President’s Message: A Secret to Growth
I don’t know anyone who doesn’t want to grow their business. But how? Does it feel like you’re reinventing the wheel every day? Do you find yourself watching an educational video and wanting to wipe the slate clean and start from scratch? Having your own business is hard work: being responsible for generating new clients every day, offering the right products, maintaining the cashflow to pay bills. Unless we’re clear on the habits and routines we want to employ, we’ll drive ourselves crazy by unintentionally falling into bad habits.
Everyone who learns how to drive probably remembers being taught the importance of the dashboard dials. There are a lot of moving parts on a vehicle and a magnitude of components that can fail. But a handful of critical indicators are enough to keep us out of trouble. Once, early in my driving experience, I heard a loud engine bang and saw something bouncing when I looked in the rearview mirror of my dad’s Dodge Dart. After having the car towed home, I received a debriefing from Dad. He asked why I ignored the flashing red oil light on the dashboard, and I realized I was going to have to start paying attention to those indicators. This lesson has been instrumental in creating measurement tools for my business. I routinely look for flashing red lights in my business and make sure I’m attuned to the indicators at our studio.
Let’s take a look at some of the major dashboard measurements that can keep you from blowing your business engine.
Lead measures: How many qualified people do you have in the pipeline who are possibly one step away from becoming clients? These could be from gift certificates sold during a philanthropic event or silent auction. Maybe you have a relationship with a vendor that has provided names of people who are interested in your products. This is a great indicator of future revenue.
Booked appointments: How many sessions or events do you have committed by month, with deposits on the books? This is another strong indicator of future sales revenue and projected cashflow. If you offer different product lines, it’s helpful to have an indicator for each line.
Sales: What are your total monthly sales? In addition, we like to break down sales by product line and average sale per client within that product line. For some photographers, the sales indicator might be as simple as wedding sales versus portrait sales.
Receipts: This is the amount your clients have paid you during the month. You may have made the sale or booked appointments, which will be tracked above, but this tracks when the dollars are collected.
Expenses: Count every dollar you have spent during the month. This includes salaries and investments like equipment. Pay attention to the relationship of how this measures against the receipts total. Managing the balance between the two is the best way to keep your cashflow healthy.
Cash on hand: This is the difference between cash in (receipts) and cash out (expenses) for the month. This helps us know the health of our cashflow as well as our estimated profit.
These indicators are simply measurements for your dashboard. Just like a flashing red oil light, they will not be effective if you don’t pay attention to them. This means tying each of them to your goals by month, year to date, and against the previous year. You may want to measure additional areas that are specific to your business model and growth. This is just an example of our dashboard that has helped us be successful and grow for over 41 years.
If you’re looking for additional resources in this same vein, you might be interested in Donald Miller’s “Business Made Simple” series of books and Keith Cunningham’s book “The Road Less Stupid.”
Equipping your business with solid measurement tools won’t keep you from blowing up a car engine, but it just might help you grow your business.
Gregory Daniel is the owner of Gregory Daniel Portrait Artist in Titusville, Florida.