Why a Tyre Pressure Monitoring System is Like a Financial Forecast
The other day I was driving down a dirt road in outback WA, about 250 kms from the last town and still about 100 kms from the next one, when my Tyre Pressure Monitoring System (TPMS) alarm went off.
It was warning me that the tyre pressure on one of my tyres was dropping below my preset minimum pressure and an indication that I had just experienced a tyre puncture.
We immediately stopped whilst there was still air in the tyre.
What the TPMS did was give me early warning that there as a problem with one of my tyres and this warning saved me:
- Damaging the tyre further and just getting the tyre repaired, rather than buying a new tyre, thereby saving money (the repair was 5% of the cost of a new tyre) and time (you could not get a replacement tyre locally so would have to wait for one); and
- Possibly experiencing a tyre blow out and maybe a resultant accident which could have had serious consequences (note no one passed us in either direction whilst we were changing the tyre).
So you now ask why is the TPMS like a financial forecast. In my mind there are 2 ways.
Firstly, by preparing a financial forecast, it allows you to set the specific alarms for your business around things like revenue, expenses, cash flow and other important metrics. You now have some visibility around your potential business performance and whether this will achieve your business and personal objectives.
Secondly, when you measure your actual performance against the forecast in a timely manner, you can now see how you are going and whether you are on track. And more importantly, whether you are triggering any of the alarms you have set. And just like we did when out TPMS alarm went off, if you can take immediate action to address the issue.
If you want help with your forecast, or to learn more about my #OutsourcedCFO Services, simply email (wayne@arealcfo.com.au) or call me (0412 227 052).
Contact Wayne on wayne@arealcfo.com.au or 0412 227 052.
Click on the below buttons to access free Resources developed by Wayne Wanders, A Real CFO to help your business scale and grow profitably
Want a confidential discussion on your business situation, help with your grant application or to learn more about my Outsourced CFO Services, simply email me at wayne@aRealCFO.com.au or call me on 0412 227 052
