#379 My 3 obsessions; liquidity, profitability and revenue security

Well hello there!

How’s your week going?

We spent the last 2 weeks talking about creating a strong personal vision and then translating that into your business vision.

Why? Because building a business is hard, and building one that makes enough profit to secure your future means a lot of things have to be done extremely well. Trying to do that in a business that doesn’t align with who you are, what you want, and makes you happy is just a whole other level of difficult. Why make life harder? Really?

This week's blog will just be a short one, as I’m feeling pretty concussed after my epic fall.?

Happily I’ve got a holiday week so I’m taking some recovery time.

So today I’ll be teeing up what we’re going to be talking about over the next 3 weeks.?

And they’re really important topics, so let’s get on with it!

Liquidity, Profitability and Revenue Security

Anyone who’s working with me will know how much I bang on about this holy trinity of financial success.

By focussing consistently on these 3 key areas of your business you create a safety net and early warning system - both of which are mission critical in this unstable environment.

I build my board reports around these so in my client board meetings we’re ALWAYS obsessing about the resilience and future of the business.?

I’m going to unpack these in more detail over the next few weeks, so here’s just a quick overview:

Liquidity

Liquidity is the star no question.

If your cash flow isn’t robust then your business is at risk. Anyone who knows me will be familiar with my insistence on having all your taxes put away and a 3 months overhead buffer.?

Our one certainty after the last 4 years is uncertainty;? having cash behind you means you can weather most storms.

Profitability

Far too many businesses are trading with too little profit. There are many very good reasons why you should be making 15% - 20% EBIT? (more of that in future weeks)??

It’s not just an aspiration for when you want to exit, it’s where you need to be now.?

Waiting and hoping to “grow into” your overhead base is a risky strategy, unless you’ve got a ton of cash and a proven plan to scale quickly.

Revenue Security

If liquidity is the star, revenue security is the lead domino.

Liquidity and profitability can only come from profitable revenue.

Let me correct that - liquidity and profitability can only come from consistent profitable revenue.

Being able to see months ahead and know you’ve hit your revenue (and therefore profit) target is crucial in building a profitable and valuable business.?

Boom and bust lumpy revenue is a profit and cash killer. I’m sure you can relate to having a cracking month or quarter where you make a fantastic profit, followed by losing the profit you just made because sales fell off a cliff.?

And there is actually a lot you can do to create revenue security;? I can’t wait to chat about that soon.

That’s it for now. Keep these three obsessions in mind—they're your business’s safety net.?

Have an awesome week, and get ready to dive deeper into Liquidity, Profitability, and Revenue Security next time.

Serena

x

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