Currently, many executive leaders are urging their teams to hit unclear targets, while these same leaders are frustrated by underperformance in profitability and cash flow. In many cases, the leadership team is not even aware of cash flow and profit targets as they have not been set or communicated.
“You can’t hit a target you cannot see, and you cannot see a target you do not have.” - Zig Ziglar
If you want to hit your targets, you need to know what they are. The challenge is most managers, and even some founders, don’t really understand the financial metrics and the levers they have to drive them.
In addition to the financial targets – you and your team must also know the key drivers to influence those financial targets. The Power of One concept helps accomplish this.
Revenue is vanity.
Profit is sanity.
Cash is king.
For many entrepreneurs, their first love is their idea – their product or service. Their second love? Revenue. They become overly focused on revenue and don’t provide enough visibility to what truly matters – cash. Ask yourself: Are you generating enough cash to scale the business?
Not all revenue is created equal and growth sucks cash. As you scale up, it becomes more critical than ever to generate sufficient profit and cash flow internally. Business leaders can fall in love with revenue without accurately understanding the implications on profits and cash flow.
Recently, I was with a client in the landscaping industry whose leadership team was inspired by The Power of One tool to stop pursuing high-profile RFP projects. The co-founder revealed that the work was stressful, strained their workforce, and despite generating robust revenues, it yielded low margins and sometimes even incurred profit losses. Despite flat revenue growth in 2023, bottom-line profit and cash flow saw significant improvements by refusing to pursue these projects. This change in strategy has reduced stress on the team and eased the challenge of labor shortages in a competitive market and delivered increased profits and cash flow. The co-founder expressed gratitude for the Power of One tool and for teaching his team that revenue is vanity, profits are sanity, and cash is king.
The Power of One is a simple yet powerful tool that businesses can use to educate management on the key drivers for enhancing profits and cash. It highlights where a one-percent or one-day change can significantly impact cash flow and profits, introducing new metrics that enable managers to easily measure the increased cash flow and profitability resulting from their efforts.
We've provided a helpful worksheet that equips you to identify the seven levers that your company's management can influence to improve profitability and cash.
Click here to download a copy of the Power of One tool.
Working capital
Watch the webinar replay now and start focusing on cash flow today. If you need personalized guidance on applying the Power of One to your business. schedule a consultation with me.
Embarking on your journey to accelerate cash flow and boost profits requires strategic planning and disciplined execution. Begin by assembling the right team, and documenting the drivers of profits and cash flow. Use the list below to start your brainstorming.
Accelerate cash and profits
Marketing and sales execution
The journey to business growth begins with understanding and leveraging the right financial tools. The Power of One equips you with the knowledge to make strategic decisions that drive profitability and cash flow. By focusing on the seven financial levers, optimizing your business model, and empowering your team with financial insights, you can unlock success the RISE way.
Dive deeper into the Power of One tool in my recent webinar. Discover how this powerful resource can transform your business into a cash-generating, profitable machine.