Predicting Business Success – Success Step 5
Monitoring the Right Things for Your Business
Many small business owners think regular meetings are a waste of time. I hear them say things like, I know what’s going on.” “I have the pulse of my business.” And that may be, but does everyone else? And, you may only have a piece of the story!
The next thing I hear is, “well I look at my financials every month.” This person is more evolved than many, but missing opportunities to accelerate their success. You see, there is much more to monitor in a business than just you’re financial. You should be monitoring each stage of the Revenue Engine because problems will show up there way before they hit the financial reports! Financial reports are just a historic record of what happened. Revenue Engine reporting gives you leading indicators from which to make course corrections before you see revenue decreasing or expenses increasing in ways that will affect your profitability.
For example, if you monitor your leads (as every business should) then you know that your sales will be impacted if you see less leads coming in than usual. One client noticed this was happening over a 3 -4 week period, so we looked to the market. We found that there was a shift from one segment to another. They shifted their marketing efforts to the other segment and soon leads and business became coming in again.
Let’s see what would have happened if they had waited. Sales take about 90 days to close. Then work usual takes 6 – 10 weeks to complete. Add another 30 days for billing and collections and they would have seen this market shift for at least 6 month! Even if they had fixed the problem the moment it showed up on their financials it would have taken another 6 months to have an impact which means the cycle is a whole year!!! Can you wait a year to have an impact from a change? If you’re like most small businesses the answer is NO!
So, what do you monitor? I’ve written several posts on this topic. I recommend that you read Understanding Cause and Effect: What Do You Measure?; Poor Cash Flow – 5 Things That Could Be Causing It; Is Your Revenue Underperforming?; and Maximize Revenue by Selling Your Excess Capacity to get an idea of how to approach monitoring your business. If you need further assistance or help figuring out the specifics for your business feel free to email me. I’d be honored to assist you with this critical aspect of creating predicable success for your business!