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How much money are your businesses leaking cash?
How much money are your businesses leaking cash?”
BML #106: Every business is leaking money
I call these leaks cash holes.
For small business owners who operate multiple businesses (SBOMB), the problem is this: They are losing personal net worth every day because these cash holes aren’t being fixed.
Whatever work you’re executing, remember this: You are either increasing your personal net worth or decreasing it as a SBOMB.
Two terms to master: FIG vs. HIL
Fighting the Gnats (FIG): Actions that reduce personal net worth.
High Impact Levers (HIL): Actions that increase personal net worth.
You must categorize every action your business takes into one of these two buckets.
Then, focus all your energy on the High Impact Levers bucket.
How do I know where my business is leaking cash?
I conduct an Enterprise Leverage Audit (ELA) using our CLEAR framework—a detailed audit of all your company’s Key Performance Indicator (KPI) metrics. This is where we identify the cash holes.
The ELA specifically identifies the KPI Value Levers where your business is leaking cash in operations by:
Pinpointing areas where your company is losing money.
Identifying the key levers you need to optimize so your cash flow is maximized.
Gaining a clear understanding of your company’s true enterprise value.
Don’t believe me? Here’s a quick example:
Your #1 selling product (out of 20 total) produces 40.6% of your revenue and 52.8% of your total profits, but you’re going to be out of stock for 16 days.
The product produces $1,422 per day in revenue and $637 per day in contribution margin.
Do you know how much your personal net worth will drop over those 16 days?
That’s a rhetorical question, but think about it—it will reduce your PNW.
Why does this happen so frequently?
Because SBOMB are too caught up in day-to-day operations—Fighting The Gnats.
They don’t have effective SOPs for their team (especially in purchasing & marketing), and their team doesn’t know how to take 100% ownership or clearly communicate with each other.
Remember, unless your team members have ownership in the business, their personal net worth is not affected by this cash hole.
I hear it all the time from people I guide.
I ask, “Why wasn’t this successfully (read: profitably) done?”
The answer? Too busy Fighting The Gnats.
What do you want out of your business?
To fight Gnats?
Or to focus on executing around your High Impact Levers?
I don’t make this decision for the people I guide. Our weekly scorecard brings everything to light.
By simply looking at their weekly scorecard, I can tell if someone spent their week Fighting the Gnats or working on High Impact Levers.
I help people organize and execute around HIL—growing their personal net worth daily.
Feel free to reach out and we can have a discussion on your cash holes.
How much money are your businesses leaking cash?
How much money are your businesses leaking cash?”
BML #106: Every business is leaking money
I call these leaks cash holes.
For small business owners who operate multiple businesses (SBOMB), the problem is this: They are losing personal net worth every day because these cash holes aren’t being fixed.
Whatever work you’re executing, remember this: You are either increasing your personal net worth or decreasing it as a SBOMB.
Two terms to master: FIG vs. HIL
Fighting the Gnats (FIG): Actions that reduce personal net worth.
High Impact Levers (HIL): Actions that increase personal net worth.
You must categorize every action your business takes into one of these two buckets.
Then, focus all your energy on the High Impact Levers bucket.
How do I know where my business is leaking cash?
I conduct an Enterprise Leverage Audit (ELA) using our CLEAR framework—a detailed audit of all your company’s Key Performance Indicator (KPI) metrics. This is where we identify the cash holes.
The ELA specifically identifies the KPI Value Levers where your business is leaking cash in operations by:
Pinpointing areas where your company is losing money.
Identifying the key levers you need to optimize so your cash flow is maximized.
Gaining a clear understanding of your company’s true enterprise value.
Don’t believe me? Here’s a quick example:
Your #1 selling product (out of 20 total) produces 40.6% of your revenue and 52.8% of your total profits, but you’re going to be out of stock for 16 days.
The product produces $1,422 per day in revenue and $637 per day in contribution margin.
Do you know how much your personal net worth will drop over those 16 days?
That’s a rhetorical question, but think about it—it will reduce your PNW.
Why does this happen so frequently?
Because SBOMB are too caught up in day-to-day operations—Fighting The Gnats.
They don’t have effective SOPs for their team (especially in purchasing & marketing), and their team doesn’t know how to take 100% ownership or clearly communicate with each other.
Remember, unless your team members have ownership in the business, their personal net worth is not affected by this cash hole.
I hear it all the time from people I guide.
I ask, “Why wasn’t this successfully (read: profitably) done?”
The answer? Too busy Fighting The Gnats.
What do you want out of your business?
To fight Gnats?
Or to focus on executing around your High Impact Levers?
I don’t make this decision for the people I guide. Our weekly scorecard brings everything to light.
By simply looking at their weekly scorecard, I can tell if someone spent their week Fighting the Gnats or working on High Impact Levers.
I help people organize and execute around HIL—growing their personal net worth daily.
Feel free to reach out and we can have a discussion on your cash holes.
© 2024 Deliberate Achievement LLC