A while back, I wrote an article about the Vicious Sales Cycle where we examined how steady sales and steady cash seem to be mutually exclusive for many shop owners. When sales are up, cash is down. When cash is up, sales are down.
As an owner or entrepreneur, it is painful to watch your cash swing violently up and down over a period of time. Not understanding what is causing it makes it that much more frustrating.
What if I told you that you can have a steady stream of cash simply by adjusting how you approach production and sales? It is possible, even for the small businesses that don’t have sales and marketing staffs at their disposal.
In this article we will explore a few points.
How to create constant production (without you, the owner, driving the progress).
How to generate a steady stream of sales.
How this helps your cash flow problems.
Executing the points below in a way that align with your company vision will change your life and your business if you make a concerted effort to change the way you operate.
Production that Works Without You
As we laid out in our series of articles, How to Make it in the Cabinet Industry, we learned that systems and SOP’s are paramount to having an operation that runs how you as the owner always intended, without you actually having to be there every step of the way.
There are some of us as owners that prefer to work some on the shop floor, which is fine, but I don’t believe that any of us signed up to be a slave to each individual task that the shop performs. I also I don’t believe any of us signed up for the inconsistent production (and cash) that results from operating that way.
If you have to be there for something to be produced correctly, what happens when you have to step away to tend to another part of your business? Production wavers and what that really means is that your cash flow wavers.
For the first 10 years as a shop owner, I was a slave to my business because everything went through me. At the time it seemed logical that if everything flowed through me, it was going to get done right.
I thought I was doing the business a service, but in reality I was creating a horrible culture, I had no vision for my company, and I was exhausted almost everyday. Sound familiar? After finding a business coach, everything turned around. I can confidently say I am not a slave to my business anymore. Everyone in our company, including myself, is better because of it.
If you can learn how to fire yourself from production by empowering your team to work with excellence without you, then your shop can produce consistently and you can therefore smooth out your cash flow.
Constant Production = Constantly Delivery of Products = CASH
On the contrary, if you are in a Vicious Sales Cycle, you are more than likely using the cash you just made to fund the next production cycle. While you’re in the production cycle, you’re not selling because all of your time is tied up in production. Then, once you’ve produced and delivered, there’s no longer anything to produce because you weren’t winning new jobs. So you spend your time selling in order to be able to produce. And the vicious cycle continues.
Always 1 step forward, 2 steps back.
Take a deeper look at your operation. Does it require your every second for product to get produced correctly? If so, start creating standards now. Start trusting your people and help them understand the vision of the company. I promise you will be amazed with the results.
Generating A Steady Sales Stream
If you have successfully achieved production that does not require your every second, you can finally focus on sales.
I don’t know how many times I have heard from all different owners that, “Sales are not the issue” or, “I could have all the sales I wanted if I was just on the streets.”
I say, prove it!
I understand why owners are saying this, but what I don’t understand is why they aren’t trying to achieve it. If you’re not growin’ you’re dyin’.
I believe that achieving a steady stream of sales is easier than solving the production problems we have in the shop. If you have a great product, fair price, and good turn around time, then you probably can get all the sales you can handle...if you actually take the time to consistently sell.
Instead of spending time on the shop floor, dedicate time every week to get out and sell.
Create a default calendar that allows you to step outside the shop and get in front of people.
Set reminders to call on the builders you work with or some of your previous customers to ask for referrals.
Look back at your previous sales and determine what got you the sale in the first place.Try to replicate what you did to get those sales!
Generating Consistent Cash
When you get out of the Vicious Sales Cycle, your cash will normalize and instead of funding the next cycle, your cash is put to work creating more cash.
You’re not stuck on the shop floor producing, but production is being handled by your team through clearly defined standard operating procedures. Not only are you free to work on your business, but you’re team feels trusted and empowered in their responsibilities. Your company culture is being established in a positive direction.
Because you’ve created time to work on your business and generate steady sales, constant production is leading to consistent delivery of products. Now you’ve got a steady stream of cash you can count on every month.
That is the goal: create more cash so you can move closer and closer to your vision.
Other Production Solutions
As I mentioned earlier, steady and constant production is often one of the hardest things to achieve. In our series ‘Making it in the Cabinet Industry’, we found that outsourcing can be a great way to level out the bottlenecks that are formed by production and manpower issues. Essentially, it gives your operation unlimited capacity with limited or no capital injections.
Would your operation be able to generate great cash, great people, and great sales if your production was outsourced? Between online ordering, expensive machinery, and inventory, it makes more sense than ever to consider outsourcing.
Don't settle for the cyle
Whatever you do, don’t settle for the cycle.
There’s so much more to business than just trying to come out ahead each month. Take the time to make your production and sales consistent with the tips above and watch your cash flow change dramatically.
Once you are free from the time and stress of the cycle, you can take your business to places you never dreamed of (or to places you never had the time or money to dream of before.)