Managing the three clocks of small business
“Time Is On My Side,” is the title of one of the classic rock ’n’ roll songs performed by Mick Jagger and the legendary English band, The Rolling Stones.
This bold statement works in a song, but for small businesses – not so much. The reason is because of the complicated dynamic between our most limited resource, time, and three of our most important business factors, expenses, sales and cash.
In the marketplace, there are actually three different clocks at work that every business uses: one for operating expenses, one for sales and one for cash. Let’s take a look at how these three clocks impact your small business.
Operating Expense Clock
Every month like clockwork, regardless of sales volume, cash collections or profitability, payroll must be met, rent must be paid, taxes must be remitted, plus phone, utilities, insurance bills, etc., must also be paid. The Operating Expense Clock is hardwired to Greenwich, England for accuracy within a nanosecond per millennium, and nothing stops it short of a global, thermonuclear holocaust coinciding with a direct hit from Haley’s comet.
The only way to influence this clock is through operating efficiencies – you won’t be billed for what you don’t buy.
Sales Clock
This clock is powered by the prospect and customer relationships you’ve created so sales result each month. You project when each sale will occur by qualifying prospects and attributing a clock to each potential transaction so that you can budget future sales volume, which delivers gross profit to pay expenses.
How the Sales Clock operates is completely logical and intuitive, but it only works in your favor when meet all of the expectations and requirements of customers.
Cash Clock
What is not logical or intuitive is the Cash Clock and its relationship with the other two. Think of it like this: Cash is to sales as snow is to cold. You can have cold weather without snow, but you can’t have snow without cold weather. You can have sales without receiving cash, but you can’t receive cash without making sales. And expenses are like weather: you get some every day.
But what hits small business owners hard is that for every glitch in the mainspring of the Sales Clock, there are 1,000 potential sprocket failures that slow or stop the Cash Clock. Consequently, the Cash Clock requires constant maintenance.
Surely, Murphy was a small business owner, because his law lives inside the Cash and Sales Clocks. But the Operating Expense Clock is immune to this insidious law and keeps on rockin’, just like The Rolling Stones.
Write this on a rock ... Your success requires a full understanding of the three clocks of small business.
Jim Blasingame is host of the nationally syndicated radio show The Small Business Advocate and author of the multi-award-winning book The Age of the Customer: Prepare for the Moment of Relevance.
