Plomia's ideology and strategic guidelines for enterprise growth and quality improvements.

Persistence for Management

Hardship is something that every entrepreneur has to go through no matter their background. Challenges, especially if one is trying to innovate and faces uncertainties, are inevitable. Some of them seem to be beyond the entrepreneurs' capabilities and we agree with them. That is why we believe that to be successful, or at least survive in the business world, one needs all the miracles she can get in every business aspect. The good news is, miracles are attainable with the correct attitude which some call grit, resilience, or as we know it: persistence.

Repeating actions over and over again can be seen as being persistent. However, without creativity, it should not be considered as one. Consistency without strategic flexibility is simply worthless. The ability to learn from mistakes and keep trying again with the newly learned skill is what we meant by persistence.

Business has plenty of aspects. To be able to manage them well, one must know every one of them. For us, a healthy business is that which is managed to do well in the four activities: operating, marketing, investing, and auditing. The details of each one of them can be seen below, but what we believe is true is that in every one of those activities, there have to be miracles to make it actually work. If at first, an entrepreneur is unable to complete the activity due to her basic personality, say, marketing her product while being an introvert, how can she complete the task? It's easy to blame her probably for her lack of willingness to change. But is change reasonable? Is change implementable fast enough to survive? We don't see any other choice instead of hoping for some miraculous help.

The introverted entrepreneur was finally able to work out her marketing problems by hiring a digital marketing expert. But only after several interviews, losses, and sleepless nights discussing her problems with many of her friends. She has tried to learn it herself but to no avail. Well, her product gets some recognition after several weeks, but none got sold yet. Therefore, after about a month, she finally meets the one marketer which is capable of helping her generate her first sales. What do you think? It's miraculous? Not so much, but viewed from another perspective, just a month ago, she didn't know anything about marketing and today, while she's still an introverted woman in her 30s, she got her campaign running and generating enough cash flow for her business and her living costs. Ask her friends and they'll tell you she's lucky! What can we learn from this not-so-fictitious example? Persistence is luck, elaborated.

Managing with Love

Love is probably one of the oldest and most intense feeling there is. It has been documented since the beginning of time yet it is still very hard to concisely define its meaning. At Plomia, we believe that it's due to love's natural abstract characteristic which can only be felt but not logically describeable.

Profitable businesses use systems to gain managerial efficiency. Rules are established, laws are created, all to determine the right or wrong and ease decision making. This is good in most cases, but if we care to observe deeper, while being thoughtful of the 80:20 laws, significant improvements are usually found within the minority. One might miss growth opportunity with rigid rules put in place. Principles are important, legal issues should be taken seriously, but sometimes the greatest wisdom lies taking a step back to observe with love. When the loving heart and logical head collide, we'd suggest you to follow what your warm feelings told you.

On the most recent event which has proven that love prevails over logic is probably the Covid-19 catastrophe. This pandemic has not only attacked human's health but also the economy. Many businesses fall apart, overheads left unpaid, and employees laid off. In such condition, logical thinking (or AI if you prefer) would clearly suggest laying off most employees to reduce expenses. It will not tolerate any loyal long term employee or those who have helped the company since its inception, but focus on metric score alone. Ironically, such decision will surely affect the morale of those who remains and may unsurprisingly backfire. Wise companies (some of those we personally knew) used different approach. They talk and let everyone contribute in finding the middle ground. The good news is, most survived. The better news? They recover quickly post covid era. Humanity wins this round.

Operations Management

The first thing that we emphasize on the list is the operating activity. That's because it represents every account that is written on the income statement and some on the balance sheet. The investing activity is the only activity separated from it. But even then it should still have some relevance toward the enterprise's operation to function properly, especially in the earlier stage of growth (see more in the Investing section). In fact, since most enterprises' purpose is to generate positive cash flow, either to increase their owners' wealth or simply to continue to operate and provide non profit services, both activities are not so different. Both should use dollar value as analysable metrics so that whilst every enterprise's operations are naturally unique, they are can be generally analysed using the same metrics such as the gross and net margin. To be able to manage well, we suggest managers use money oriented approach and focus on the operations first, even before the business is running.

Providing goods and/or services to the customer sounds simple. Well, it's not. From the accounting perspective, there are many accounts involved. From the direct (COGS, Cost of Goods Sold) or indirect costs (G&A, General and Administrative), assets, to the liabilities if you're purchasing on account. If you're selling physical goods, inventory management and logistics are vital. On the balance sheet, you'll see the inventory and probably some trade payable accounts. On the income statement, you'll notice the COGS calculations, delivery expenses, and most probably salaries expenses which if you're lucky enough will state positive numbers for the gross and net profits. All these still have nothing to do with the 'customer' part of the sentence. You will need to have a decent marketing strategy to be able to get one, and of course, to stay green on the bottom line. Don't hate marketing and/or accounting yet, for discussions about it are still reserved in different sections below!

Marketing Strategies

Marketing is a part of the operating activity. However, due to its importance, vastness, and complexities, it requires much elaboration, hence this section. You can study marketing for years and still feel that you knew so little about it every time you're starting a marketing campaign. That is probably because marketing is so dynamic that the best practices look different from time to time. The good news is, they're not. The principles can be learned and will stay the same for good if you focus on the numbers.

There must be a reason why the sales or revenue is placed at the top of the income statement. Certainly, it is more than just for the pleasure of the eye, but due to its indispensable role in sustaining an enterprise's continuous operation. It is the oxygen which keeps the body alive along with the working capital which provides the energy. As long as the sales volume exceeds the costs, one should be confident to say she's successful in marketing on the enterprise level. She might lose some battles but surely wins the war.

Intermezzo:
Most salespeople will argue tirelessly about how the lack of support from the marketing division is making their life an agony. While it is true that sales and marketing have a different approaches, we believe that it is just the same person wearing different garments. Both are expected to generate revenues for the enterprise, directly or indirectly. Also, digitalisation has made such distinction even more irrelevant nowadays anyway!

Investment Management and Analysis

Successful enterprises generate residual cash from their operations. Unfortunately, sooner or later, the market will become saturated and growth will be stalled. When such time comes, it is best for managers to be prepared. The preparations, however, cannot be instant. One needs to prepare an umbrella before it rains.

Investing is more of a habit than just an activity. Mindset matters more than actions. Being speculative is the true enemy of real investors, but short-term thinking is the nemesis. You cannot expect to pluck an apple tomorrow by planting its seed today. Successful investors utilise compounded interest to gain superior results. They make friends with time because they know that at some point, their investments will generate more than their business due to the passive nature of the income. They understand the limits of the body and mind, which will prevent them from being able to operate timelessly, unlike good investments which are virtually limitless.

The question is, where do we start?
Small is good.
Small is achievable.
Small is realistic.
We suggest starting from within the enterprise.

Every enterprise has their own niche to be utilised. In the beginning, one should manage her own cash flow to leave enough cash for the business' growth and expenditures relative to their own special needs. Thereafter, one may begin to plan her enterprise's expansion to be even more specialised and dominant in her niche: probably larger plants, better equipment, technology, or people. All of these things are tightly related to the operations, thus its importance in investing in the early stage. However, once reaching such a stage, diversification in other asset types can also bring fortune if one has adequate financial skills.

Entrepreneurs should consider 'investing' in education before starting to put their money elsewhere—even if they decide to trust someone else to manage their money, or they will risk enduring prolonged devastating losses. In fact, education is one of the best investments since its return countlessly outlasts everything money can buy! The best education we suggest to improve one's financial skills is to read Benjamin Graham's all time classic: The Intelligent Investor and Security Analysis (with David L. Dodd). You can find more investment advice easily, but be warned, not many 'advisors' are credible. Don't buy into short term gains, those are honeypots to trap greedy bears!

Audit Principles

One should consider herself lucky if she manages to record positive results in the income statement and balance sheet. Even better if she and her team are happy with some positive vibe flowing within the organization. In that case, it's time for some audit, something doesn't feel right. Jokes aside, we believe one should actually do audits regularly, at least quarterly for financial reports and monthly for internal compliance.

Auditing is the process of confirming numbers against documents. Our first goal in doing an audit is to know whether the numbers are written accurately and appropriately, with the least tolerable (material) mistakes, accounting wise. There are currently two internationally accepted standards (US GAAP and IAS-Europe) which are mostly similar and actually converging into one called the IFRS (but only God knows when it'll finally happen). Complying with these standards is usually obligatory for public companies around the world as they're highly regulated by the governments, but not for private companies. If you're running a small business, try to at least understand the basics to create the simplest standardised financial reports: the income statement and balance sheet (by the way, uploading your Excel files to Plomia.com does the magic as well!)

Managers usually analyse financial reports to assist decision making process. Wrong decisions misled by incorrect financial data can hurt enterprises badly. This is one of the reasons why auditing is very important. One cannot simply correct a single bad decision with an equally good one. In order to prevent errors, auditing must be done thoroughly but efficiently by using proper sampling methods, analysing the business cycle and operational nature, and focusing on the important parts. For example, if the enterprise's main activity is trading goods, do the stock opname more often. If offering services is the primary activity, confirm invoice amounts and do satisfactory surveys and SOP (Standard Operating Procedures) compliance more often. If there are some findings, record and take action to immediately correct the wrongs. Only after that one can focus on the real objective of auditing: automation.

Although takes time and resources, a good and regular auditing system will encourage automation, which will then leave managers with even more time and resources. That said, we believe, auditing is crucial in catalysing autonomous operations and growth. Moreover, autonomous operations trump traditional ones many times as they're not limited by a single decision maker's capability. With sufficient trials and analysis, regular auditing will promote automation by uncovering the most effective internal procedures and compliance strategy relative to each enterprise (SOP, KPIs-Key Performance Indicators, and more). Furthermore, with improved transparency in the system, employees are better convinced to be more honest and proud of their jobs, promoting even more exponential growth for the enterprise.