Marc Haine argues small-business owners rely too much on gut instinct instead of tracking vital signs: cash flow, payroll costs, marketing ROI, and how fast customers pay. Most businesses fail from cash shortages, not low sales.
Too many owners are running on gut instinct, crossing their fingers and calling that a strategy. But your gut doesn't balance a cash flow statement and your hunch won't save you from a payroll crunch. And that is understanding what your numbers are really telling you. There's your business's vital signs. And if you're not tracking them, you might be missing the warning signs of bigger problems ahead.
That's about all they're using their numbers for when really, as you said, there's a wealth of data there. There's a wealth of information that they can use to make better decisions based on data instead of going on a hunch, on a whim, by the seat of their pants. What about your payroll? What about your marketing expense? Is your marketing even working? It's not just a matter of knowing what your numbers are, but what are they telling you? Are your customers paying you in a timely manner? How many accounts receivables do you have outstanding? And how long are they outstanding for? All of that is money that should be in your pocket. Your clients are holding on to it.
In your notes, you wrote down that most businesses don't die from lack of sales, they die from a lack of cash.
That's going to create a huge timing problem where maybe I need a huge cash infusion to cover that gap of time. Uh, and if I'm just chasing more sales and I'm not paying attention to the other factors in the business, I could be slowly killing myself. All right, so you need to do a little bit of an analysis, get somebody on your team that can help you with that, because let's face it, most business owners, we're not number people, you know.
