Are you fluent in your business? Can you speak the language? Most of us would say of course! But what language are you speaking? The financial language or the business language – and why is that distinction important?
Answer the following questions:
- Can you make a profit and not have any cash?
- Can you make a profit and not get a good return on your investment?
- Can you have cash without making a profit?
The answer to all three question is YES, but not for long. It’s like sitting on a stool with three legs of different lengths, it can be done, but only for a short amount of time.
The company must be profitable so employees have a job, customers have goods and services to buy, and the owners have a return on their investment. However, which view do you have on profit: a financial view or a business performance view?
We all know the financial view: Revenue – Expenses = Profits. This tells us where we have been. This tells us how we did last year, last quarter, last month. This tells us our history. This does not help us determine how we will do in the future.
To impact your future outcomes, you need to focus on the business performance view: People x Process = Profit. This tells us where we are going. If you want to impact the future, focus on what is happening right now! Focus on the indicators that drive your company’s financial outcomes. We want to measure, manage, and leverage people and processes on a real-time basis to improve performance. But what should you focus on? What are those indicators for your business?
TD&T is working to help our clients understand what the key drivers of their business are and how to use those to drive future success. By identifying these drivers, helping people see the link between their behaviors and outcomes, and setting priorities that will increase future performance, you can be in control of your company’s future success rather than looking at your past performance.
Join us on this journey and let us help you identify how to truly speak the language.