Ti-i-i-ime is on my side - yes it is.
So sang the legendary Rolling Stones singer, Mick Jagger. As lyrics in a ballad this is a nice sentiment, even romantic. But in small business, it’s hogwash.
In the marketplace, there are actually three clocks at work: one for operating expenses, one for sales, and one for cash. Rarely are any on the side of a small business.
The clocks that tick on sales and cash collections often seem to have hands that drag or even get stuck, while the clock that is in control of expenses is so well oiled and finely tuned that the hands seem to fly around the face.
Let’s take a look at the three clocks of small business.
Operating Expense Clock
Every month, like clockwork, whether sales are good, cash collections are on schedule or profits exist, payroll must be met, rent must be paid, taxes must be remitted, plus phone bills, utilities statements, insurance premiums, etc., ad nauseum, must also be paid.
The Operating Expense Clock is hardwired to Greenwich, England for accuracy within a nanosecond per millennium, and nothing stops it short of a global, thermo-nuclear holocaust, coinciding with a direct hit from Halley’s comet. The only way to influence this clock is through operating efficiencies - you won’t be billed for something you don’t buy.
This clock runs off the customer relationships you’ve created so that sales result each month. You project when each sale will occur by qualifying prospects and attributing a “clock” to each potential transaction so that you can budget future sales volume.
The Sales Clock is completely logical and intuitive. A sale will be made made only when a prospect’s purchase requirements have been met.
What is not so logical or intuitive is the Cash Clock and its relationship to the other two clocks. Think of it like this:
Cash is to sales as snow is to winter:
- You can have winter without snow, but you can’t have snow without winter,
- You can have sales without cash receipts, but you can’t have cash receipts without sales.
And expenses are like weather: You get some every day.
But what every small business owner knows is that for every one glitch in the mainspring of the Sales Clock, there are 1000 sprocket failures that can slow or stop the Cash Clock. Consequently, this clock requires constant attention and maintenance.
Murphy’s Law flourishes inside of the Cash Clock and is a frequent resident in the Sales Clock. But the Operating Expense Clock is totally immune to Mr. Murphy’s insidious law and rocks on just like The Rolling Stones.
Recently, on my small business radio program, The Small Business Advocate Show, I talked about the three clocks of small business. I also had a conversation about cash in an interview with Brain Trust member, Phil Holland, founder of My Own Business. Take a few minutes to listen to these conversations on this important topic and, as always, be sure to leave a comment.
My interview with Phil Holland: