Every successful business owner or leader needs a Vision Statement – a clear, expressed vision of where their business is going. It’s the intended destination, and without it you’ll never be able to measure your progress.
To begin clarifying your Vision Statement, answer these questions in specific, finite terms:
The Vision Statement defines your company’s overall goal and the methods you plan to use to achieve –it’s major products or services, your target market and what you want your organization to ultimately become. Coincidently, you can write vision statements for each division or department. The unifying idea is that each department’s vision supports the master vision of the organization.
Why do you need a Vision Statement? A vision statement will help you:
Yes, your vision statement should motivate you and your employees. So it should include words or phrases that will inspire you and the people that work with you. In the end, your vision statement should empower your entire company to work towards the goals you have set out in the statement itself.
Here’s an easy template that will get you started in developing your Vision Statement. Fill in the blanks in the following sentence:
“Within the next ____ years, grow _________________ (your company name) into a successful _______ (local, regional, national, international, other) $ ______ company, increase our net revenue from ____% to ____% and grow the value of the company to approximately $_________.”
Too often managing cash flow is relegated to the areas of cost control and accounting. In reality, those can only effect cash out, not the real source and key to financial stability, generating revenue, i.e. cash in.
In our 7 Key Numbers management matrix, the first number we teach business owners to watch is the number of leads your marketing generates. This is where all revenue begins – by creating awareness, attracting buyers’ attention, and getting them to engage with your brand. All these are a function of marketing. If as a business owner, marketing isn’t your “thing”, that’s okay… there are plenty of professionals that can manage that for you. The important this is that it is managed – failure to monitor what’s working and what’s not, adjust as needed, and continually measure results (i.e. conversions of leads into sales) will result in poor results and restricted revenue (cash in). Lower ROI = advertising dollars wasted (cash out)!
The concept of Cash Flow Engineering® states that every dollar invested in your company must be viewed as an investment that returns a predictable and measurable return. In years past, ensuring that every dollar invested in marketing was effective was impossible. “Half the money I spend on advertising is wasted; the trouble is I don’t know which half,” said John Wanamaker over 100 years ago. Today, that’s no longer the case.
Fortunately, there are simple ways to monitor, measure and effectively manage your marketing investment. Contract Relationship Management (CRM) programs automate not only reporting, but also much of the function of your marketing and sales – lead capture, nurturing, communications and reporting, optimizing your return on investment, cutting your time, and giving you instantaneous access to data so you can make better decisions, more quickly and in with less time invested.
Of course, revenue begins when a sale is made. But managing the process that captures a lead and delivers that prospect into your sale funnel is critical to ‘cash in’.
Would you rather have cash flow or profits? There is a dangerous business myth that is costing small businesses billions. This myth is more than just wrong; it actually blinds people to better business practices. The myth is that profits should be your number one concern. Not so. Profitability is just one component of a good business. Cash flow is far more important.
A business can survive a long time without profit, but it can’t survive a day without cash. Yet, most business schools teach that profits are everything. But you can’t put profit in your pocket. Have you ever gone to a grocery store and tried to spend an accounts receivable—who knows when you’ll get paid? You can only put cash in your pocket. And that means focusing on cash flow.
On a smaller level, consider the experiences of two of my clients to help illustrate this point. One owned a small construction business; the other owned a medical device company that was growing pretty quickly. Neither client could understand why their business was showing a profit but didn’t have cash in the bank. As you can imagine, they were frustrated. The problem came from the fact that:
For a real-world example, take Amazon.com. They launched in 1995. They first made profit in 2001. Now their profit is in the BILLIONS. If they’d focused on profit, they’d never have made it where they are today. They got there by managing cash flow.
Think bigger than profit. Think ‘cash first, profit second.’ Profit is a long-term result, but it only comes if cash flow is your short-term obsession.
There are three critical mandates for cash flow:
To be a success, you must know how to collect, track, save, and spend the cash you earn. This is the essence of Cash Flow Engineering.
Systems are NOT just for big companies. In fact, until you have systems, you’ll never get big.
Take McDonalds as an example. They didn’t get where they are today by having great hamburgers. They got there by having a system for selling hamburgers for pennies and still making a profit on every single one. But here’s the key: They built their system in 1948 in their very first restaurant. They were a small business with a great system, and that’s how they became a big business.
Systems create predictable results. They tell you exactly how much any job will cost you, which means you know exactly how much to charge, how many employees to hire, when to invest in growth, and when the real money will start coming in.
In any business, there are three major activities: marketing & sales, operations and organization, and financial management. All of them need systems and processes. The good news is that creating these systems isn’t as hard as it might seem!
For example, in marketing and sales, CRMs and marketing automation programs help you create processes that lead prospects through the Customer Journey in the most effective route… and increase your sales effectiveness by 300%. Organizational procedures and operational manuals add consistency to even small companies and make it easier to onboard new hires. And if you don’t already have rigid financial management policies, then your accountant isn’t doing their job!
However, systems take time, and when you’re running a small business, time is your most valuable commodity. But look at McDonalds. It was once a small business just like any other. Now you’re five minutes away from one no matter where you are in the country. That’s because they took the time to get their systems right.
We can help you develop systems, but even if you never call us, you should still start building your systems. The more businesses that do this, the more successful we’ll ALL be.
There are three key disciplines of business that every owner must address: Sales & marketing, Operations and Financial Management. As the leader of your company, how do you know if and when each of these is successful on its own? How do you determine if your operations department is successful? How do you know if sales and marketing are successful? Finally, how do you know if the financial side of your business is performing as it should? Please note that there is a huge difference between managing the financial side of your business and what we find from typical business accounting.
The most successful companies have people in their organization that take responsibility for each of the three key disciplines of their business. However, those are the exceptions. Most businesses, even profitable ones, fail to perform as they could or should. Why? The owners or senior managers might play a key role in operations or sales and marketing, but might leave a void in terms of financial management as an example. Yet, it is our position that you make money in all three areas, and if any one of them is weak it brings down the total profit by as much as one-third of the profit potential of the enterprise.
Don’t be confused! Experience, information and the correct tools are key components of success in all of these areas. Combined, they drive consistent, predictable and sustainable cash flow.
In most cases, the hardest part of running the business is the financial side. Finance is generally the area in which the managers and owners have the least amount of experience or knowledge, especially when it comes to understanding how to make money from the financial side of the business! Because it is so misunderstood, most business owners tend to avoid it or ignore it, to their peril. Conversely, the most successful businesses know how to gain intelligence from their numbers and make them work for them to generate cash flow and profit.
The point that each area of your business has a profit opportunity… IF it is managed according to the proven principles of Cash Flow Engineering®. Managing all three key disciplines of business will go a long way to helping you manage your cash flow.