A root cause of the failure of many businesses is the focus
on increasing sales whilst at the same time ignoring the true benefits of the
profits originating from the increased turnover.
It is far too easy to be lulled into a false sense of the
company’s welfare by an increase of sales unless it is accompanied by a
proportionate increase in the bottom line.
Strong financial controls are crucial as are customer-facing
functions or what used to be deemed as “customer service”.
In many cases the best business strategy for a “start-up” or
a SME would be to focus on smaller projects with higher margins rather than
chasing volumes and sales with thin returns. So called prestige accounts are
also a luxury than many companies could do without.
The focus has to be on increasing growth whilst at the same
time controlling and wherever possible reducing overheads.
The reality of a strongly managed cash-flow is that profits
are then available to be used to settle accounts with suppliers or other
operating (overhead) costs. A lax approach to cash-flow will inevitably see the company
running out of funds and unable to fulfil its obligations.
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