What is your financial engine?
I asked a client this question recently. They had a couple of businesses and had thoughts for more but weren’t making much money.
They responded with a puzzled look. When I explained that, as with an automobile’s engine, a business’ financial engine drives the business forward, they got it. It pays the bills. It generates cash for future investment. It enables them to self-finance and to financially share with all company stakeholders.
We identified their financial engine and were able to significantly improve its performance within 6 months.
Interestingly, since they’ve identified and optimized their financial engine, they now have the resources to pursue new ventures, which was their desire all along.
I’ll leave you with some questions to ponder:
- How can it be used to fund your future growth?
- Do you have a financial engine? If you are making a profit, you have one. If you can’t answer this question or the answer is no, it’s time for some hard work.
- Is it running well (are you profitable, generating cash, and at a minimum, realizing the typical return for your industry)?
- What changes need to be made to take it to the next level?
