Financial Metrics - Cash versus Statements - Where to Look

In dealing with business owners and entrepreneurs, we are often asking questions about the financial health of a business.  This is also true when we deal with departments in a larger corporation.  Knowing the financial state and status of your business or department is truly critical.  

It is scary to see how infrequently some business people are monitoring their financial metrics and also understandable.  Most people that start out in business get annual statements from the accountant or perhaps quarterly.  Managers get a quarterly summary or see published quarterly numbers.  People get conditioned to waiting long periods before knowing how they are performing.

It is critical that finances and cash are monitored weekly and even daily and this doesn't mean waiting for the accountant.  Financials serve their purpose and update you on the health and condition of a business.  Unfortunately, changes in a balance sheet are often slow to demonstrate trends and a business owner need to know where things are constantly.  Cash is King in business.  Knowing your cash situation is the timely and critical means for managing business tightly.

We work with clients to ensure they are running at least a weekly financial/cash performance summary.  This includes, sales, accounts receivable (current and also immediately expected), accounts payable (current and also must pays), then current cash positions.   We can see cash shortfalls and manage our clients and suppliers.   We have seen people grow a $15 million dollar company on cash management without being able to read a financial statement ... this isn't ideal but does show the value of cash metrics before statement reviews.

Establish your weekly Key Performance Indicators (KPI's) for team performance and responsibilities AND then set the weekly cash flow KPI's next.  It is the key to growing a performing, profitable, company and team.

Plan B

With many of our coaching clients at the ownership and management levels we talk about Plan B. What is your plan to generate income that doesn't rely on your current job or your current company? If you assumed no one else was going to cover your retirement or long term well-being, what plan do you need in place? Now some people think this is about being a financial planner. It's not. It is about business strategy for you as an individual and as a company. It is critical to know that you have a second income stream, second opportunity and cushion if things ever finished up quickly with your primary role/job.

Where are your interests? What things do you love? Real estate? Stocks? Makeup? Organic Products? Find your interests and see where Plan B can fit around those. If you had to spend 3-4 hours a week working on your future then you have the makings for a Plan B. Do it with your spouse. Know that getting rich and being independent isn't based on what your financial advisor tells you - he or she has hundreds of clients and isn't watching your money every minute of the day. It is based on you taking time to find a hobby called Plan B that will continue to grow your knowledge in business and your wealth outside of your first role/career.

Money is the Result.

So many people are focused on making money in their companies and in their careers that I thought it was important to write about how they can do this. The fundamental problem most people have is that they don't recognize that more cash, bonuses, sales, commissions and salary are results. They are an output and not an input. Therefore, by just focusing on the result of things (I need some more money personally, we want more sales this quarter) we are missing the critical focus - the inputs that create money for us.


In your job you should know exactly why you get paid what you do. What is expected of you in order to earn your salary? My experience is many people aren't quite sure. Well, you need to know in order to be able to increase your inputs to get more output (money). Talk to your boss and your co-workers, AND your clients and see what generated results for them. Then you have a sense of what you need to produce more of in order to get more money. A raise doesn't show up without more effort and results. You don't get a bonus at the start of the quarter, it's at the end when your results can be measured. So start today in knowing what you need to do to serve more people and to create more results worthy of more cash.


As a business owner or manager, how can your organization serve more clients and better serve the clients you have? So often companies think that clients deal with them because of their base product or service. Well, your clients can get your product or service from probably 50 different suppliers (or at least 5). So why are they dealing with you? You need to know in order to create more value. As you create more value for clients you create more buzz, strengthen your reputation, advance your product offering and generate more results for clients. It is a cycle. So figure out fast what you offer. Then set some new goals based on how many people and companies you will help this quarter. That is the input you control and revenue is the result.

Leadership Tip: Make a List of All the Things You Hated

What are the things you have hated about every job you ever had? What things did your old boss or manager do that drove you wild or made you feel bad? Often realizing what didn’t empower you gives insight into what you need to avoid as a leader.

Although we like to work in the positive of “do these things”, we also can formulate those by recognizing what didn’t work with us and making sure we don’t do it to others.

Abdication Versus Delegation

So many times when we work with clients in our coaching programs, we start to move the owner to a higher level of management - getting them away from all the day to day issues. This means more and more decision making and responsibility gets shifted to the team. This works great every time, except when we start to ask the newly time-rich owner details about where things are at. It normally starts to sound like this - "So how are sales this week?" "I'm not sure, I don't generate the sales reports anymore." "How are your largest two accounts and their project launch dates?" "I am not sure, I haven't heard back from the team."

You get the idea that instantly, through leveraging your management team, your distribution of responsibility and decision making can be lost. It is key to delegate those responsibilities and roles but still retain a feedback loop so you are in the know. Delegation ensures there is reporting and updates regularly so you know what is happening - without having to do it. Abdication is the hand-off of responsibility without any feedback or response - someone else now handles it and you don't know what is happening.

So often the next step of business owners and managers that abdicate is to realize they have lost all information flow and to take it all back. All the decisions, all the responsibility and all the long hours. Don't do it! Delegate everything you can to others with strong training and a regular reporting method so you know what is happening but don't need to be doing it.

Leadership Tip: Lead In All Areas of Your Life

Often great leadership is demonstrated to your team in how you manage your whole life. Many business leaders think it's only about how they operate in the office and how they lead in meetings, campaigns or with staff. Your team is gauging your leadership in your management of your health, your family, your marriage, your personal finances, your car care, your hours, etc. All of this happens in addition to how you lead in the office.

Make sure that leadership development is holistic in your life and watch your results within the office improve too.