In a world of uncertainty, there are only three metrics you need to watch in a pandemic like this.
Our primary objective is to survive, get to the end, and, where possible, thrive. Most businesses are experiencing a downturn, and yet some are thriving.
While the majority are suffering and will suffer for a while longer, there are three key metrics that will help you navigate through this period of uncertainty we are heading into:
1. Cash Flow
Cash flow is king!
Keeping an eye on cash flow at a micro level (weekly or even daily) will help you understand how many days you can keep the doors open.
You’ll know when your next two BAS is due and how much they will be. All your liabilities will be outlined with due dates as will your receivables. It is crucial to note that managing cash flow isn’t the same as managing your accounts. They are quite different in that the timing of payments and flows of cash do not reflect the profitability of the business.
A very profitable business can succumb to poor cash flow management in no time.
The average small business has about 4-8 weeks of cash in the bank at any one time, so it doesn’t take long for that to dry up if income is down. Any blip in cash flow in one week can have massive ramifications so watch your cash flow like a hawk.
How much work do you have lined up for your business?
Are you filling that funnel as effectively and diligently as possible, exploring every lead and opportunity? Let’s face it, if there’s one sure fire way to prop up cash flow, it’s through selling more.
We can control profitability provided the first two metrics are managed well. So, if we have a strong enough pipeline and stable cash flow then our next most important metric is profitability.
Whatever you do must be profitable and maintaining profitability in times like now is crucial to support your cash flow.
Get yourself a dashboard
There is no road map for success in unprecedented circumstances.
In a world of uncertainty, it’s time to step up and acknowledge that this isn’t business as usual.
Keeping a close eye on these three metrics will give you the insights you need to pave the way to success.