Episode E4.009 Personal attention to sales vs capacity vs cash flow issues - watch working capital

Introduction
As of Monday morning we had Mozambique join the audience making it our 117th country, not bad for just our Second Season on the air. We currently have entrepreneurs and owners in 60% of the global business community tuning in daily - thank you and we are just getting started!
​
We have three more weeks of shows left - 009 through 012 before Season 3 starts and everyone is excited about our hard launch on October 5th from the Kilo Market (Australia, New Zealand, Singapore, Philippines, Taiwan, Hong Kong, and surrounding areas). 

There are several ways you can interact with the station and our OnAir Hosts:

• Pulsating ? on every page. It is a direct link to the Host and they will respond to your question during the show;
• Hit us up on social media - Facebook, Instagram, LinkedIn, and Twitter. Our handle is ibgrnetwork;
• JOIN our Community of Commerce and become an insider with direct access to our Hosts and support materials discussed on the show.​

​JOIN our Community and Let’s Grow Together!

Have a great business week.
​
Listen>Apply>Engage
​

Show Objectives - The Why
There are three stages in a business's growth cycle covered on IBGR where the business could die. Life or death stages of a business covered at IBGR are Stage II, Stage IV and Stage VI. Failure in Stage II and Stage IV are both dependent on cash flow (Stage VI fails because of bad decisions - a topic for another show). It will either grow the company or kill it. You have already navigated the first cash flow crisis when you validated your business and began generating consistent revenue in Stage III. It’s imperative that you begin to focus on cash flow again in Stage IV. 

Today’s show will give you the areas you need to monitor closely and frequently in order to keep your business on a growth trajectory. Failure to do so will be the failure of your business. There is no other way around it. How you accomplish this is by having an understanding of the relationship between sales, production and cash flow - and it’s not what you think!

Key Issues - Owner Perspective:

1. Building the forecasting muscle - a core competence
2. Focusing on performance to plan - a core competence 
3. Understanding the relationship between sales, production, and cash flow

What You Need to Know - The What
Stage IV Failure Points: Destruction of working capital: unbalanced mix of new sales vs. production while servicing existing accounts. Insufficient infrastructure: over promise and under deliver caused by the failure to build capacity in Stage III.

EPISODE A4.008 MONITORING CAPACITY VS SALES VS WORKING CAPITAL

What You Need to Do​​ - The How

1. Learn how to read the metrics: Sales Forecast, Production Forecast, Cash Flow Forecast
2. Generate the metrics. Use the help of your accountant or CFO if needed. Start with expenses then forecast revenue. Create a conservative and aggressive forecast.
3. Create your forecast in sales, production and cash flow. Find a “realistic medium” of your aggressive and conservative forecast numbers. You want to get this as close to real-time as possible.
4. Implement a performance plan in accordance with your forecast. Everyone in the company has to be on board. 
5. Monitor the performance plan often and make corrects as needed (ie. slow down sales to allow production to catch up.)
6. Know, understand and keep an optimal flow between sales, production and cash flow. Cash flow is critical - slow down sales and/or production accordingly.  

Shows

• Previous: Episode E4.008 Personal role in Recognition and Rewards programs
• Next: Episode E4.010 Organize top customer forums for input and cementing relationships

 
Written by Donna Kunde

​