“Taking the pulse of your business”
What does your doctor do when you go in for a visit? He checks your weight, blood pressure, temperature, and pulse. In the same way you should check the pulse of your business by staying on top of the building blocks of money-making.
When it comes right down to it, business is very simple. Every business is the same inside. There are universal laws of business that apply whether you are one-person business or a very big business. Successful business leaders know them. They have what is called “business acumen” the ability to understand the building blocks of how a business makes money.
The best business people, whether they are running a small or large business, think the same way. They know their cash situation, They know which items are profitable and which are not. They understand the importance of keeping their products moving, inventory turnover, and they know their customers.
You have to know the total picture of how your company is doing by answering the following questions.
ü What have your company’s sales during the year? Are your sales growing, declining or flat?
ü Is your company growing profitably?
ü What is your company’s profit margin? Is your profit margin growing, declining or flat?
ü What is your company’s return on assets? R = Profit Margin X Velocity(Sales/Tangible assets)
ü How does this compare with your competitors? Other industries?
ü Do you know your company’s inventory velocity? Inventory turnover.
ü Is your company’s cash generation increasing or decreasing?
ü Is your company gaining or losing against competition?
ü What are the external realities of your particular business? This is not an easy question to answer and requires some market research on your part.
If you can answer these questions for your company, you are speaking the “universal language of business”.
In short, you need to know your sales, profit margin, inventory turn, return on assets, cash position, and be in touch with your customers.
With this information you can set clear priorities and action plans. That what successful business leaders do. You need to set no more than five priorities to retain customers and achieve your money-making goals. A business priority defines the most important action that needs to be taken at a certain point in time like:
- Doing business on the internet.
- Controlling prices.
- Reducing expenses
- Improving customer satisfaction
- Improving velocity
- Improving profit margin Management Advisor Marketing Advisor Business Communications
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