If I was a betting person I would bet that you either don’t think you have any processes in your business, or if you do it’ll be one that is involved in delivering your “stuff” to your clients, whether that’s a service or product.
Well every business, no matter how big or small they are, has one key process that governs their success, and it’s rare that I ever come across a business owner / MD who has total clarity on that key process. This process is “Enquiry to Cash” which basically means it covers everything from generating that initial enquiry (ie your marketing) through to you delivering the work, invoicing for it and getting paid for it.
I usually find that as businesses grow they become more focused on various parts of this process, for example when you gain sales staff you get focused on your sales stats, but having total clarity on how well your business is performing across this process from day 1 has the ability to drive improvements across the board.
The majority of business owners hold this end to end process in their heads with elements of it tracked in spreadsheets or online systems, especially the tail end of it which covers invoicing and cashflow. But it’s the front end of the process, the marketing, following-up, closing the deals part that can make a huge difference to most businesses. And having total clarity on the whole process will help you improve your enquiry rates, your sales conversions, and the speed in which you get paid. In a nutshell…managing this process effectively can put more money in your bank account!
Ok then, how do you do it? Just do these straightforward steps and you’ll be in far more control of your business performance than you were when you started to read this blog 🙂
Step 1: Draw out your process. How do you generate enquiries, what do you do when you get an enquiry, where do you log that data, how do you ensure you follow-up etc. What does delivering your “stuff” look like for you? How do you know when delivery is complete and you can raise an invoice? How do you raise the invoice? How do you check it’s been paid? What do you do if it goes beyond its payment terms etc.
Step 2: Find ways of tracking the info you’ve just drawn out. Depending on how much you like to use technology this could vary from pen & paper through to an app but find a way that works for you. It’s easy when you first start up to think you don’t need to do this as you can keep track of it all in your head and in your diary but you’ll be surprised how easy it is to overlook something important, plus it’s way more easy to adopt a new system from the beginning when you aren’t so busy than it is once you are busy and don’t have the time to get things sorted out! You know I’m talking sense 🙂
Step 3: Now you know what data you are going to log you can decide on what targets you want to achieve and start to measure them. The classic ones to measure are:
- Number of new enquiries per month
- Number of new sales/clients per month
- Total price of invoices issued in month
- Total costs per month
- Total profit per month
- Total amount of overdue invoices (aka your aged debt)
Once you get into the swing of doing this every month you can get more sophisticated and measure where your enquiries are coming from, how long your average sales cycle is (the length of time from enquiry through to confirmed sale) and so on.
By knowing your process, measuring your business performance and setting targets for it, you will start to drive an improvement across which ever areas you choose to target. Try hard not to fall into the trap of always doing this historically i.e. you always look at last month’s data and see how you did, try and do it in a more forward looking way, i.e. this is what I want to achieve this month and then work out a plan to achieve it and get into action!