A friend, who is life-long gear head, said something to me about cars years ago that changed how I think about engines and business: “Your car doesn’t run on gas. It runs on oil.”
That took a while to sink in, and eventually the statement made perfect sense to me. Without oil, it doesn’t matter how much gas you try to put through the engine. Without oil, the pistons will overheat and seize up inside the cylinders. Your engine is dead.
That concept applies to business as well: Your business runs on revenue, not profit. Cash flow is king. Without good cash flow, your business will start to overheat and seize up as you struggle for where to get the funds to make payroll and cover the bills.
So if revenue is the oil of the business engine, profit is the gas. To run you need revenue, to accelerate you need profit. The more profitable you are, the further you can go because you can invest into new markets or innovate with new products and services. But if you can’t keep the engine running with a steady flow of cash, profit is irrelevant.
So how do we keep our business engine running? What’s the “source” of revenue? Let’s break revenue down:
Revenue comes from customers (without customers, you don’t have a business!)
Customers come from good services and products
Good services and products come from skilled and productive employees
Skilled and productive employees come from… your leadership.
All that to say the most important part of any business is how you lead your people, and how they are trained and motivated. The quality of the people you put in front of your customers determines whether those customers will stay with you and continue to be a source of revenue. And the quality of your people is directly correlated to your ability as a leader.
Someone once told me, “If you focus on customer service, you won’t have to spend much on marketing because your customers will take care of that for you.” Logically, if you foster a culture that allows employees to learn, grow and acknowledges their value, they’ll deliver great customer service. Take care of the people who take care of your customers or, before you know it, your engine is dead.
(Photo by Lucas van Ort)
