Revenue is Vanity, Profit is Sanity, Cash is Reality 0
Posted on 15, May 2013
in Category Management Consulting
No truer words have been spoken. So many companies that we see have, in this post recessionary period, continued to survive while others thrive.
There is no question that the economy has gone and is going through a complete global re-set and it will be a multi-year process. Here are some of the new paradigms we see that have and continued to develop.
Revenue is Vanity: CEO’s and CFO’s are putting less emphasis on revenue as a measure of accomplishment or success. The focus is shifting to the quality of revenue, ie. Is it good quality revenue from good quality customers? Is the revenue providing acceptable margins for the operation? If it is not, revenue is nothing more than an attractive number with no bearing on how your company is actually performing…Vanity.
Profit is Sanity: Boards of Directors are mandating CEO’s and CFO’s put a greater focus on profitability. It is becoming abundantly clear that with the conservatism of the Chartered Banks and other lenders, there needs to be good, solid and sustainable profitability within companies in order to access the capital required to sustain and grow their business.
Cash is Reality: Cash is the life blood of any organization. Cash reserves, access to credit and access to equity are essential to function going forward and gives an organization a significant advantage over its competition whose access to cash is difficult, time consuming and perhaps even questionable.
For most companies this will take a complete re-look at the business. This may sound like a time consuming task, however with the proper methodology, process and assistance, is much less daunting.
Where to begin? Start with an assessment of the organization to determine where opportunities exist and what affect it would have on the company in terms of profit and cash flow. At EnPower Group, we perform these assessments at no charge to companies.
Once opportunities are identified and exploited, the organization should re-set their overall strategy as the changes will give the flexibility to increase business with existing customers and attract new customers.
Should you have any questions or comments, feel free to contact:
Douglas R. Cranston, CMC
EnPower Group www.enpowergroup.com (416) 949-4850