Ah yes, 2012! Another year behind us, and another year to continue to impact the world in which we live. We spent some time in the past few weeks focusing on presents to give to our loved ones. Let’s now turn our attention to presence.
Merriman-Webster dictionary describes presence as the fact or condition of being present. For me, being present is akin to being conscious and aware of everything you say, do, feel and think. Forgive the pun, but presence is also a gift. Presence is a rare quality that few people consistently manifest. So what does this have to do with 2012?
Let’s put resolutions aside and explore more meaningful and creative ways to approach the onset of 2012. I trust that many of you will agree that we cannot control the events in the world, but we can control the manner in which we respond to events. So rather than talk about our expectations for the New Year, let’s concentrate on ways that will assist you in controlling your “world.” Rather than use the word resolution, why not create meaningful expectations for yourself and your business?
To start with, if you assume increasing revenue as fast as possible as the “new normal” for future revenue expectations, your business could grow broke. Especially during these challenging times — when accelerating and/or realizing any growth seems to be a good thing — companies can get tripped up when they focus on increasing annual revenue as fast as possible with little regard to its full effect. The growth ends up consuming the resources of the balance sheet much more quickly than they can be replenished. Since company executives still need to meet the demand, they must find additional financial resources and usually must pull from their available cash flow. In the end, they are left with much less (if any) cash flow available to reinvest in the company’s long-term strategic growth plans.
Successful businesses recognize the “cure” for growing broke: sustainable revenue growth. Operating from that strategy, businesses focus on the ability to sustain or increase revenue growth year after year. By following that approach, they don’t deplete their available free cash flow just to keep the immediate business growth afloat.
In addition, if the owners look to sell the business, they have more reliable growth numbers. Buyers will appreciate those figures, and the sellers will gain from providing them. Also, if the owners sell to a group (such as key employees) who will make payments over a term, they can expect sustainable growth will ensure on-time payments.
Let’s let our ears and eyes guide us this year to keep a better barometer on the productivity of our business.
Be present with your ears. When an event occurs or when a client or employee speaks to you, are you really hearing what they are attempting to communicate to you? Too often we are so busy with daily routines that when it is time to really respond to someone, we fall to habit and give an answer, sometimes even interrupting the conversation before your client or employee completes their remarks. Active listening is an art form. Some people listen but never hear.
Next let your eyes see more clearly. Take a good look at your financials to make sure that your growth strategy will not have your business growing groke. Spend some time reviewing and checking the barometers for success in your business.
Are you checking the “dashboard” (indicators and measurements) within your business?
Some of the items on your dashboard are periodically examining your business cash flows. Are you reviewing your cash flow and asset to liability ratios?
There are twelve key financial metrics that business owners should examine annually. Please join me and Dan Cunningham, CEO of The Business Ferret LLC, on January 25, 2012 at 1 pm (EST). Our webinar that day will discuss these 12 Key Financial Metrics, and how you can apply these principles to your income statement and balance sheet to determine whether you’re on the road to prosperity or mediocrity.
I wish you a Happy and Prosperous New Year. Be present in all that you do this year.
Robert A. Valente, CFP®, AEP®, is CEO and Managing Member of RAV Financial Services LLC. He can be reached at firstname.lastname@example.org.