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Wednesday, April 7, 2010

Money Talks; Bullshit Walks

On Monday I wrote a post about reviewing business performance, and I got lots of great responses in the LinkedIn groups where I posted it as a discussion topic.  There were many different ideas about what metrics are most important, including customer retention, employee satisfaction, and marketing effectiveness. 

Each of these measures are helpful, as are countless others.  However, for startups and small business with limited resources the measures that matter most are financial, specifically cash flows and operating profit.  Customer and employee satisfaction don't matter if your business isn't profitable (and low prices and high wages might be what made them happy!).  Even effective marketing campaigns mean little if you can't afford to pay for them any longer. 

Businesses need to have their finances in order before they worry about other success factors.  No other measure matters if the company can't stay in business.  Without cash everything else is just bullshit.
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