If you want a “bulletproof” cash flow management process, here’s the system you need.
Imagine yourself strolling on the beach.
As you skip the pockets of quicksand along your way, you enjoy the gentle lapping of the waves, the warm sunlight, and the familiar sounds of your local wildlife.
Suddenly, a colossal shadow turns everything around you into darkness.
You turn to look at the ocean, and then you see it – a massive wave, hurtling towards the shore.
By this time, it’s too late.
That is how COVID-19 crippled businesses around the world.
And while many have successfully pivoted to the “new normal” way of doing business, even more, have lost the fight.
So I’m sure like most owners, you’re constantly wondering.
How do you position your business to not only survive but thrive through these curveballs? Introducing…
The “Tidal Wave Warning System”
In some tsunami-prone countries like Japan, they have set up warning systems to predict tidal waves before they arrive. Citizens are thus forewarned and prepared to respond ahead of time.
We apply warning systems like this to our business.
Like most businesses during the early days of the pandemic, our multi-million dollar inspection franchise, Resicert, also took a hit.
But despite these unfortunate circumstances, I was confident we could weather the storm.
And that’s because our “Tidal Wave Warning System” helped us build a “bulletproof” cash flow position for the business ahead of time – long before a crisis actually happened.
Even better, once the initial wave of market uncertainty died down, our business reached an all-time high.
So how can you apply The Tidal Wave Warning System to help you “bulletproof” your business?
How to “Bulletproof” Your Business With The “Tidal Wave Warning System”
After 3 decades of managing multiple businesses and helping other business owners do the same, I’ve discovered that risk events often happen due to the lack of visibility or data.
If a problem is unnoticed for a longer period of time due to the lack of a warning system, it becomes difficult to correct or handle.
On the other hand, identifying issues quickly and early provides the most amount of time and opportunity to rectify and get back on track.
Therefore, to reduce risk and see when something is coming, statistics in a visual format is essential. Some of the key steps and guidelines to consider are the following:
Track five to seven statistics weekly
Choose five to seven statistics that provide the status for each area of the business. It’s crucial to measure performance across all areas including:
- Executive
- People & Productivity
- Marketing and Sales
- Financial
- Production and Delivery
- Quality Control
- Publicity/Lead Generation.
Then, track the statistics weekly. In Invizbiz, we use a cycle from Friday to Thursday with metrics measured on a weekly basis. This is crucial because a monthly cycle for many statistics is too long and does not alert you to an issue early enough.
Include all team members in the tracking and reviewing of statistics
Practice involving all team members in the tracking, recording, and reviewing of statistics. All members must have access and visibility to key business statistics. Furthermore, they must be actively engaged in the creation of which stats to measure.
This encourages ownership, transparency, and visibility at all areas of the business. Most importantly, it helps develop a culture rooted in management by statistics. If you want sanity and remove confusion this is the way to go.
Create a visual and comprehensive statistic design
For any statistic to be useful it needs to be placed on a graph. Without a graph, it is very difficult to see trends, status, and what areas need attention. It’s also important to set KPIs/targets for statistics. This provides a mechanism to measure the statistic against expectations.
For higher-level statistics involving key business areas, you can also compare and measure data versus the previous two years. This will take into account any seasonal movement and give you a clearer picture of how the business is moving.
Final Words
Setting up statistics enables business owners to fully understand the true health of their business at any point in time. This is crucial, especially for business owners who wish to work fewer hours and engage in other significant areas in their lives.
For example, there’s a way to get peace of mind while taking vacations at the beach with one’s family. It’s having statistics set in place to get a snapshot of the business’ health, and knowing that even if something’s about to go wrong, you’ll be alerted quickly.
It’s surprising how many businesses do not track statistics at all. Those that do often focus on sales and financial metrics only, ignoring everything else. Tracking states is a positive step forward, but not using graphs and visual dashboards makes it hard to see what is going on.
The bottom line, following the steps outlined above, enables you to make business decisions rooted in solid data and statistics. It enables you to assess where issues lie. It also gives you feedback to identify if the approach you’ve implemented is enough to work on the actual issue.