Most owners offer a profitable service. Most sell a profitable widget. Few owners make enough per week to survive in the long term.
Read that again.
The individual activity is profitable but the week never goes as planned. As a result, few businesses make the profit they plan – let alone the return they are capable of.
The most important financial metric in every business is:
Gross Margin per week.
Do you look at Gross Margin weekly?
Cash is to an organization like oxygen is to a person. It is the enabler of a healthy business. And the primary driver of cash is Gross Margin dollars per week.
Once the week is gone, the week is gone. The hours are spent.
Most are content to look at the theoretical profitability and hope it all works out.
There is another reason few look at this metric – Gross Margin per week is lost between the financial functions of your business and the sales & operations processes.
The good news – most businesses are capable of so much more than they are currently doing.
Cut through the fog. Know your numbers.
Look at this week – How much gross margin will you make this week?
Even if you do it on the back of a napkin at the start of every week and then add up the actuals at the end of every week you’ll be in much better shape.
October 13, 2020