Refresh Your Business: 5 Key Insights to Improve Performance

Group of business people collaborating in office

Is it getting harder to profitably run your business? Are your revenues up but profit margins shrinking? Here are five often overlooked strategies and other actions that can help improve the financial operations of your business.

  • Stay focused on good customers
  • Leverage your balance sheet
  • Maximize stakeholder value
  • Get current with technology
  • Be a cash hoarder

1. Stay focused on good customers.

It’s easier to keep your current customers than find new ones, so make frequent touch points and closely monitor retention rates. Discuss future volumes and forecasts, and offer them incentives if possible. If you have slow paying and/or unprofitable customers that are high maintenance and add complexity to your business, seriously consider your cost to keep them as a customer.

2. Leverage your balance sheet.

Little things can add up. Measure DPO (days payable outstanding) on your payables and DSO (days sales outstanding) on your receivables. You may realize there are opportunities to increase cash flow just by tweaking your payment or collection habits. Don’t pay vendors early unless rewarded, and get creative when negotiating longer payment terms. If you have inventory, pay special attention to DSI (days sales in inventory). Many companies have untold fortunes and cash flow tied up on inventory shelves. If the inventory is not moving, move it, regardless of the sales price.

3. Maximize stakeholder value.

Maximize all relationships for growth potential. Stay connected and nurture relationships with bankers, attorneys, accountants, insurance agents and consultants. Communicate regularly, provide timely reporting, ask for ideas. Keep key employees happy, and maintain open lines of communication with key vendors.

4. Get current with technology.

Integrate your systems – measure inefficiency. Revenue growth should not equal people growth. Don’t be afraid to spend money – ROI is faster than you think.

5. Be a cash hoarder.

Measure your headcount efficiency often. Forecast weekly cash flow. Negotiate discounts or co-marketing opportunities with vendors. Eliminate low ROI initiatives. Re-evaluate your lease vs. purchase. Be diligent on collections.

Bringing It All Together

So what’s the net of this? The devil is the details. Often times it’s the little things that can be holding you back or costing you more than you think. Take a close look at the basics. You’ll be pleasantly surprised at the seemingly small adjustments that can have a significant impact on financial performance.