Think and Lead Like a CEO

Is the work you are doing creating value in your business?

Here are six business fundamentals every employee in a growing, profitable business ought to know. One CEO of a small business I coach taught these principles to his workforce and achieved a 10% ($3M+) increase in employee-led income!

Customers.

A business will succeed when it solves significant client problems, meets or exceeds client expectations, and anticipates clients’ future needs. What problem is your business solving? Is the work you are doing making a big difference for your customers? Is your business growing through repeat business from satisfied customers and additional business from new accounts?

Products and Services.

Customers pay for products and services that make a difference in their lives. Do you understand what your customers require? Do you design, engineer, and deliver products that meet client expectations? Do you simplify your design and eliminate features that do not add significant value?  Is your work evolving and adapting to changes in your customers’ lives? Are your products reliable and defect free?

Sales Revenue.

Sales are fuel that drives a business. Sales reflect value clients believe they receive from your products and services. Are your sales trends positive? Are you meeting or exceeding sales forecasts?  All customers matter but some customers matter more than others. What are your current sales from key accounts? How well are you pursuing and winning sales from new customers?

Cost/Expenses.

Over time, most successful businesses increase efficiency in services and reduce the cost to make products. These savings are achieved through relentless continuous improvement initiatives and economies of scale as the business grows.  How could you accelerate improvement to reduce cost or achieve significant efficiencies? What are you doing to increase your own productivity and efficiency?

Gross Profit = Sales Revenue – Cost of Goods Sold.

Gross profit is the profit a business earns after deducting direct costs of making and delivering a product or service. To increase gross profit, a successful business could: increase prices; reduce the direct cost of goods sold; reduce scrap, waste, or unsold inventory; sell a greater quantity of more profitable products; or introduce new, more profitable products. What are you doing to help your company increase its gross profit?

Cash Flow.

Cash flow is the net amount of cash moving into and out of a business on a daily or periodic basis. Positive cash flow enables a business to pay its bills, settle its debts, reinvest in the business, and pay its shareholders. To assure and improve cash flow, successful businesses: reduce cycle time for production; ship and deliver product on-time; invoice promptly; offer favorable pricing or discounts for early payment; and manage inventory to eliminate slow-selling products and accelerate turnover. What are you doing to help your company improve its cash flow?

Is the work you are doing today creating value in your business?

Once you understand how your business makes and loses money, you increase your ability to influence and contribute to business change, growth, and performance. This is good for your company and for your career!