A question we are often asked – is profit or cash more important.

Both are important of course, but for a business to survive it needs cash first and profit second.

A balanced approach and clear objectives should focus the company on delivering:

 1. Effective and cost/resource efficient activities to create cashflow – i.e. production, distribution, marketing and sales (paid not just invoiced).

Focus on activities that provide benefits that meet and or exceed your customers’ expectations (depending on your strategy). Focus on delivering a product that will ensure customer retention. Price isn’t enough to keep a customer loyal anymore and we all know it costs more to get a new customer than it does to retain an old one.

2. A streamlined, productive, low cost back end supporting the cash generating activities – ie HR, Payroll, IT, Finance, Quality, Compliance, etc.

These processes should be ‘lean’, some could be outsourced and but all should be focussed on doing more for less without sacrificing quality or delivery times.

All of these activities can and should all be measured and the right people be made responsible and accountable for meeting their objectives at all levels of the organisation – staff, management and executive.

If you do (1) and (2) right, the (3)rd element, ‘growth’ will be inevitable!


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