It can be confusing and even scary to figure out how to grow your business today when fuel prices skyrocketing, wages increasing, finding and retaining good people is challenging, employees wanting flexible work arrangements, and interest rates are rising.
However, where pessimists see problems and optimist see opportunities, entrepreneurs can—and always have—solve problems and pursue opportunities to grow their businesses.
It’s always a good time to grow your business.
The best entrepreneurs and business leaders I’ve worked with over the past three decades were proactive, knew their numbers, and applied maximum force in a few critical areas.
For example, water, when it’s focused at 50,000 pounds per square inch of pressure, can cut through two inches of steel. When water is not focused, it splashes around and creates rust that weakens steel. It’s your role to keep your people focused on fewer priorities that matter the most.
The highest priority is providing value, ideally quantifiable value, to your best customers, while producing a profit.
“How do I do that?” you ask. You don’t do it by reviewing your monthly financial statements a month after the fact. You do it by reviewing three key metrics in your business every day: sales, production, and cash flow. You make decisions and take actions based on these real time metrics. More on that later.
These are the three components of a Flash Report that I’ve used with clients for decades to help them grow their businesses. The beauty of these daily numbers is exactly that: they are daily numbers. They’re real. They’re not prepared according to GAAP or some artificial language designed for third party comparability.
They’re real measures of what happened in your business yesterday and the day before. They’re numbers that give you immediate feedback on your business strategy, marketing and sales, efficiency and operations, financial decisions, and resource allocations. In other words, they are management’s best scorecard for measuring real time performance.
When you know the score in real time, you can make timely decisions and take immediate actions to improve the score.
My favorite aspect of working with privately held businesses is the speed of their implementation. We can talk about strategy in the morning, they implement in the afternoon, and we discuss how it went in the evening.
If something was effective, we can increase it and scale it in other areas of the business to generate more positive results. If something didn’t work, we can tweak it and see what happens the next day.
This successful management process of carefully measuring and evaluating daily results is like football, where a play is called and executed, then evaluated five or ten seconds later for its effectiveness, and then the next play is called and executed. Football coaches and players don’t wait until the end of the month to read the statistics to try and figure out what happened in the game. That’s too late and, well, useless.
Let’s keep this simple and useful.
- Sales: How much did you sell? Measure actual dollar sales and signed contracts. Proposals or quotes don’t count. Only signed contracts, orders or cash received.
- Production: How much did your team produce? This might be in units, billable hours, square feet, linear feet, donuts, project progress, test drives, or some measurable productive action that the customer is willing to pay for.
- Cash flow: What is the inflow, outflow, and ending balance? What is the cash flow forecast for the next four to six weeks? How can you optimize surplus cash?
I recommend starting this process daily so you can figure out what and how to measure the key metrics. Once you’ve got the daily measuring down, you can move to weekly monitoring and my favorite, Flash Meetings.
The critical management step is the Flash Meeting where you bring sales, production, and finance leaders into one meeting to discuss the week’s results and how to improve them. Yes, under one roof, at the same time, and all responsible for, and focused on, improving results.
That’s how you create a team, by the way, where everyone is playing the same game at the same time, and they all know the score. Otherwise, managers can hide in their silos, and you never have leaders that play the game as a team.
When your team is focused on the real numbers in real time, you will make better decisions and take better actions. There are always external factors affecting your business, your competitors, and your customers. By focusing on the factors that you can control—sales, production, and cash flow—you will grow your business in any economy.