Entrepreneurs are an odd lot. We pursue a passion but end up with a business. Sure, launching a company seems like a good idea at first. We start with stars in our eyes, but end up married to the dreary demands of running a company.
If your business is not helping you pursue your dreams — by generating both income and opportunity for you to do what you love — then it’s time for a bit of “Couple’s Therapy”. Just you and your business. Communicating, listening and finally coming to a resolution that empowers you both to grow and thrive.
So how do you hear what your business is saying? Just keep reading.
This month I’ll be posting my 4 Steps to a Business Tune Up. These quick “therapy sessions” will help you understand what your business needs… Because once you know what your company is trying to tell you, you can stop struggling and do more of what you love.
Ready? Let’s get started:
First Clear Away the Cobwebs
Every relationship gets a bit stale if you allow the junk to pile up, the routines to become ruts, or the future to get foggy. Start with a clean slate by streamlining your operations and getting a better view of the future.
Step 1: Focus on Cash Flow
The first goal is to reduce the work required of you on a daily basis and to give yourself a clearer view of your financial future. Too many entrepreneurs get their heads stuck in their bookkeeping. If you (or your staff) are spending more than a few hours a week keeping books, issuing invoices, collecting debt and other accounting work, there’s likely an opportunity to reduce time and redundancy — all while improving reporting of key management data.
- Start by writing down each step that you take from the time you shake hands with a customer until his money is in the bank. Are you recording information about this customer in more than one place? Are you using a CRM system (like ACT! or Nutshell) and also putting the data into a project management package and then later entering it into QuickBooks so you can do billing? Look for opportunities to consolidate several processes into one. Make the paperwork as simple as possible. (Tip: QuickBooks has some great management tools built-in, some that are add-on apps and some that are separate, but integrate seamlessly, like the online CRM package called “Driven“). If you can’t see the complexity, try explaining your process to an outsider. If it takes more than 2 minutes, you’ve got room for improvement.
- Once you know all the steps before money lands in the bank, make a money timeline. How many days or weeks does it take for that money to be available to you? And how much do you need in the meantime to service the customer and keep the doors open? Put these cash flows on a simple calendar or cash flow spreadsheet to project how much cash you will have on hand at the end of each day or week. You are looking, of course, for those days during the month when the cash is dangerously low — or below zero! Decide now how you will delay spending or speed up collections to get that money flowing in the right direction.
- Now you know what happens and when… take the final step by measuring “how much” of your money is stuck at each step. Make a big, simple paper dashboard for yourself. (Tip: follow the link for an example.) Each week or month take a moment to measure how much money is at each step of your pipeline (all the way from pre-sales to new contracts to billed, collected and in-the-bank.) With good reliable book keeping, you can do endless reporting of course, but this may be the one and only report you need to keep your finger on the pulse of the company.
By the time you tape my dashboard to your wall, you should be taking a deep breath and saying “Yes, this is where I am and where I’m headed.” It may not be a pretty picture, but you will, at least, have a clear understanding of the facts. And no relationship can be improved until you listen closely to the facts. [Tip: Please download my free XL template for a business dashboard.]
Stay tuned for the rest of my 4-Step Business Therapy, uh, I mean “Tune Up” Program. I’ll send another installment about each week.
Want a sneek preview? Here’s the titles of what you’ll be hearing from me over the next 3 to 5 weeks. Take your time and do the steps in order. If you are diligent, a better, more profitable business awaits you at the end of the month.
- Week 2: Model Key Drivers of Performance & Profit
- Week 3: Lay a Financial Foundation for Growth
- Week 4: Grow Faster with the Right Strategy
Dedicated to your (rekindled) profits, -David
PS: I’ve used this system to transform a countless number of small businesses. Each entrepreneur has unique problems and unique opportunities, of course. But the 4-step process will help you identify and solve key problems, no matter if your business is baking cakes or building cars. If you’d like help walking through each of these steps, give me a call. 704-614-2701.
photo credit: Brandon Christopher Warren via photo pin cc