Episode A4.008 Monitoring Capacity vs Sales vs Working Capital

Show Objectives - The Why
Every once in a while the answer is simple and obvious. When your company reaches Stage IV is one of those times. This growth stage is exciting and dangerous - you are finally achieving the company's potential but at the potential of out stripping it's ability to afford it. ​

RESULTS RADIO..."Let's Grow Together"

Introduction
Hope everyone is looking forward to a great week. We have a few announcements to make about growth of the IBGR Network. 

First, we are doubling the number of new and returning visitors to the site. July was twice June’s numbers and we beat July’s numbers over the weekend.

Second, with the addition of Gambia on Sunday, IBGR is now heard by entrepreneurs in 100 countries. That is 51% of all the countries on the planet. 

Third, we have declared war on Covid19. That is not on the disease itself, just a worse variant of the flu. Our declaration is aimed at those politicians and bureaucrats that are making arbitrary, non-science based decisions on economic activity. People with no skin in the game, collecting checks from our taxes are deciding which business lives or dies. If you do your own research, a stark reality will become apparent - what is happening in your country is not based on science - it is based on power and control.

Check these articles out as reference points:

• Sweden Hits COVID-19 "Triple Whammy": No Lockdowns, Low Deaths & Minimal Economic Damage
• Lockdown Restrictions Are A Test To See How Much Tyranny Americans Will Accept
• THE TRUTH ABOUT COVID19 - DON'T LET THE BUREAUCRATS AND POLITICIANS GIVE YOU A LINE OF BULL.

Put all of this together and we are your advocates against the forces of statism and command economies. We understand entrepreneurs are a different breed that don’t live by the leave of others - why? Because everyone at and associated with the station are entrepreneurs. We are building a network of ideas, insights, and tools that will help you navigate the pandemic and beyond.

JOIN our Community and Let’s Grow Together!
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Show Objectives - The Why
Every once in a while the answer is simple and obvious. When your company reaches Stage IV is one of those times. This growth stage is exciting and dangerous - you are finally achieving the company's potential but at the potential of out stripping it's ability to afford it. 

Your #1 fear is "destruction of working capital".

Key Issues - Owner/Manager Perspective:​

1. Building the forecasting muscle - a core competence
2. Focusing on performance to plan - a core competence
3. Living in the real-time

​
What You Need to Know - The What

• EPISODE B.018 YOUR FIRST REAL BUDGET
• EPISODE E.002 CORE PROCESSES - STRATEGY & FINANCE​

​What You Need to Do​​ - The How
Sales Forecast

1. Forecast (Planned)
   1. Estimated individual units sold over the period
   2. Average price per individual unit over the period
2. Performance to Plan (Actual)
   1. Closed sales to date
   2. Actual vs Forecast

Production Forecast

1. Forecast (Planned)
   1. Total Schedule
   2. Schedule Sequence
   3. Average labor hours per day
2. Performance to Plan (Actual)
   1. Actual vs Planned Total
   2. Actual vs Planned Sequence
   3. Actual vs Planned labor hours per day

Cash Flow Forecast

1. Revenue Recognition (Inflow)
   1. AR by month
   2. AR average recognition time (AR Aging Report)
2. Cost of Goods Sold (Outflow)
   1. AP by month
   2. AP average payment time (AP Aging Report)
3. Velocity (Inflow/Outflow)
4. Monthly Cash/Credit Demands
   1. Forecast period = 2x Aging Report
   2. Isolate periods of negative COH (Cash On Hand)
   3. Credit - can you cover or forced to reduce marketing/sales?

Shows

• Previous: EPISODE A4.007 CREATE TRACKING REPORTS ON EMPLOYEE INSPIRATION, EMPLOYEE READINESS, EMPLOYEE TURNOVER
• Next: EPISODE A4.009 Monitoring Progress on MBO