Managing sales is a balancing act to protect your brand and cash flow.
Rapid growth is a welcome addition to any business, but at the same time, unmanaged growth can be detrimental to a companys quality and brand reputation. Balance your sales growth with your ability to deliver to protect your brand for the long-term.
A growing business is a delicate ecosystem that must be maintained to safeguard the companys brand and future. As the business owner, its your responsibility to keep the balancing act in check:
- As the FlowFirst management model explains, the three flows of sales, operations, and finance must maintain a balance to protect the companys ultimate goal: cash flow.
- If sales outpace operations or finance, the business puts it ability to deliver to customer expectations (and to profit from that delivery) in jeopardy.
- The right people and processes can facilitate communication and ensure that the balancing act maintains a healthy equilibrium.
Every business wants to grow, but how does a business owner balance that growth with maintaining a level of quality that does not dilute the companys brand? Its a delicate dance that requires smart decision making and prioritization.
First, it is important for the business owner to recognize that this balancing act is being driven by the three foundational flows that form the basis of any basis:
- Sales flow
- Operational flow
- Financial flow, as designated by the FlowFirst management model.
Growth is dictated by sales flow. Delivering the product falls under operational flow. And billing, collecting, and accounting for the sale are all aspects of financial flow. Brand integrity occurs when these three essential flows are in balance.
If any one of these flows falls out of balance, it can compromise the quality your company is known for. Most commonly in a rapid growth business, sales can begin to outpace the operational and financial flows, which will quickly leave your customers (and your cash flow) high and dry.
As the business owner, its key to make sure your company is selling only to your ability to deliver. Oftentimes, this may mean that when a company is smaller or growing rapidly, the business must actually turn away sales. Its a difficult and perhaps counterintuitive thing to do, but the fact of the matter is that in many cases, it needs to be done.
Otherwise, the companys long-term reputation and brand could be put in jeopardy if the company cant actually deliver on what was promised.
So how does a business owner ensure that this balancing act maintains its equilibrium?
What helps the most is having the right balance of people on every side of the equation, and the right processes in place to ensure their communication.
For example, assume the client is ready to place an order. What should happen next? First, sales should communicate the prospective sale to operations to ensure that delivery can be made.
If there is a backlog which may impede normal delivery, operations can then communicate to sales when delivery can be guaranteed, and sales can communicate that back to the client. The clients expectations are properly set, the sale is closed, and the client is satisfied with the company.
In this manner, the right processes and people help to maintain balance between the sales and operational flows.
And this balance is only enhanced by having the right internal and external accounting team to ensure that billing, collection, and financial reporting is timely. After all, product sales and delivery are of no use to a business if the company cant collect on that sale and turn it into cash.
Cash flow is the lifeblood of a business, and continuing the balancing act through to the financial team will keep that lifeblood flowing.
In short, processes that enhance communication greatly contribute to the balance between sales growth, quality of delivery, and the companys financial health. Maintain the balancing act between sales, operational, and financial flow to safeguard your companys brand reputation and long-term future.
About the author
Alexander J. Hart of Cuban American decent is principal and founder of Hart Vida Raffo. With over 25 years of experience, Alex specializes in the areas of tax strategy and planning, business process improvement, and capital consulting. Whether advising on capital and financing strategy or consulting for privately-held professional services firms, Alex has the expertise and practical know-how to help any company optimize their business processes and make tactical financial decisions. He began his career at IBM in sales operations and accounting. He was a Controller for the N.Y. Post, has been a CFO for a medical device company, and has written a tax column called “Ask the Tax Guys” for Micro-Cap Review. Alex is a professional member of A.L.T.A. (Affiliated Lawyers of the Americas), a member of the National Association of Tax Preparers, and is a contributing author and mentor at Latin Business Today. Alex graduated from St. John’s University with a B.A. in Spanish and his M.B.A. in Finance. He obtained his accounting degree from Pace University.Website