A long time ago I learned a valuable lesson to about how to make a business successful. My focus as President was always on aggressively planning sales, marketing, and customer service strategies to grow a business both internally and through acquisitions. A sure sign of success was to tell everyone how large the sales are and how we grew! Right?… WRONG.
The problem was while driving sales and the value of the front end of the business, we lost focus on the business as a whole. Cashflow tightened. We began working longer hours looking for answers to control costs. We were “reactive, rather than proactive.”
There I was, sitting outside a board meeting, frustrated, but determined to provide the right business plan to execute. A longtime, very successful board member sat down to console me and offered the following thoughts. First, if you have to work yourself and everyone extremely hard in developing a plan and executing it, you have to ask if you really have a business model. Secondly, focus on a plan that grows and sustains profits as a first objective.
Recently I found myself reinforcing the lesson I learned that day long ago as I was asked by various clients: “What is the most important driver of our business, Sales Growth or Bottom-line Profit?”
The immediate answer I always provide is:
- Focus on Profits and Cashflow FIRST, the drivers and plans from that will naturally lead to your SECOND objective… sales growth!
- Keep your strategic drivers to a maximum of 3-5 key actions that MUST happen and build off of them and you will find planning and execution success comes easier.
I’m happy to report that those clients are indeed becoming proactive and as a team, executing to objectives to improve cashflow and profits. And, as a result, sales starting to improve!