How long does it take you to achieve business success?

One of the most important factors in business success, especially for growing businesses, is speed. Small businesses and mid-market companies have significant advantages over larger companies because of their nimbleness and responsiveness.

We can register a domain name, for example, faster than a big company can send a formal request to their legal and marketing departments.

When you customers ask you for something, you should be thinking, “How quickly can I provide this value to my customer?”

Customers value speed. Ironically, any company that charges by the hour has a disadvantage in the speed zone because their model doesn’t incent them to provide value faster, even if their customer is willing to pay for it. My plumber charges the same fee whether I have an emergency or not, provided that he can fit me in to his schedule. Of course, evenings and weekends cost more. The plumber’s core strategy driver isn’t service, its queue management.

Here are key measures for success:

Total Days to Profit

How long does it take to generate profit? Measure inputs such as labour, materials and overheads and then compare these costs to how long it takes to generate a sale. For example, if it takes a company one month to produce inventory, it sells $250,000 of product each month and the total inventory is around $500,000, it’s taking three months to generate profits (one month to produce and two months to sit on the shelves). That’s a long time and that’s why inventory build up is dangerous.

Reducing your inventory build up, responding quickly to customer orders and minimizing costs that don’t add value will enhance your total days to profit.

Total Days to Cash

In addition to measuring profit, an even more important measure is Total Days to Cash. You pay your employees every two weeks. You probably pay your suppliers monthly. How long does it take to get paid from your customers? The best businesses have negative days to cash in that they get paid in advance and before they incur significant costs. Using the above example, and allowing your customers to pay you “net 30 days” and suddenly it’s four months or 120 days until you get paid. Many companies underestimate their Total Days To Cash.

Taking deposits and offering discounts for early payment can dramatically accelerate your total days to cash.

Total Days To Strategy

How long does it take to convert a new idea into a viable new product or service and a new revenue stream? Rapid prototyping and testing with your customers can accelerate your strategy and success. Your existing customers already know you and trust you. By listening to them and responding quickly to their requests, you have an opportunity to quickly develop successful strategies.

Remember, strategy is the intentional alignment of your resources to provide focused and differentiated value to your customers. That means that your strategy needs to focus on your customer and not on your technical expertise or methodologies.

A great idea that is implemented quickly and presented to a customer can generate success in days, not months.

What can you do to accelerate your Total Days To Success?

Copyright 2012. Phil Symchych. All rights reserved.