There are a number of metrics as a business owner for you to consider in the running of your business: revenue, pricing, expenses, profit, but there’s another important piece to knowing your numbers.

Understanding your cash flow.

Cash flowing through your business is like water flowing through a river; if it dries up, the environment around that river dries up and suffers.

You could have sales going through your business, but there’s a timing to cash flow and if that timing is off, it could hand-tie your business, inhibiting growth. If cash is running like that flowing river, then you have enough to fund growth and allow your business the flexibility it needs to operate.

The considerations that go into cash flow are largely around the timing of when money comes and money flows out, and ensuring there’s more coming in than going out.

For money coming in, consider things like…

Have you ever had a wonderful experience with a brand, product or service that you really wanted to tell your friends about it?

Actually, I’m guessing you have. When we experience something wonderful, we want to tell people about it.

I am happy to share with others when I’ve had a phenomenal experience at a restaurant, a retail store, or with my hairstylist or my insurance company.

We want others to have those experiences as well and for those individuals to continue to be successful because of the great work/food/products/services/etc. they’re putting out into the world.

So now let’s flip things.

Do you think people say the same for your business?

There’s one critical question you can ask your customers in order to measure how well you’re doing as a business to know if you have high levels of customer satisfaction and the answer to this question is also proven to be predictive of your future stream of revenue.

The question is…

Maybe the reason your business is wearing you out isn’t necessarily because you’re burning the candle at both ends, or worried about making your bills, or because of another late order arriving.

While these are all worrisome and tiring, these could be symptoms of a deeper issue.

It could be due to a lack of capacity and diversity in one or all of three key areas: employees, suppliers, and/or customers.

How dependent you and your business is on any one employee, customer, or supplier can be a real indicator of business health, how high your business risk is, and how you, as the owner, are shouldering the effects of this directly. And, if that one employee is YOU, well that would be a signal of a lack of capacity or diversification of employees and skills sets.

I was recently speaking with a business owner who is dependent on one employee (themselves!) who tried to hire another employee recently.

They said ‘it didn’t work out’ and ‘it wasn’t a good fit’. And, they doubted that there would be a good employee out there that could do what they’re looking for.

I probed a little more and it became clear that they really didn’t believe another person could do what they could do and could serve the clients the same way they could.

I have heard variations on this theme from a number of business owners.

So what’s the answer?

Take a look at the three areas I mentioned and see how your business fares in these areas.

Even though I called this the second driver, these are really in no particular order and not necessarily in the order in which we would focus on for your business. If you missed the first driver of company value that I spoke about, you can check it out here.

To grow your business and to build a valuable asset, this is likely the most common area we think about for a business: Financial Performance.

Financial Performance is simple to understand but not necessarily easy to achieve…

There are 8 drivers of company value that contribute to the valuation of whether your company will be easy to pass on or to sell in the future. Through my work supporting business owners to grow their businesses in a way that maximizes their future exit options, I have found that these 8 drivers aren’t always obvious.

And, through focusing on these 8 drivers, this is the process to grow your company, so if you’re not looking to sell anytime soon, these drivers will offer you a roadmap to enjoy growth in the meantime.

The first driver I would love to talk about first is Hub and Spoke. I wanted to start here because typically, almost every owner I’ve worked with has an opportunity in this area…

People start a business for all types of reasons. Some start looking for more freedom and flexibility or financial freedom. Some start because they have a great idea that they haven’t seen in the marketplace. Some want to create a legacy or make a positive change in their industry. Your reasons could be all, some, or other reasons for starting your business.

But whatever your reason is, this question is relevant to consider:

Do you want to create a valuable business?

What does valuable mean?

What kind of impact on the world are you aspiring to make through your business?

Companies who are moving towards their vision and accomplishing big things through their businesses are very thoughtful about WHO they need to communicate to (and with!) in order to get their message to the right people so they can fulfill their mission and purpose.

Having a big vision and achieving that is largely about getting your message to the people who need to hear it.

The question here is: HOW do you get your message to those that need to hear it?

A few weeks ago I mentioned that I would share the year-end review that I conduct in my business to close out one year and move forward in the next.

By sharing my process I hope this supports you to hone in on what’s important in your business. 

My mission is to help Leaders and Business Owners create sustainable businesses. In order to create a sustainable business, knowing the metrics that convey the health in your business is so important. This way you spot problem areas that need to be addressed and successes that you can leverage or lean into.

If you chose to grow your business, you know whether or not you have a healthy foundation in which to do so.

I like to keep it simple.