Driving Your Business

Businesses are living entities in motion. No matter how slight or subtle, there is always movement – no matter if the movement is beneficial or not!A business owner could think of the business as the vehicle that will carry the owners and shareholders to success regardless of how success may be defined.Like any other vehicle, the business vehicle requires a driver to steer and to keep the business on the road to success. In a small business that someone behind the wheel is typically the Owner. In larger businesses, the driver will be the President, CEO, Managing Director, or one of similar title. But no matter the business size, the driver is the leader and the leader is the driver.Again, no matter the business size, the “driver” must depend on the following three business elements and components in order to steer and to lead the business properly.A clean and unobstructed Windshield in order to see clearly where the business is going.A Dashboard that provides the driver with necessary data and information on demand to assure the business continues on the move.A clean and unobstructed Rear View Mirror to show where the business has been and what may be approaching the business from behind.Obvious you say? Of course! Who would want to drive a business vehicle without these components?Sadly enough, most small business owners “drive” their business day-to-day without the full benefit of all three components. Sadder yet is that those same small business owners and operators don’t need to do without.Let’s take a look at the same three components from a business operations perspective.The clean and unobstructed Windshield represents the Forward-Looking Plans and Direction of the business. What the business leader sees out the Windshield is what the business leader Wants to Happen. It is the Vision (not Mission) of the business.The Mission of the business was established long ago, and it is not likely to change. On the other hand, the Vision of the business may change over time. Vision defines where the business wants to go and how the business wants to be perceived at a targeted time in the near future compared to where the business is now and how the business is perceived now.The essential elements and components of a clean and unobstructed Windshield include:Marketing and Sales Plans that include Goals for Revenue, Profitability, and Operational Needs such as equipment and additional staff as well as Strategies and Objectives to achieve the Goals.A Financial Operating Plan that forecasts Sales by Revenue Stream, Costs and Expenses by category, and Margin expectations. (Think of the Financial Operating Plan as a “fully loaded” Budget with all the extras.)The fully functional Dashboard provides the Immediate and Current Status of the business.The Dashboard informs the driver (leader) of the present and immediate status of all the major elements of the business. Immediate for some data could be the previous day’s results. Some information, like Cash-on-hand, available Cash, Accounts Receivable due, and Accounts Payable owed must be available immediately.Cash is the fuel of business, so the driver must always know how much fuel is in the tank? Timely Information is the most powerful tool available to business leaders. The sooner the business leader knows, the sooner the business leader can act.The essential building blocks of the Dashboard include:Cash Management Plans that project Cash In, Cash Out, and average balances on hand. Cash Management Plans that project when payments are due and project when favorable payments policies (early pay discounts) are available. In other words, full and immediate control and awareness of Accounts Receivable, Accounts Payable, Scheduled Expenses, and Line of Credit Status.Measurements of Actual Revenues, Costs, and Expenses compared to the Financial Operating Plan. In other words, where is the business today compared to the plan?The clean and unobstructed Rear View Mirror is the historical data and information. It is the “What has gone before”. Past Performance data and information are essential tools to the business for many reasons including awareness of past successes and past shortcomings. Additionally, past performance results are the basis for Income Tax and other business taxes.The essential building blocks of the Rear View Mirror include:Accurate (Audited) Financial Statements and Reports including the Balance Sheet and Income Statement.Project or Job Completion Reports that compare actual cost and expenses incurred to the Estimate or Quote.Tax Reports including Federal, State, and Local Income Taxes, Sales Taxes, Property Taxes, and other business taxes. [These reports are prepared by the tax accounting firm or other outside agencies. While necessary reports, typically they cannot be presented soon enough to allow business leaders to make timely decisions.]As stated previously, far too many businesses (mostly small businesses) depend solely or primarily on the Rear View Mirror components. They must not and they need not.Decades ago the Drive to Success was easier in many ways. There was less traffic (competitors) and there was plenty of available fuel (profitable sales opportunities) for all. Today the Drive to Success is not so easy. The traffic is bumper-to-bumper as competitors (qualified or not) are abundant. Profitable sales opportunities are few.However, today many businesses are not just surviving, but thriving. Why? Because they have plans and they know where they are according to plan on a timely basis so they can act sooner. In other words, the leaders of these successful businesses have a Clean Windshield, a functional Dashboard as well as a Rear View Mirror.