The Non-Negotiable Rules are a powerful dimension within the Stages of Growth. They define the laws that a business must follow in order to be successful. The fact is that every natural system, whether it is a forest or a commercial business, succeeds by aligning itself to fundamental natural laws that establish order and balance.
Finance
Finance is a term that refers to the management of the flow of money through an organization. It encompasses the generation of revenue, the tracking of the money, and knowing how it’s used.
Finance is a core component of every business, no matter what size, but at earlier stages in an organization’s development, a lower level of sophistication is required. Businesses in Stages 1 and 2 are mostly concerned with generating enough cash flow to cover expenses, and while that’s seldom an easy prospect, it isn’t a very complicated one.
As the company grows, the ability to forecast and organize how the company is going to use funds becomes more complex. More strategic planning is required to account for department budgets and to plan for spending further in advance. More people are needed to manage the complexity of those decisions, too, and as more people are added, the financial system needs to be sophisticated enough to handle the higher volume.
A key concept that goes hand-in-hand with Finance is ensuring that every employee understands how the company makes and keeps money, which is where Key Performance Indicators (KPIs) come into play. They serve as an early signal of a company’s financial health. Not every employee needs to understand the full financial situation to be able to contribute to the bottom line. KPIs serve as a bridge that maintains the connection between individual effort and company results.
For example, if lead generation is one of the KPIs for a company, the marketing employee working on an email campaign will make the connection between writing compelling headlines to an increase in opened emails to an increase in leads to an increase in revenue for the company. This type of direct connection between work and revenue will increase the profitability of the entire organization.
As with all the dimensions of Non-Negotiable Rules, the Rules related to Finance are cumulative; you can’t skip ahead and expect to be a healthy, thriving business. To advance from one Stage of Growth to the next, you need to have at least 80% of the Rules covered for the current Stage.
Discover the Rules for Your Business’s Stage of Growth
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