Merriam-Webster defines cash flow as “ the cash expected to be generated by an investment, asset or business.” This is a good technical definition, but it doesn’t help you understand how it works. How do you manage something when you don’t understand how it happens?
An Operational View of Cash Flow
Cash flow is actually an operational concept. So, I designed a simple model called Tuning Your Revenue Engine which helps business owner understand this critical concept like successful entrepreneurs do. The diagram below visually depicts the process:
Four major business functions comprise the Revenue Engine defined as follows:
- Marketing which generates leads.
- Sales works leads turning them into contracts.
- Delivery fulfills the contracts.
- Collections bills and collects payment for the product or service.
The revenue engine represents your cash flow cycle. Most business people find this concept much easier to understand than, “the movement of money in and out of a business.” Or, “the cash expected to be generated by an investment, asset or business.” What makes it easier to understand? You and your employees do it all day, every day!
Now, take a step back and think about your revenue engine. Slow it down and what happens? How about if it slows down too much, then what happens ? Use Tuning Your Revenue Engine to remove obstacles and challenges so you can speed up the flow of dollars into your business. Watch the following concept video and get a better idea of how Tuning Your Revenue Engine provides you with better results.
Tuning Your Revenue Engine
Apply this powerful management method to fix cash flow problems in your business. Find out the solutions available by clicking the button below.