The Five Key Drivers Of Business Success Need To Be Always In Mind
Do you feel confident when making business decisions? Are you equipped with knowledge or risk running your business into the ground?
Learn the importance of focusing on five key drivers – cash, profit, assets, growth and people – to make money and sustain profitable growth.
A small problem in one area can have a ripple effect throughout the company. According to Kevin Cope, founder of Acumen Learning the secret to cutting through this complexity lies in understanding the five key drivers of business – cash, profit, assets, growth and people.
“We tend to become specialized and get very good at focusing on the specific parts of our jobs, so much so that we fail to see the big picture – how what we do fits into the overall goal of helping our company make money, achieve its strategic objectives and be profitable,” Cope says.
Having worked with dozens of companies, including many in the Fortune 500, Cope has discovered that focusing on the five key drivers – cash, profit, assets, growth and people – enables everyone to understand how their organizations operate, make money and sustain profitable growth.
While each driver is unique, it is also completely dependent on all of the other drivers. You cannot affect one without influencing the performance of another.
“Leaders have to take the connections between the drivers into account as they make their decisions, or risk running their business into the ground.” Employees, too, need to understand the drivers in order to think strategically and communicate more effectively which, in the long run, will enhance their own career opportunities, Cope says.
These are the drivers:
Cash – Cash is the fuel that drives a business. Without cash, a business can’t pay its bills, can’t pay its employees, can’t buy the goods it needs to produce the products or services it sells. If you evaluate the three key components of cash – cash position, cash flow and liquidity – you will have a better understanding how you generate cash and how to use it wisely and spur growth.
Profit – Profit is simply the difference between how much you make by selling goods and services and how much it costs to produce and sell them.. By looking at the differences between profit and cash flow, and explore the concept of profit margin, you can reveal how efficiently a company is turning revenue into profit.
Assets – Assets include everything a company uses to produce revenue – whether it is tangible, such as buildings and equipment, or intangible, such as patents. Balancing asset strength is a dilemma all businesses face. Exploring how a company meets its obligations, takes advantage of opportunities and survives tough economic times – with asset utilization, is vital to produce revenue and sustainable growth.
Growth – Constant change is a reality in today’s business environment, and growth is one of the few ways to handle it. Growth can be measured in terms of both revenue and profit. Understanding how growth strategies impacts business performance and the bottom line, will provide a smoother roadmap to success.
People – People lie at the centre of the five key drivers, Cope says. “People make the decisions, supply the financial resources, buy the products, provide the labour and services…. They drive cash, profit, assets and growth.” Meeting, exceeding and anticipating the wants, needs and expectations of your employees, customers and other important stakeholders is essential to your financial success.