The Cockpit: Leadership
The cockpit is the part of a plane where data is transmitted and clearly communicated to ensure the plane flies stably.
The cockpit personnel, as it relates to your business, includes middle management, executive leadership, and/or board members.
Your business's leadership team is responsible for:
- clarifying and communicating the company's mission
- establishing key lead and lag measures
- managing and developing talent
The Wings: Products and Services
The wings of a plane give it lift. They represent the products and services you sell.
Without profitable products and services, your business can't get off the ground.
The Right Engine: Marketing
A dual-engine plane can fly using only one of its engines, but when both engines are firing on all cylinders, the plane moves with greater thrust and lift.
The right engine of the plane represents your marketing team.
Your business's marketing efforts come first. Even before sales. Without marketing, your sales team will not have a clear message out in the marketplace that engages customers and backs up their sales efforts.
The Left Engine: Sales
A plane's wings won't create greater lift without some kind of engine selling your products and propelling the business forward.
The left engine of the plane represents your sales team.
Your business's sales efforts increase revenue so the business can grow and scale.
The Body: Overhead
The body is the largest part of the plane. It's also the whole point of the plane. It exists to solve the problem of getting people and cargo from one place to another.
The body of the plane represents your business's overhead, which includes salaries, benefits, rent, office supplies, etc.
Overhead exists to solve your customers' problem. In exchange for solving problems, team members get money, healthcare, and other benefits.
The Fuel Tank: Capital and Cash Flow
A plane without fuel will crash no matter how efficient its other parts are.
Fuel represents your business's cash flow.
When a business runs out of cash, it crashes and everyone onboard the body of the business loses their job.
The goal of every business should be to operate with a positive cash flow. It is the most important factor leading to a business's success.
How to keep your business flying
For starters, you must offer a profitable product or service that customers want.
Then, your marketing and sales efforts have to be strong enough to sell the product while focusing on keeping overhead light so your plane isn't bogged down.
Lastly, you must have enough cash to pay your bills.
Here are a few tips to help keep your business flying high:
- Resist adding costs that don't increase the bottom line. Costs can make the body of the plane too heavy and risk the entire body's job security.
- Make sure your products' profit margins are high enough to cover the overhead necessary to produce and sell them. Profit margins must be high enough for the product to cover the cost of itself and overhead, as well as provide job security for the entire team.
- Get weekly marketing and sales reports that reveal whether these efforts are performing effectively. Marketing and sales efforts must lead to revenue generation that offset the costs of overhead. They don't? Time for new marketing campaigns that do.
- Increase the efficiency of production, sales, and marketing. Just like a good plane engineer, business leaders make sure the activity-to-output ratios of the business's divisions are high so capital and cash flows go further.
Like flying a plane, operating a business is no easy task. However, seeing both the whole and its parts allows you to better understand how to lead yourself and help others create and sustain a business that grows in revenue and profit.
As always, stay alert, stay educated, and most importantly, stay cool.
Have a great week!
Talk soon,
Old Man Winter
Source: Business Made Simple
