Success of any business should not be judged only on the basis of profitability: Alan Miltz
Kathmandu, February 26
Alan Miltz, the founder of Cash Flow Story (CFS) — financial story-telling techniques — today said that three other key elements other than profitability should be considered for the overall success of any business.
Citing that profits that a business records at the end of a year is only one part that indicates the growth of the business, Miltz stressed that the company’s working capital, other capitals and funding should be equally prioritised for the holistic success of a business, which can be achieved only if the business has a positive cash flow.
“If any management seeks to take its firm/business towards long-term sustainable growth, it should equally focus on the aforementioned other three measures other than revenue growth,” stated Miltz, who is currently in Nepal to attend an event organised by Entrepreneurs’ Organisation (EO) Nepal.
Citing that many businesses tend to undermine negative cash flow while attempting to increase revenue of
the business, Miltz opined that negative cash flow of a firm can adversely affect the company’s success story in the long run.
Meanwhile, Miltz also suggested different ways, including effective marketing, finance and operations of any business, to control the negative cash flow.
Miltz also suggested businesses to adopt the ‘Power of One’ tool/principle to achieve positive cash flow and high profit. The ‘Power of One’ analyses the impacts on cash flow of a business if the company makes one per cent or one day change in price (products, services), quantity, overhead costs, debtors and creditors, among others.
He also highlighted the need for positive cash flow among managers and chief executive officers in any business. In his own words, Miltz said, “Revenue is vanity, profit is sanity, cash flow is king.’