on to find out. Also if you are conversant with the Hindi language, you can watch our video on the topic here.

APPROACHES FOR CALCULATION OF PROFIT AND LOSS UNDER THE SINGLE ENTRY SYSTEM

There are two approaches to calculate profit or loss under the single entry system:

1. Balance Sheet Approach – Statement of Affairs Method; and
2. The Transaction Approach – Conversion Method

In this article we will cover the first approach.

BALANCE SHEET APPROACH OR STATEMENT OF AFFAIRS METHOD

Under this method, a trader can ascertain his profit or loss for a particular period by comparing the capital at the beginning of the period with the capital at the end of the period.

The basic assumption behind this approach is that the increase/decrease in capital of a business during an accounting period is due to the profit earned/loss sustained by it during that accounting period.

For this purpose two comparative Statement of Affairs are prepared, one giving the capital at the commencement and other at the end of the period. Capital in both cases is being represented by Net Worth i.e. excess of Assets over Liabilities.

WHAT IS STATEMENT OF AFFAIRS?

Statement of Affairs is a statement of Assets and Liabilities prepared to find out the financial position (or Capital) of a business where accounts are not maintained on the double entry system.

IF IT IS A STATEMENT OF ASSETS AND LIABILITIES THEN WHY WE CALL IT A STATEMENT OF AFFAIRS AND NOT A BALANCE SHEET?

Although a Statement of Affairs shows a collection of assets and liabilities, it cannot be called a Balance Sheet. This is because the values of such assets and liabilities are not taken from ledger accounts but are estimates made by the owner of the business.

The balancing figure of the statement of affairs on a particular date = Total Assets – Total Liabilities = Capital as on that date

SO HOW TO FIND PROFIT OR LOSS UNDER THE STATEMENT OF AFFAIRS METHOD?

Profit or Loss is calculated using the following formula:

Profit or (Loss) = Closing Capital + Drawings during the period – Opening Capital – Further Capital introduced

LET US TAKE A SMALL PROBLEM TO UNDERSTAND THE ABOVE

• Capital as on 1st January, 2017 Rs. 25600
• Capital as on 31st December, 2017 Rs. 30400
• Drawings during the year 2017 Rs. 12600
• Additional Capital introduced on 30th Sept, 2017 Rs.  4000

Calculate the Profit or Loss for the year 2017.

Solution:

Calculation of Profit or Loss for 2017

(Applying the above formula: Profit or (Loss) = Closing Capital + Drawings during the period – Opening Capital – Further Capital introduced)

Profit = 30,400 + 12,600 – 25,600 – 4,000 = Rs 13,400

If the result was negative, it would have meant a loss.

LET US TAKE ANOTHER ILLUSTRATION

Problem:

Mr D started a business by investing Rs 9000 in cash into the business with no other assets and no liabilities to outsiders. At the end of the first year, his records showed the following assets and liabilities:

• Furniture Rs 4000
• Cash Rs 3600
• Equipment Rs 4000
• Creditors Rs 6000
• Debtors Rs 5000

1. Prepare a Statement of Affairs as of the close of the first year.
2. Assuming that he did not make any drawings from the business nor did he introduce any further capital during the year, calculate his profit in the first year.

At the end of the second year, the records of D showed the following assets and liabilities:

• Furniture  Rs 8000
• Creditors  Rs 16000
• Cash  Rs 5000
• Equipment  Rs 6000
• Debtors Rs 4000
• Building  Rs 20000
• Loan  Rs 10000

1. Prepare a Statement of Affairs as of the close of the second year;
2. Assuming that during the year he had introduced Rs 3000 as additional capital and had withdrawn Rs 600 per month for personal use, calculate his profit for the second year.

Solution:

First Year

First of all let us prepare the Statement of Affairs for the first year as asked by the problem.

Capital at the beginning of the first year = cash invested by Mr D = Rs 9000 ( as mentioned in the problem)

Since there is no drawings or capital introduction in the first year, profit will be calculated as follows:

Capital at the end of the first year	10600
Less: Capital at the beginning of the first year	9000
Profit during the first year	1600

Second Year

So from the above we got Capital at the end of the Second year = Rs 17000

Now let us calculate the profit or loss for the second year:

Capital at the end of the Second year	17000
Less: Capital at the beginning of the Second year	10600
Add: Drawing during second year (600×12)	7200
Less: Capital introduced in Second Year	3000
Profit in the second year	10600

From the above Statement of Affairs, we could find out the Capital at the end of the first year which is the balancing figure i.e. Total Assets – Total Liabilities = 16600- 6000 = Rs 10600.

Written Communication Tools for Employees

Written Communication Tools for Employees Messages that are exchanged in written form are called written communication. Organizations use different tools or methods for communication with the executives and with the employees. The methods or tools of written communication as applicable for written communication tools for management and employees are discussed below-

Management is to communicate with the employees to make them aware and informed about different matters. The written communication tools for employees are discussed below-

Written Communication Tools for Employees

• Job Schedule: Employees are given job schedule so that they can better understand their work area, authority and responsibility. Sometimes, management also reminds the employees about their job areas by supping job schedule.
• Pay-roll Envelope: In many organizations salaries or wages are paid to employees in envelope. The envelope also contains a statement of salary showing the basic or gross payment, allowance, deduction etc. business communication 
• 

• Notice Book: Sometimes managers use notice book to communicate urgent message to the employees. Normally, the office peon brings the notice book to the concerned employees and makes the notice signed for acknowledgement.
• Employee Newsletter: Employee Newsletter is used to communicate less important or less urgent messages. It contains the recent activities / programs of the organization, progress about projects, etc. It is published at a certain time intervals, such as weekly, fortnightly or monthly.
• Monthly House Organ: Monthly house organ is published by large organizations. It contains information about various organizational aspects.
• Letter to New Employees: Welcome letters are written to newly appointed employees by the managers that contain congratulatory messages for their joining in the organization. It helps the authority to build a good relationship with the employees.
• Reading Racks: Large organizations arrange reading racks for their employees. Reading racks contain different books, journals, booklets, papers, periodicals, etc. so that employees can read them during the leisure time. It helps the employees t increase their reading habit and to gain knowledge in different areas.
• Employee Bulletin: Bulletins are used for communicating important messages on emergency basis. Supervisors prepare and disseminate employee bulletins and normally these are released within hours.
• Employee Handbook / Booklet: Employee handbook or booklet contains company profile, policies, procedures, plans, rules-regulations, etc. It helps the employees to know about the organization in details.
• Complaint and Suggestion Box: Organizations practicing participative management install complaint and suggestion box at the convenient place. Employees are encouraged to drop their complaints, suggestions, opinions, questions etc. in this box from where management can get valuable information on different matters.
• Memorandum: Memorandum is a widely used technique of internal communication. General information or message is circulated to all of an organization by memorandum. For example, promotion of employees, notice of meeting, increase in salary, gratuity, changes in policy etc. are taken to the notice of the employees by memorandum.
• Notice Board: Notice board is used to communicate day to day or routine information with the employees. Employee work schedule, day’s programs, usual message etc are pasted on the notice board for the attention of the employees.
• Special Report: Special report is used to convey special information to the employees. This type of report takes short form and usually prepared for special purpose or on special occasion.
• Internal Circular: Internal circulars are used to communicate emergency message with the employees. Circulars may be hanged on the notice board or given to the departmental heads for making others informed.
• Annual Report: Annual report is prepared at the end of the financial year and from it employees can get information related to various matters. By reading annual report, employees also can know their strengths and weaknesses and try to improve their performances in different areas.

From the above discussion, we find that there are different methods or tools for communicating with managers and employees in written way. All of these tools act as the evidence for further reference. There are also information about written communication tools for management.

EM: The 7 Ps of Marketing

Once you've developed your marketing strategy, there is a "Seven P Formula" you should use to continually evaluate and reevaluate your business activities. These seven are: product, price, promotion, place, packaging, positioning and people. As products, markets, customers and needs change rapidly, you must continually revisit these seven Ps to make sure you're on track and achieving the maximum results possible for you in today's marketplace.

Product

To begin with, develop the habit of looking at your product as though you were an outside marketing consultant brought in to help your company decide whether or not it's in the right business at this time. Ask critical questions such as, "Is your current product or service, or mix of products and services, appropriate and suitable for the market and the customers of today?"

Whenever you're having difficulty selling as much of your products or services as you'd like, you need to develop the habit of assessing your business honestly and asking, "Are these the right products or services for our customers today?"

Is there any product or service you're offering today that, knowing what you now know, you would not bring out again today? Compared to your competitors, is your product or service superior in some significant way to anything else available? If so, what is it? If not, could you develop an area of superiority? Should you be offering this product or service at all in the current marketplace?

Prices

The second P in the formula is price. Develop the habit of continually examining and reexamining the prices of the products and services you sell to make sure they're still appropriate to the realities of the current market. Sometimes you need to lower your prices. At other times, it may be appropriate to raise your prices. Many companies have found that the profitability of certain products or services doesn't justify the amount of effort and resources that go into producing them. By raising their prices, they may lose a percentage of their customers, but the remaining percentage generates a profit on every sale. Could this be appropriate for you?

Sometimes you need to change your terms and conditions of sale. Sometimes, by spreading your price over a series of months or years, you can sell far more than you are today, and the interest you can charge will more than make up for the delay in cash receipts. Sometimes you can combine products and services together with special offers and special promotions. Sometimes you can include free additional items that cost you very little to produce but make your prices appear far more attractive to your customers.

In business, as in nature, whenever you experience resistance or frustration in any part of your sales or marketing plan, be open to revisiting that area. Be open to the possibility that your current pricing structure is not ideal for the current market. Be open to the need to revise your prices, if necessary, to remain competitive, to survive and thrive in a fast-changing marketplace.

Promotion

The third habit in marketing and sales is to think in terms of promotion all the time. Promotion includes all the ways you tell your customers about your products or services and how you then market and sell to them.

Small changes in the way you promote and sell your products can lead to dramatic changes in your results. Even small changes in your advertising can lead immediately to higher sales. Experienced copywriters can often increase the response rate from advertising by 500 percent by simply changing the headline on an advertisement.

Large and small companies in every industry continually experiment with different ways of advertising, promoting, and selling their products and services. And here is the rule: Whatever method of marketing and sales you're using today will, sooner or later, stop working. Sometimes it will stop working for reasons you know, and sometimes it will be for reasons you don't know. In either case, your methods of marketing and sales will eventually stop working, and you'll have to develop new sales, marketing and advertising approaches, offerings, and strategies.

Place

The fourth P in the marketing mix is the place where your product or service is actually sold. Develop the habit of reviewing and reflecting upon the exact location where the customer meets the salesperson. Sometimes a change in place can lead to a rapid increase in sales.

You can sell your product in many different places. Some companies use direct selling, sending their salespeople out to personally meet and talk with the prospect. Some sell by telemarketing. Some sell through catalogs or mail order. Some sell at trade shows or in retail establishments. Some sell in joint ventures with other similar products or services. Some companies use manufacturers' representatives or distributors. Many companies use a combination of one or more of these methods.

In each case, the entrepreneur must make the right choice about the very best location or place for the customer to receive essential buying information on the product or service needed to make a buying decision. What is yours? In what way should you change it? Where else could you offer your products or services?

Packaging

The fifth element in the marketing mix is the packaging. Develop the habit of standing back and looking at every visual element in the packaging of your product or service through the eyes of a critical prospect. Remember, people form their first impression about you within the first 30 seconds of seeing you or some element of your company. Small improvements in the packaging or external appearance of your product or service can often lead to completely different reactions from your customers.

With regard to the packaging of your company, your product or service, you should think in terms of everything that the customer sees from the first moment of contact with your company all the way through the purchasing process.

Packaging refers to the way your product or service appears from the outside. Packaging also refers to your people and how they dress and groom. It refers to your offices, your waiting rooms, your brochures, your correspondence and every single visual element about your company. Everything counts. Everything helps or hurts. Everything affects your customer's confidence about dealing with you.

When IBM started under the guidance of Thomas J. Watson, Sr., he very early concluded that fully 99 percent of the visual contact a customer would have with his company, at least initially, would be represented by IBM salespeople. Because IBM was selling relatively sophisticated high-tech equipment, Watson knew customers would have to have a high level of confidence in the credibility of the salesperson. He therefore instituted a dress and grooming code that became an inflexible set of rules and regulations within IBM.

As a result, every salesperson was required to look like a professional in every respect. Every element of their clothing-including dark suits, dark ties, white shirts, conservative hairstyles, shined shoes, clean fingernails-and every other feature gave off the message of professionalism and competence. One of the highest compliments a person could receive was, "You look like someone from IBM."

Positioning

The next P is positioning. You should develop the habit of thinking continually about how you are positioned in the hearts and minds of your customers. How do people think and talk about you when you're not present? How do people think and talk about your company? What positioning do you have in your market, in terms of the specific words people use when they describe you and your offerings to others?

In the famous book by Al Reis and Jack Trout, Positioning, the authors point out that how you are seen and thought about by your customers is the critical determinant of your success in a competitive marketplace. Attribution theory says that most customers think of you in terms of a single attribute, either positive or negative. Sometimes it's "service." Sometimes it's "excellence." Sometimes it's "quality engineering," as with Mercedes Benz. Sometimes it's "the ultimate driving machine," as with BMW. In every case, how deeply entrenched that attribute is in the minds of your customers and prospective customers determines how readily they'll buy your product or service and how much they'll pay.

Develop the habit of thinking about how you could improve your positioning. Begin by determining the position you'd like to have. If you could create the ideal impression in the hearts and minds of your customers, what would it be? What would you have to do in every customer interaction to get your customers to think and talk about in that specific way? What changes do you need to make in the way interact with customers today in order to be seen as the very best choice for your customers of tomorrow?

People

The final P of the marketing mix is people. Develop the habit of thinking in terms of the people inside and outside of your business who are responsible for every element of your sales, marketing strategies, and activities.

It's amazing how many entrepreneurs and businesspeople will work extremely hard to think through every element of the marketing strategy and the marketing mix, and then pay little attention to the fact that every single decision and policy has to be carried out by a specific person, in a specific way. Your ability to select, recruit, hire and retain the proper people, with the skills and abilities to do the job you need to have done, is more important than everything else put together.

In his best-selling book, Good to Great, Jim Collins discovered the most important factor applied by the best companies was that they first of all "got the right people on the bus, and the wrong people off the bus." Once these companies had hired the right people, the second step was to "get the right people in the right seats on the bus."

To be successful in business, you must develop the habit of thinking in terms of exactly who is going to carry out each task and responsibility. In many cases, it's not possible to move forward until you can attract and put the right person into the right position. Many of the best business plans ever developed sit on shelves today because the [people who created them] could not find the key people who could execute those plans.