We’re in the business of solving poor cash flow problems. Immediately, we resolve poor cash flow with financing. For long term solutions, we help identify the underlying issue. Many times, the reason is a poorly defined company vision and mission statement.
Mission and vision are often used interchangeably, but they are technically and subtly different.
- Mission Statement: A mission statement is the company’s reason for existing. It explains the purpose, intention, and general approach to obtaining company objectives. Overall, it supports the vision.
- Vision Statement: A vision statement is an aspirational outlook of the desired future for the company, its position, and is the ideal state the company wants to achieve. It is inspirational, challenges employees to achieve, and shows where the company is headed.
So how do mission and vision statements impact cash flow?
Clarity Among Stakeholders
When your company has a clearly defined mission, everyone in the company, from the janitor to the CEO, knows what the company does and the company’s objective. A clear mission, i.e., build luxury homes using sustainable materials, creates clear actions:
- The sales team approaches a specific clientele.
- Clients anticipate a high price point.
- The purchasing team solicits higher quality materials made with sustainability in mind.
- The finance department can create a more accurate budget and forecast.
- The clarity and focus of these actions create a clear cash flow picture.
Conversely, if your mission and vision aren’t clearly stated or poorly communicated, there is a disconnect across the company. Using the same scenario, let’s say your intent was the same but undefined. Stating instead, we build houses creates a disconnect across the company:
- The sales team would approach clients across various markets and price points.
- Clients could have widely varying expectations.
- The purchasing department might purchase cheap materials one month and luxury materials the next month.
- The finance department ends up with a wide range of potential forecasts.
All these variables would create a less predictable cash flow model.
Inspire Continued Employee Engagement
This next benefit might seem unrelated to cash flow. However, a well-defined vision statement creates inspiration in employees. An aspirational vision statement keeps employees engaged, which helps lead to retention and fuels employee investment in your company’s long-term goals.
Let’s lean into the sustainable luxury homes example. Your vision might be to build 125 in the next 5 years, all with built-in green initiatives or building 25 homes per year. This vision may help retain your top talent reducing the cost of training new hires due to turnover. Additionally, having an attainable but aspirational goal may push some employees to put in extra effort to help the company succeed.
Clarify Strategic Planning
Finally, the most significant benefit of having a clearly defined mission and vision statement is being able to create strategic plans to help your company achieve its objectives. Think of your mission and vision as setting your coordinates into your GPS before setting off on a road trip. Once you have your coordinates, you can create your roadmap. Strategic planning is that roadmap.
No coordinates, no roadmap.
Without knowing where you want to go, you run the risk of never achieving your goal resulting in little or no cash flow or growing too fast without cash on hand to fulfill the needs of your expanding demand.
How Liquid Ally Can Help
After 25 years in finance, I’ve seen profitable companies fail because of a lack of vision or mission. If you don’t have a clear vision and grow too fast, you’ll face a cash crunch. At Liquid Ally, we can help with the immediate cash flow needs by helping you determine the right financing package with the right lender.
In the long term, we can also assist you in establishing a vision for your company and implementing it so that you can avoid all of the pain that comes with cash flow problems.
How do we do this?
- Determine your purpose as an organization.
- Where do you see your company in 5-10 years?
- What does your success look like? Define it in great detail.
- Make sure EVERYONE knows what your vision is.
- Define your goals and chart your progress.
If you have any questions, contact me for your Complementary Liquidity Consultation. I’d be glad to answer any questions.