Many business leaders are the owners of rapidly growing business, and they can unfortunately look at the wrong metrics to determine financial performance. Sometimes, they are looking at no metrics at all. This is where a business’s growth can get stuck.
Although revenue growth is definitely important, a business leader should instead be thinking about what their return on capital has employed. It is something all business leaders should know the answer to. Having funds tied up in a business is an opportunity cost, because after all, if the funds were not invested in your business, they could have been invested somewhere else. As a business leader, look at more than just your profits; look at what you have invested to achieve these profits to get a view of the larger part of the story.
Another common mistake I see being made is not recognising the true reason behind a lack of cashflow. It can be simple to identify a cashflow problem, and often it is a sign that there is a greater issue. Cash flow problems are manifested by unsustainable growth and lack of profitability. I see many business leaders jump straight into trying to fix this problem. Instead, they should take the time to think about how the cause of the issue may be due to unsustainable growth, profitability and maybe even poor management of working capital.
Another mistake that can be fixed is chasing high sales for the sake of it. Business growth is at the top of the mind for successful business leaders. However, many people go straight into increasing their sales volume without thinking about margin. Increasing the price of your products or services can be unsettling, but even a small price increase can greatly improve your overall results, and most customers may hardly see the difference.
Are you looking for a better solution to your cashflow problems? Are you looking for a different strategy to help your business achieve greater financial success? 9East Marketing Services works to solve problems for their clients. Contact Amjad Khanche to book an appointment and learn how to achieve the next goal in your business plan.