There Are Many Harsh Lessons To Be Learned From The Gambling Experience, But The Harshest One Of All Is The Difference Between Having Fun And Being Smart.
Gambling In Business
What is gambling?
Gambling is the act or practice of risking the loss of "something important" by taking a chance or acting recklessly. In simple clear terms: If you're not making decisions based on data, that's gambling.
Right now, the question I have for you is: Do you like to gamble? For me, yes!
Gambling is fun and I enjoy going to the casino to play some blackjack especially when I'm with a group of friends. But like I said, it's just fun and I know that anything I put into playing these games, I'm expecting to lose it.
The reason why I'm bringing this up and why it's so important is because a lot of people are operating their businesses as if they're gambling. They're flying blind, they don't know where they are going, and they don't even understand how to make decisions that could move the needle forward in their business. You'll agree with me that when we approach business this way, it's like going to the casino and sitting at a blackjack table hoping to earn a paycheck. But the reality is, it doesn't work that way.
Listen, to build a successful company, you have to keep track of the most critical metrics in your business. In our sales team for example, we track all quality conversations, offers that are made, and videos that are contributed over a period of time. When we track these things, we begin to see trends and based on these trends, we make decisions that will lead us to our goal.
But unfortunately, a lot of people, especially those in the real estate industry, are not tracking these sales and marketing metrics. They don't even understand their cash convergence cycle and how it's calculated. And when you don't keep track of these things in your business, you can't be successful.
The CCC Accounts For:
How much time your company needs to sell its inventory.
How much time you take to collect receivables.
How much time you have to pay your bills without incurring penalties.
Another simple way of thinking about the CCC is through this mathematical formula:
CCC = Days Inventory Outstanding (DIO) + Days Sales Outstanding (DSO) – Days Payable Outstanding (DPO)
You see, when we take our time to fully understand these metrics and the story told, we're able to make confident decisions in our business, adapt and adjust accordingly especially now that the market is shifting and regulations are being put in place.
Here's a great example: A few years ago, the 10DLC was put in place and for people who relied heavily on SMS marketing, that was completely cut off. And while others were panicking, some business owners were able to adapt and adjust to the new regulation.
This was because of their confidence in their decision-making in their business. And as a result, they were able to pivot and launch more channels while understanding the cash convergence cycle that ultimately set their business and their team up for success.
So make sure that you're not gambling in your business and start tracking these key metrics. Because when you track these metrics and understand the story told, you'll be able to make confident decisions and set yourself and your team up for success.