To be successful in business, there are hundreds of elements, factors and skills that you need to incorporate into your business plan. But the most necessary skill that is required to progress a business is the ability to manage 3 very important components of the business – your cash-flow, your people and your time. All are equally important – no enterprise can run, leave alone succeed, if it does not value and effectively utilize money, people and time.
If your business does not have sufficient cash, or if the funds it has are not spent wisely for the right things, then there are chances of it floundering and even coming to a halt.
More important than profits is cash flow
If your business does not make money, has no profits, then you have no business. So anything else you try will not work. But more important than profits is cash flow which is basically the movement of funds in and out of your business. You may have profits on paper but if you have a negative cash flow, then you will find it difficult to run your business.
Profit does not equal cash flow. Profit, as defined by the rules of accounting, is simply revenue minus expenses. Invoicing a customer for products or services you sold to them creates revenue. Actually collecting the money on that invoice is what creates cash. Businesses suffer when the amount of cash coming in is less than the amount of cash going out. The essence of a good businessman is to be able to manage the inflow and outgoings so that there is available cash in the company. Achieving a positive cash flow does not come by chance. You have to work at it constantly.
Right people in the right roles at the right time
Your employees are the backbone of your business so managing them successfully is the key to the welfare of your enterprise. You need to have the right people in the right roles at the right time. You have to recruit people who are in tune with your philosophy and work culture, who will contribute to the company’s progress.
Managing people involves resolving emotions that arise in the workplace, it means letting your people shine while achieving goals and meeting targets, it means acknowledging their efforts, it means motivating, inspiring, guiding and mentoring them to greater heights. You have to treat them with respect and show them that they matter, that their opinions count, that they are an integral part of your business because only then will they be committed and loyal to you, and give you their best. Treat them like professionals who are worthy of your trust.
Learn to work smart not just work hard
Finally, a good businessman has to know how to manage time. Working hard, running from task to task, being busy all the time does not always lead to positive results. You have to learn to work smart not just work hard. Working “hard” often leads to wasting time on unnecessary things. Managing time is not squeezing in as many things as possible into each workday. Rather it is about simplifying matters, prioritizing tasks, working more efficiently, and hence achieving more. Eliminate unnecessary tasks, concentrate on your work, work in short bursts, learn to say no, take time off to smell the flowers and you will find yourself achieving more in less time.
There is no magic mantra to business success but if you can manage these three elements – cash flow, people and time – efficiently and wisely, then success will be yours, definitely.