Remember the Three Clocks of Small Business
So sang the legendary Rolling Stones singer, Mick Jagger. As lyrics in a ballad this is a nice sentiment, even romantic. But in small business, it's hogwash.
There are actually three clocks at work in the marketplace: one for operating expenses, one for sales and one for cash. Rarely are any on the side of a small business.
The hands of the clocks on sales and cash collections often seem to drag or even get stuck. But the clock in control of expenses is so finely tuned that the hands fly around the face.
Let's take a look at the three clocks of small business.
Operating Expense Clock
Every month, like clockwork, regardless of sales volume, cash collections or profits, 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
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 runs off the customer relationships you've created so that 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.
The Sales Clock is completely logical and intuitive. A sale will be made only when a prospect's purchase requirements have been met.
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 without snow, but you can't have snow without cold. You can have sales without cash receipts, but you can't have cash receipts without sales. And expenses are like weather - you get some every day.
But what small business owners know is that for every glitch in the mainspring of the Sales Clock, there are 1,000 sprocket failures that slow or stop the Cash Clock. Consequently, this clock requires constant maintenance.
Murphy's Law (everything that can go wrong will) lives inside the Cash and Sales Clocks, but the Operating Expense Clock is immune to this insidious law and rocks on just like The Rolling Stones.
Write this on a rock... You must always manage the three clocks of small business.
Jim Blasingame, small business expert and host of The Small Business Advocate Show
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