Financial sustainability

The first leg of the “three legged stool” I want to discuss is Financial Sustainability. You won’t have any sustainability if you don’t have financial sustainability. Without money for marketing, tools and equipment, or payroll you won’t have much of a business. If you don’t have money in reserve you may not survive certain unexpected events or business slowdowns. Your financial sustainability is important to everyone from ownership to employees to vendors. There are a lot of people out there relying on your business to be financially sustainable.

Before I go any further I’d like to point out that the concept of sustainability relates to how each “leg” of the proverbial stool relates to the other. I’m discussing financial sustainability by itself, but never forget that none of these operate in isolation. Your financial sustainability impacts the other two “legs” of the stool as they affect it.

How do you monitor and influence your financial sustainability? Obviously your financial statement is your primary indicator of financial sustainability and thus most often what you monitor. Do you have control over these numbers though?  Yes, you do. The question is how do you control the numbers?

I make the case that each employee of the business is responsible for the organization’s financial sustainability. Technicians have a responsibility for producing work. The primary product sold by you is time. Technicians are responsible for you being able to sell more and more time. The more productive they are, the more money comes into the business. If you want financial sustainability, pay attention to your technician’s productivity.

Service advisors have a responsibility to financial sustainability as well. Their primary responsibility is for selling work and creating customer satisfaction. They must balance these two. If they only sell, and sell well they will eventually create customer dissatisfaction. If they only focus on happy customers they are likely missing some sales. Service advisors need to constantly be working on their selling skills, improving their listening skills, and learning how to influence technician production.

Ownership of course has a responsibility to financial sustainability as well. Their responsibility is to get cars in the door so that service advisors and technicians can execute their responsibilities. Owners also have the responsibility of budgeting. Budgeting helps to ensure financial sustainability through the vigilance of where money is getting spent each month. Without proper budgeting expenses can sometimes get out of control, or at the very least money gets spent where it may not be effective. Budgeting can also be a management tool for teaching others certain aspects of the business.

Develop your own organization’s financial sustainability by focusing technicians on productivity, service advisors on sales and customer satisfaction skills, and make sure to develop budgets each fiscal to keep an eye on expenses. In the next installment we’ll look at Environmental Sustainability and how it relates to Financial Sustainability.

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