There are three primary areas of your business that drive value. In large businesses, there could be a dozen or more departments. But, when you get down to brass tacks, there are only three essential areas no matter your size: marketing, operations, and accounting.
Marketing
This is how well you attract leads and turn them into customers. The latter is often called “sales” which I’m not intending to shortchange but let’s keep this simple. Do you have a sufficient pipeline of new leads or existing customers interested in more assistance? If not, fix that first. Once that’s fixed, how well do you convert prospects into customers? Fix sales conversions once leads aren’t an issue. Customer retention shouldn’t be ignored and tends to fall apart if the next area isn’t working.
Operations
The operations area is where you make or deliver the product or service to the customer. This is where the sausage gets made, and there’s constant tension between speed and accuracy. It’s where mistakes, complaints, accidents, customer changes, under-billings, and delays happen. There’s no way to eliminate all issues but if you can get a little better every day, you’re making progress. The key is to develop systems followed by all employees to minimize problems. Taking pride in doing boring things well is critical for operations success.
Accounting
This is where you count the beans, create financial statements, and comply with tax laws. But these are minimums today. A good accounting department also provides feedback to the other two areas without shame and blame. Accounting should tell marketing whether prospective customer meetings are turning into new sales so they can improve or double-down. They should also tell operations when errors are increasing and where they’re happening so they can fix them.
Parting Thought
I think we often complicate what a business does and it makes it hard to identify the problems and solutions. If you’re struggling, there’s a good chance it’s in one or more of these three areas. I would improve them in the order above because good marketing and sales spark cash flow needed to hire more good people to improve the other two areas. Just make sure you delight your customers or more sales can backfire.
Josh Horn, CPA, CVA
Horn Valuation
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