What is the Trinity of Management?

In my initial meetings with 235 entrepreneurs in Grand County I use a unique way to express the basic concepts of business management.

 I call it the Trinity of Management. This trinity, as it were, is a phrase coined and trademarked by Ernesto Sirolli, founder of the Sirolli Institute, where I was trained.

The Trinity of Management is a simplified concept of basic business management that makes it relatively easy to get across the basics of business. It creates a framework in which we can start the work of building a solid new business or expanding an existing business.

There are many ways that have been used throughout the years to get across these basic concepts. Some people teach that there are “quartets” of management or even “twenty basic tenets” of business. I’ve even seen complicated flow charts and diagrams explaining business concepts that would confuse even an organic chemist.

That’s why I like the trinity. It’s easy to understand.

The first leg of the trinity states merely that in order for a business to succeed it must have a superb product or service. These products or services must be at least as good as the entrepreneur can make them. But in the real world where there’s lots of competition, products and services must be the best of the best. Without a superb product or service, a business will not succeed.

The second leg of the trinity is sales and marketing. Perhaps it goes without saying that it doesn’t do an entrepreneur any good to have the best product in the world if nobody knows about it. But the truth is that there are people who in fact probably do have superior products or services to sell but because of poor sales and marketing, they aren’t succeeding. Many entrepreneurs at first dismiss the importance of this aspect of the trinity, saying they don’t need to spend much on advertising or promotion. They feel the products or services will sell themselves.

But believe me, it doesn’t work that way. There must be strong sales and marketing or an enterprise is likely to fail.

The third leg of the trinity is financial management. For many businesses, financial management consists of two aspects that are important — and yet they ignore the third critically important aspect of financial management.

First, bookkeeping must take place so that an entrepreneur can have clear and easy-to-understand profit and loss statements. Without these statements (assuming they reflect reality), a business manager is operating in the dark. They won’t know if they are making money or losing money. They won’t know how much they’ve grossed, how much they’ve lost, what’s selling well and what isn’t, and so on. I can’t overemphasize the importance of accurate and regular profit and loss statements.

Most businesses then also meet with a tax accountant, usually only once a year, to resolve the tax implications of the last year’s business. This is important too.

But the third aspect of financial management that gets overlooked is what I call the forward-looking or “projecting” aspect of the numbers. This can be nothing more than using the “budget” line on bookkeeping software or preparing a realistic cash-flow analysis. The point of these is that they involve looking forward, and planning forward, as well as keeping track of the past (bookkeeping). The truth is that it usually takes money for a business to grow and usually businesses need to plan how to spend that money. Forward budgeting or cash flow projections are the way that can take place in the financial realm.

There it is: The Trinity of Management. This is a great thing to understand, with one condition: No one person can do a good job of executing all those aspects of the trinity.
But that is a topic for another article in the near future.

Patrick Brower can be reached at 970-531-0632 or at patrickbrower@kapoks.org.

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