Read the story to protect and possibly build company worth
If you're a business owner who is fortunate to be listed as an essential business and remaining open during this pandemic, make sure you are looking closely at your incoming order book for the last 60 days because it's telling you a story that is worth listening to and it could be a different story than it was telling you just 90 days ago. Here are some things to think about doing:
- Make sure you are looking at new order "dollars" and "units". If you supply a widget of some sort to your customers, don't just evaluate your incoming new business as it pertains to dollars, also make sure you are fully understanding what is happening with widget units being sold. If you're just looking at dollars you are only giving yourself and your team just one important dimension. Your revenues may be down like so many are experiencing, but are all your widget units down equally? Perhaps some products of your portfolio are up or are down much less than others, make sure you know what's behind this because knowing this could give you opportunities to take steps to either minimize the negative results you're seeing or it might give you ideas for how to identify some offsettng growth opportunities.
- Evaluate what combinations of products your customers are buying. if your product line is such that people buy various SKU's from you, make sure you monitor how this has changed in the last 60 days. And if your customers often buy combinations of products from your portfolio, evaluate whether these combinations are the same now as they were back in February. Customer's buying new combinations could be strategically meaningful for your business and you won't see this if you're simply monitoring dollars.
- Because cash is king, look closely at what is also occuring with gross margins of your product offering as this is a critical dimension to add to monitoring dollars and units. Are unit sales and gross margins trending together or is there a new story being told that you need to understand?
- Monitor your customer credits and returns to add to the story your order book is telling you. You may be analyzing your dollars, units and gross margins but also make sure you're looking at what credits and returns you're experiencing that may be very different than you were seeing just 60 days ago. You don't want to analyze the sales of your widgets to think you're gaining strategic insights only to realize what's being returned has it's own message that you need to factor in.
As we look to protect and possibly build our company worth during this pandemic, monitoring our order book is essential but doing so should include dollars, units and gross margins because one without the others could mean you're only getting a partial story.
