4 Key aspects of business that should be in focus

In today’s increasingly competitive business environment, being an entrepreneur is tougher than ever. The days when one could start a thriving business within a few months of solid work are long gone, and with more and more services and products being traded through the internet the competition in terms of quality, volume, and costs has gone through the roof. Therefore, closing a sale and making enough profit to keep things running smoothly is more important than ever. Throughout the world, an increasing number of entrepreneurs from all sectors are looking towards methods that can improve asset management, strategic planning, and profit to generate enough cash to turn a handsome profit. This method is the only way to ensure long term growth and continued growth in different markets without having to restart work on projects from square one every few months.

One of the most common misconceptions I hear when people talk about their business assets is “value”. This is more pronounced among entrepreneurs, who often perceive assets as core drivers of value – whereas in my opinion, assets are the generators of sales. They cannot be considered static items adding value to a business no matter how large or small, rather they need to be taken as active parts of the business machine with one common goal: profitability by promoting sales and cash flow.

Take a step back for a moment and think about the last asset you purchased for your business or work purposes – it doesn’t matter if it is a pen or an expensive multi million dollar piece of sophisticated construction equipment. Why did you buy it? Was the main instinct to merely add value to your operation, or was it to improve and streamline efficiency so that you could be more productive, finish projects on time, deliver excellent quality, and contribute to your overall profit? And what was the motivator behind the need to make profit? Is it not to ensure that there is enough readily accessible cash for your personal, professional, and operational needs?

I think I have provided a fairly accurate description of an entrepreneur and business owner’s job and motivation above. But there is one important piece of the puzzle that is missing – what is “cash” that I am referring to? Is it paper money, or is it something more elaborate? We can all count the various types of cash flow at a business: for example, a loan or a start up fund is considered to be financing cash. On the other hand, the earning from selling a piece of real estate owned by the business, or other inventory, is considered investing cash. Finally, we arrive at the most important concept – operating cash.

The health of any business is not dictated by how high the profits are; rather it is reflected by the operating cash being generated. This is the kind of cash that can be utilised for expansion, research and development, marketing, industrial collaboration, export development, patenting and more.