If you can do what you do faster, you can improve cash flow which in turn helps profitability. But, that means you already know exactly what you are doing so you can refine and fine tune!
This is one of the reasons that the 4 areas of operation focus during the existence stage I discussed in the last post are so important. If you don’t already have a standard method that assures quality and customer services systems to deal with exceptions it becomes nearly impossible to fine tune your operation.
Frequently I find small businesses stuck here trying to understand how to grow their business. Part of their struggle is the inability to scale to meet the need with growing sales. They spend so much time trying to solve quality issues, or finding the right production resources that they stay stuck in “no man’s land.”
If you haven’t established set protocols for your operation then your business growth stops until your operation catches up. By having operating procedures that are followed you…
- Know what to expect based on past performance
- Can rapidly train new resources to add needed capacity
- Begin refining the system to do things faster and more cost effectively.
If you remember from the tuning your revenue model, you recognize the benefits here. The purpose of the model is to help you identify your chokepoints so you can open them and increase throughput. This in-turn increases cash flow which is always has good results.
So returning to last week, where many people believe that those objectives are too early in the cycle. If you wait, you stall the survival stage. As a result many never find their way out and are stuck here for 10, 15, 20 years or more.
Now, don’t get me wrong, your business is profitable here. But, it requires your full attention if you want it to continue to be profitable. What I am advocating is a proactive approach that allows you to have continued growth while build a self-sustaining business. Our eBook How to Get Out from Under Your Business will provide you a more in-depth view of creating sustainability in your company.
So, don’t delay getting things structured in operation. Start this from day 1. Then when you get to the survival stage you can focus on tuning your revenue engine to increase efficiency and improve cash flow. If you need more help in this area I would recommend that you check out the business improvement area of our website.