If your journey to business success feels like a roller coaster ride, you’re not alone. From start-up to business, your company goes through different stages of growth, including generating leads. And like on a roller coaster, at some point, you feel your head spinning (and probably a little nauseous)!

To be successful in business, you have to move through the different stages – lead flow, workflow, cash flow, and profit flow. But what most business owners don’t realise is that you can’t sail your way through the stages and get through them by the skin of your teeth. This is why your revenue, leads, and profit are everywhere.

Business success is like a puzzle; you unlock the next level when you’ve successfully solved the current step. Let me explain how the stages are connected, why it’s important to understand them, and how you can master each level.

Stage 1 – Lead Flow: Generating Consistent Leads

Sales and marketing initiate everything in business, aiming to secure leads. The goal of lead flow is to have enough quotes from ideal target market clients who pay on time.

Success in this step means consistent leads and quoting and selling ideal clients for the ideal job at the ideal margin. Inconsistent lead flow can be improved by reading ‘How to Improve Sales Consistency in Your Trades and Construction Business.’

Stage 2 – Work Flow: Efficiently Managing Leads and Workflow

Now that you’ve nailed your marketing and sales and you have ideal jobs on the books, we can move through to operations. Workflow is the work you’re currently completing and the work you’ve secured but not yet started.

The key to a successful workflow is on time and budget. Pretty simple. But…you must be on time and budget for your clients AND you. Chances are you’re already on top of the former because you can’t run a business if you’re not.

However, many trades and construction businesses are NOT on time and budget for themselves. For example, they quote 20 hours of work, and they only charge those 20 hours (on the budget for the client), but they take 25+ hours to get the job done. 

It’s also common not to charge for variations, but remember that any additional costs you don’t hand back to your clients eat into your profits. As I mentioned earlier, each stage affects the next, and mistakes in your workflow have a more direct impact on your cash flow. 

If you’re not already, monitor every job in terms of time and budget. Track your costs against your budget, and see how many jobs are in the red vs black. Over time, you should see a positive trend.

Stage 3 – Cash Flow: Understanding Financial Numbers and Forecasting

Cash flow is crucial in business finances. Moreover, have you ever been in a situation where you couldn’t pay the ATO or an unexpected bill due to insufficient funds? Knowing your numbers prevents such surprises.

To gain insights, you need various numbers: a weekly scorecard, profit and loss, a balance sheet, and a cash flow forecast. Each set offers unique perspectives for informed decision-making and positive outcomes.

Additionally, your cash flow forecast determines your investment capability and profit flow. Consequently, when current processes yield diminishing profits, it’s time to increase capacity through hiring or equipment investment.

Furthermore, business owners often need help with hiring expenses. However, your cash flow forecast clarifies affordability.

Moreover, understanding your numbers allows for business fluency: in finance. Nevertheless, to discuss cash flow, success in lead flow and workflow is vital. Specifically, leads generate work, and work creates cash.

Stage 4 – Profit Flow: Transforming Leads into Profitable Business Growth

Everyone desires to reach the profitable stage in business! To achieve this, one must first navigate through the initial three stages without exception.

To ensure successful profit flow, two key factors are crucial:

1. You must be on budget for yourself and your client.

 Are you quoting with a decent margin but then giving that all back with unplanned extras, not charging for variations, mistakes, etc? Businesses are wasting so much money in their workflow, which directly eats into their profit! Tighten up your processes and communications where needed to plug these leaks.

2. You can’t be too conservative.

Being too conservative is just as dangerous as being too liberal. In this case, being conservative means you’re being held back by not knowing your numbers. You’re not hiring people, buying equipment or expanding into larger premises because you’re worried you can’t afford it. 

Which stage of business do you need to focus on?

I hope you’ve seen that everything you do affects other business areas. There will be many opportunities to improve your business at every stage. Still, right now, I want you to pick two specific actions you can take immediately to strengthen your business.

This could be:

• Chasing up quotes for a final yes/no answer
• Putting an hour of sales/marketing time in your diary every week
• Tightening up communication with clients to save time on jobs
• Tracking labour and materials more closely
• Getting familiar with your numbers
• Starting your cash flow forecast
• etc!

Don’t overwhelm yourself by trying to do everything at once. Find your biggest opportunities and start there.

If you want more guidance to increase your profit and scale your business, join our private Facebook Group with weekly live streams, recommendations, and networking.

Here’s to a great week!

Damien Churton

Coach and Partner, Business Benchmark Group