Small Business Dials. Do You Know Yours?

Dashboard Dials

Know Your Dashboard

In a recent article in the Wall Street Journal, the author notes many of the concerns of “Main Street” – uncertainty being one of the fundamental issues.

The demands on the small business person are enormous. Business issues — inventory, capital expense, and management of cash — are tools that must be managed to best meet customer needs.

Managing a business takes a steady hand on the pulse of the market. One of the people quoted in the article was Portland entrepreneur, John Bradshaw, (President of Portland Transmission Warehouse) who knows the “heart-beats” of his business by keeping a steady eye on his business dials. He understands investment in too much inventory, when business is slow, can quickly drain cash. Inventory/cash is not the only dial on the dashboard of his business – he has several that help him manage effectively. Do you know the four or five indicators that will help you manage cash? Every business has its own unique set of “dials” which provide patterns of the changing buying habits of customers and the costs associated with running a business.

An example: You are in the heath-care field. You were trained as a chiropractor and have built a practice with massage therapists, acupuncturists, naturopaths, physical therapists and nutritionists. You now own a building and lease space to those independent contractors (none of these people are on your payroll).

Because you want to help them get their business started, you charge on a moving scale based on their traffic and the amount of time your staff (on your payroll) handles the phone, scheduling (according to the calendar provided by the independent contractor) and billing.

This chiropractor might ask the question: What business am I really in?  The answer will impact the dials chosen. Perhaps it’s revenue/sq.ft. Maybe it’s clients/hour? Some practitioners provide significant revenue for the room: others do not. In this example, the “business dials” chosen will help the entrepreneurial chiropractor understand who should stay and who needs to find another way to earn a living (perhaps working for someone directly instead of being self-employed).

Some questions you may want to consider:

* Do you understand what business you are really in?

* Do you know your most productive sources of revenue?

* Are you watching your largest consumers of your business cash?

* What five numbers (dials) do you use to your business?

* Do your employees know them and when you ask the question “how are we doing” which of those numbers do they own?

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2 Responses

  1. If you don’t know your dials, you DON’T KNOW your business!

  2. You got that right!

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