BUSINESS STRATEGY & GROWTH • August 19, 2015
3 minutes Read
By Gene Marks
It’s time for you to create a Flash Report. Every successful business owner I know has one. And you need one, too.
What is a Flash Report? It is a one-page document that holds all the key metrics that you need to run your business. It is not detailed like an income statement and it doesn’t give a full picture of your company. However, it does tell you enough to know that you’re on the right track. The Flash Report is prepared for you every single day. It is compiled mostly from information out of your accounting system. You don’t need an accountant to prepare your Flash Report, however. All you need is someone with enough aptitude to gather the information from different resources around your company. And make sure you’re always, always, always comparing your data to prior periods, just to make sure you’re making progress.
Everyone’s Flash Report is a little different. It depends on the industry you’re in. Or the size of your company. Or just what’s really important to you. But for most of my clients, there’s a core set of metrics that’s critical to them all. And here are a few:
Cash. It makes no difference what business you’re in or how passionate you are, the bottom line is that you won’t be in business for long unless you have the cash. To me, cash is the number one metric for all businesses. Do you have more cash now then at the beginning of the year? This time last year? If you do, then you’re moving forward. If not, you want to make sure you understand why.
Accounts receivable. Good business owners always know what’s out on the street. They have a number of receivables that is acceptable and if that amount gets higher than what they usually see, it sends off alarms. Some of my clients not only show accounts receivable but they also show amounts over 60 or 90 days. A few demand a listing of those customers who fall into those categories (and who owe over a certain amount). Are your receivables in line with the end of the year? Or this time last year?
Quick Ratio. This is just a quick adding of your cash and accounts receivable divided by your accounts payable. This shows just how liquid you really are. Of course, this ratio will fluctuate, but you really want it to be 2:1 to 3:1. By the way, too much liquidity needs to be addressed, too – maybe you should be investing your cash better or distributing some money to you and your shareholders. Have this calculated on your Flash Report every day.
YTD Revenues. My smartest clients are all about sales. What’s the total to date and how does this compare to the same time last year? Are we ahead or behind? If we’re behind, why? What customers aren’t buying? A good Flash Report raises as many questions as it answers.
Backlog sales. These are sales that have been booked and ordered but not yet completed or shipped. This is what makes you sleep at night. It’s nice to know that you’re ahead of last year in sales, but what about the next 3-4 months? Good business owners are always looking ahead and a strong backlog, particularly if it’s ahead of where you were at this point last year, is better than any sleeping tonic.
Pipeline sales. These are not sold yet. But maybe. This comes from our customer relationship management (CRM) system or a spreadsheet of open quotes. Hopefully you’re adjusting your pipeline every day. Hopefully, you’re also using a “probability” percentage – for example, we discount our quotes to 50 percent when they’ve just been sent down to 20 percent if a prospect is hemming and hawing. That way, we can get a good weighted average look at our pipeline during the next two to four months. It’s also good to compare this with the same period last year and the end of last year.
Complaints. Yes, complaints. If you’re really on top of your game, your CRM system is also tracking issues/calls/complaints from customers. Good business owners don’t run away from these – they want to tackle them. And they want to know how many problems are out there so they can ask questions and make sure they get resolved. Have a listing of complaints, in detail or in summary on your Flash Report compared to a prior period and watch how happy your customers will become because you’re involved.
Start now. Put these metrics on a Flash Report. And watch how your business will improve.
Small business influencer Gene Marks is a guest blogger for CAN Capital. He is a celebrated author, columnist and small business owner.
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