Do you speak the universal language of business?
Of course it's important to speak Japanese in Japan, French in France and English in the U.S. Of course it's important to speak manufacturing to manufacturers, distribution to distributors and construction to builders. Of course it's important to use Engineering terminology with the Engineers, HR terminology with the Human Resources folks, and IT terminology with the computer crowd.
But wouldn't it be a lot easier for all of us if everybody just spoke the same language? Well, realistically, that will never happen, however...
...there is, in fact, a universal language of business. It's called "Finance." Think of it this way: Regardless of the customer's country of origin, SIC code, or job, every single one of them is in the money-making business!
Think about having value propositions along the lines of the following for every one of your proposals: "Investment in an ABC can give you a 79% ROI with a net present value of $140,000. You could pay for it in cash and break even in just over 2 years, or with the right financing, generate positive cash flow immediately." (Who cares what an ABC is? I want one!)
A short newsletter like this one can't cover all the detail you need, but it can get surprisingly close. Here are the key terms and concepts:
- Net Cash Flow - For any given year the amount you end up with after paying all the bills and collecting all the benefits (Could be + or -)
- Cumulative Cash Flow - The sum of all the cash flows for all the years included in your analysis
- Payback Period - The number of months it takes to recoup the initial investment
- Net Present Value - A calculation that enables an apples-to-apples comparison of the value of cash today vs. the interest-adjusted value of cash for different times in the future
- Internal Rate of Return - The most common calculation for Return on Investment or ROI
Or is learning the universal language of business just too much trouble?