5 C’s for Business
In several areas, I’ve run across 5 C’s that are important. For diamonds, the 5 C’s are Carat weight, Cut, Color, Clarity and Certification. I suspect most women know this one very well. For diesel engines, there are also 5 C’s some men may know: Cylinder block, Crankshaft, Cylinder Head, Camshaft and Connecting rod. What might be the 5 C’s for business? Certainly, something to do with Cash, but what else? Actually, I might not be able to limit it to just 5 words or concepts. For starters, consider these 5 C’s.
Cash flow — This has to be at the top of the list. If cash flow is not positive, you’re moving in the wrong direction as a company. At some point, the influx of cash has to exceed the outflow or investors and the business go away. Cash On Hand is a close second, since it relates to your ability to deal with cash flow on a short term basis. The time from order to cash is critical to understanding the needs for cash in a business.
Cost — Well, if you want positive cash flow, the price for your product or service better be greater than your cost. Sounds simple, but many people just starting in business think they can do it so much better than others, that they can easily offer the product or service for much less than the competition and capture the market. Often, they don’t understand all of the costs involved in producing a product or running a business. Don’t ever lose sight of the costs in your business.
Competition — We just mentioned that in relation to cost. Every business needs to understand its competition. It includes the obvious direct competitors that are easy to discuss. Often people overlook the most obvious competitor — doing nothing. Getting a customer/client to take action means your product or service must be better than the option of doing nothing. Then, there are the indirect competitors. This week I listened to a hat purveyor who added a decorative lace to the front of the cap that can double as a lanyard to hold the hat on during sports activities. The business person said those famous words, “We have no competition!” Not so. While no one may have that particular style of hat with a lanyard, there are many different styles of hats with lanyards. There is always competition.
Calendar — You might think it strange to include this as a top “C” word. However, what you include in your calendar indicates what your priorities are in business. If you take time each year to meet with people to set goals and strategize about the coming years, you’ve made an important decision. If you set aside time each month to review your business finances, you’ve set a priority on being in business as discussed above. If you set aside time to talk with your people, you set a priority on people you rely upon. I could go on, but I’m sure you get the idea.
Communication — What are you communicating to your customers? What are you saying to your investors and stakeholders? What are you saying to your employees? What are you hearing from them? Communication is a two way concept.
These are just five words to consider. I know there are many more that are important. What “C’s” are important to you and your business?