Do you know how your business performed yesterday, what’s on for today, and what is expected to happen tomorrow? The SME Business Wealth Builder Daily Flash Report can help you to get more control over your business so that you can increase revenues, profit, and valuation. You’ve got to know your numbers: sales, production, and cash.
When you’re driving your car, how many critical pieces of information do you need to be aware of at any point in time?
Once you know you’re within the speed limit, you may not pay any more attention to it because you’re focused on what’s around you. If something goes (or is going) wrong, your car’s warning systems such as blind spot indicator, lane departure warning, or collision avoidance will alert you. Most systems work in the background. They trigger exception alerts or turn on automatically when you need them.
In business, you need to know what is happening today and what is going to happen tomorrow. Your financial statements tell you what happened last month according to accounting rules and language. You need better information.
When you know what’s happening in real time, you can make decisions and take actions to improve results.
In business, you always need to know three things to improve performance:
- SALES: How much is sold. Sales are confirmed customer orders. Do not include expected sales based on probability. You need real numbers. You can measure this in units such as products or billable hours if you sell time, and in dollars. How many units are sold in your pipeline?
- PRODUCTION: How much and how fast you produce. This is based on your actual (that is, yesterday’s) production volume. You can determine how long you’re booked based on your sales pipeline divided by production speed. For example, 20,000 units sold divided by 1,000 units per day of production equals twenty days of work in the hopper. How long will your company be busy based on current sales?
- CASH: How much cash you have in the bank or have access to for funding operations and growth. Cash is the outcome of your working capital resources being converted from inventory, accounts receivable, and accounts payable into cash. A great metric is Total Days to Cash which measures how long it takes to convert everything, from wages and materials to invoicing and collections, into cash. Speed is king. Cash is the ace. What is your cash position?
When you know the answers to your sales, production, and cash positions, then you can improve them.
Figure 6.1 The SME Business Wealth Builder Daily Flash Report
Tip: Focusing on three simple metrics-units sold, daily production volume, and cash position—will dramatically increase your control and improve your results.
If you’d like to discuss how I can help develop and implement your Daily Flash Report so that you can increase your revenues, profits, and valuation, please give me a call.
Thanks for reading!