Edition 447 – Stinkers
I caught up with a former client recently, for breakfast at Coogee in Sydney’s Eastern Suburbs. He’s a young bloke who was courageous enough to take the leap from the security of paid employment, and chase his dream of running his own business.
As we’re catching up, talking shop and pontificating about what the future holds, we talked about the bumpiness that can occur in business from time to time.
“We had a couple of stinkers over that period” was his comment about a time in business, a little while back. “Stinker?” was my questioning response, which was accompanied by a giggle. It’s not what I’ve known of as a “stinker” in the past, but perhaps that’s my puerile mind working overtime.
I’m now embracing the term “stinker” for all it’s worth as it defines, perfectly, what things are like in business, when work drops off, cashflow dries up, staff issues prevail or a myriad of other travails rise to the surface.
In my experience, one lousy month in business can take up to three months to recover from. If you have a horror sales month that’s well below budget, you need to make sure you’re above budget for the next two months to ensure the quarter is at least running as you’d planned it to be.
Three lousy months in business is a real stinker! The early warning signs have been ignored and, invariably, you’ve continued to only look in the here-and-now in terms of chasing work and paying the bills, rather than noticing the pattern anywhere between three to nine months prior. If enquiries are drying up, or you’re not getting quotes over the line now, it’s going to hurt you in 60 to 90 days at a minimum.
This is where a Dashboard works wonders. I’ve rabbitted on about these in the past, and for the clients that are diligent enough to keep them up to date, it gives you a much better “real-time” analysis of what’s happening in your business than any form of financial reports.
Dashboards look at both financial and non-financial elements of your business. Invariably, when the numbers come through, the first question from me to the client is, “what does that mean?” Over the years, some of those questions have emanated from:
- Daily sales numbers.
- Unit sales of a particular line item.
- The number of filled vs. available appointments in the diary.
- Seasonal trading conditions – such as Christmas.
- The weather – and in one instance, we identified that when the maximum temperature dropped below 10 degrees, custom dried up.
Next time you’re taking a moment to look at the numbers in your business, look for the patterns that identify which months, or quarters, or seasons, are “stinkers”. By doing this, you’ll have a better handle on business, and be better prepared for the next time adversity crosses your threshold.
This Week’s Tip
“”Stinkers” are manageable, if you know what the early warning signs are.”