How Measurable Objectives Increase Cashflow

Having set objectives automatically improves cash flowObjectives are the stepping stones – the measurable results – that tell you where your are in relation to your vision. While the vision statement expresses where you want to be quantitatively, objectives clarify and quantify the components that will get you to your ultimate goal.

The key to setting meaningful Objectives is to identify goals which are:

  • Critical to your success (I.e. Revenues, costs, net income, productivity, project profitability per FTE, net Income per FTE)
  • Can be graphed and allows relevant and real comparisons
  • Can be easily tracked (Easily tracked = data is readily available & the specific target can be counted or MEASURED)
  • Have a specific achievement date
  • Must be improved over time to improve your performance

Why create measurable objectives?

  • As a basis for performance reviews; gives teams, individuals and the entire company specific targets
  • Measure effectiveness of strategies necessary to achieve stockholder objectives
  • Identify areas required for improvement
  • Allow performance tracking which is meaningful and timely
  • Show progress in relation to the vision statement
  • Establish a framework for accountability and incentive pay
  • Minimize subjectivity and emotionalism

Measurement leads to obvious insights into what works and what doesn’t, so decisions become easy to make.

Measuring gives you numbers you can trust and that trust turns into confidence about your decisions. Confident decisions lead to rapid profit increases. Confidence also leads to peace of mind. It makes operating your business so much easier, with less stress, less pressure, more clarity and results. However, you should write objectives only for your most important goals – more is NOT better!

And here’s the best part: By creating these metrics you can focus on “finding money from nowhere”. Every business has it, and you will “find” this money by knowing what, when and where to measure in your business. Measuring always releases money, like magic. The more you measure, the more magic you create and the more profit you find.

About the Author Jeff Prager

Jeff Prager has founded, run, grown and sold dozens of businesses, small and large. Along the way he's developed the 7 Key Numbers that drive revenue in every business - the core of Cash Flow Engineering. Jeff is an author, speaker, consultant, and business coach, and an adjunct professor of economics at UC Denver.

Leave a Comment: