The Power of One
Ask yourself – “Is the goal of your business to improve Profit, Cash and Valuation”
A story of numbers is told over 4 Chapters:
Chapter 1 – Profitability
Chapter 2 – Working Capital (Accounts Receivables, Inventory/WIP, Accounts Payables)
Chapter 3- Other Capital (This is the rest of the Balance Sheet and the main item is normally Fixed Assets)
Chapter 4 – Cash Flow (The result of the business is Cash Flow – You cannot read Chapter 1 Profit and expect to understand Chapter 4 Cash Flow)
Your management team needs to have a very sound understanding of Chapter 1 – Profit and Chapter 2 Working Capital
There are 7 key levers that your management team can impact to improve Profit, Cash and Value.
Chapter 1 Levers ( Measured as a % )
- Price
- Volume
- Cost of Goods or Direct Costs
- Overheads
Chapter 2 Levers ( Measured in Days)
- Accounts Receivable Days
- Inventory Days
- Accounts Payable Days
“How many 1% or 1 Day Changes should your company make to achieve your desired results.
The Power of One is the code of company – Every company will have their own unique code.
You need to have a Quarterly Power of One discussion in your board/management meetings
