Your business and a hose pipe…

What can you learn from a hosepipe when it comes to your business?

A hosepipe is used to transport water from one place (tap, pump, tank etc) to somewhere else where you want to use the water. Depending on the length of the pipe, how many kinks or obstructions are put in the way; their will be an amount of time passes before the water starts flowing out of the hosepipe and how well it flows, once the tap has been opened.

If the water has been flowing well and then slows or stops altogether, it’s the sign of a problem. The tank might be empty, you have suddenly developed a kink in the pipe or got an obstacle; of course you then go and investigate.
Sales pipeline
So, by now you are probably wondering what the hell this has got to do with your business… read on.

Your Sales Pipeline

In business the flow of the customer, or more accurately their money, through your sales process from initial contact to sale and money received is often called the sales funnel or pipeline. The customer enters the ‘pipe’ at the point of contact and negotiates their way through the various steps of your sales process to the point of making a purchase and handing over their money. Depending on the complexity or level of interaction, there will be a finite amount of time taken to negotiate the pipeline; this may be a few seconds for a low cost electronic download transaction to several months, perhaps even years for a large, bespoke product. Of course, not all transactions will flow simply from one step to the next, there may be the odd obstruction or obstacle that slows things down. Now those obstacles could be a supply problem, competitor action or something similar. If the worst came to the worst, somebody might even turn the tap off and you get no more customers and your cash flow dries up.

Cash flow is the life blood of your business

For your business to survive and thrive you need to understand the length of your pipeline; How long (generally as an average) does it take a customer to flow through your process? You also need to understand the things that may stand in the way of your customer flowing smoothly through the process. What are the key indicators that your business is operating well and that you do not have any kinks or obstacles in the way? You, as a business owner, need to be able to look forward and forecast how well your business is going to perform and if necessary take actions or countermeasures where you forecast a problem. If you do not know the length of your pipeline or the key factors that drive it, you are running blind. Lack of cash flow is one of the biggest reasons why businesses fail. Unlike normal financial statements which have a historical focus, understanding your pipeline and key drivers will allow you to forecast forward and make sure your business is healthy.

  • Do you know how long it takes from initial contact to sale for your business?
  • Do you know what the key drivers of your business are?
  • If for some reason all of your prospective customers stopped ‘finding’ you, how long would it be before your cash flow dried up? How would you know?

Want to know more? Need help mapping your pipeline? E-mail me,