Business alignment ensures that sales, operations, finance, and management are moving forward together

You wouldn’t think twice about checking your tire pressure before taking a high-performance car through its paces on a mountain road.  Nor do you hesitate to get your vehicle aligned with the purchase of a new set of tires.  Yet, most business owners and management teams will make important business decisions without confirming their business is performing at specification.

Your profit plan represents the specifications you have set for your business by month for the year ahead.  Just as a Porsche, BMW, Mercedes, and Tesla establish manufacturer specifications to provide a description and statement of the requirements of a product, components of a product, the capability or performance of a product, and the service or work to be performed to maintain their product your BusinessCPR™ Step 2 – Plan for Your Profits states the planned performance by month for the year ahead.

Without knowing your sales and profit targets to be realized each month, it’s impossible to see if you made what you expected to make, let alone accomplish your goals.  Ideally, your Profit Plan is finalized in month eleven of each year, so you’ll know your goals for month one of the upcoming year.  Click here [P-9  four keys to profit planning] to learn the core steps to follow in building an achievable profit plan.

Tire misalignment hurts vehicle performance

When your car is first manufactured, the wheels are aligned, tested, adjusted, and ultimately verified at the factory. In a brand new vehicle, there shouldn’t be any problem with a wheel alignment.  The problem with tire alignment comes over time due to a combination of factors in and outside of driver control.  Ultimately, every vehicle will have its wheels fall out of alignment.

It is hard to focus on driving when you are in a tug of war with the wheel to keep the vehicle straight.  Applying consistent pressure on the steering wheel is tiresome.  Plus, it takes the fun of driving away.

Vehicle misalignment happens when your wheel and tire assembly is not balanced.  Tire alignment is confirmed through a series of measurements and movements used to establish the exact alignment position for your vehicle.

A tire alignment helps your vehicle in many ways.  Not only does it extend the life of your tires, it also helps a car drive smoother and consume less fuel.  Ultimately, it ensures optimal drivability based on each vehicle’s unique recommended set of specifications that must be sustained for proper alignment.

Wheel alignment is suspension alignment, as it involves fine-tuning the angles of the suspension system so the wheels are pointed in the right direction.  The benefits of having your wheels aligned regularly include:

• Tires last longer
• Vehicle drives smoother and handles better
• Wheels point in the right direction means you can cruise without constantly correcting course
• Less energy is needed to move the vehicle-saving money at the pump
• All happening while making it safer for everyone

Any vehicle that does not have proper wheel alignment risk’s prematurely wearing out its tires while creating dangerous driving hazards.  When vehicles are out of alignment, the tires wear unevenly compared to each other.  The wheel alignment on every vehicle ensures that all four tires are correctly angled with each other and the road.  It is how you maximize the miles you can drive on a new set of tires.  It reduces uneven tire wear that can affect a vehicle’s ability to stop, especially in inclement weather.

Just as wheel alignment is essential to the performance of your vehicle, business alignment affects your profits and cash flow

Just as your tires play a vital role in giving you a safe and smooth ride, helping you stop quickly and letting you steer accurately.  Members of your management team play a vital role in your ability to get work, do work, and enable work.

The equivalent of visually checking your tires for uneven tire wear regularly, that will alert you to problems that could result in an accident-causing blowout, is accomplished through your weekly management team meetings.  When managers return and report on their results during this meeting, you learn what’s getting done as it should and what isn’t.  Knowing what’s working and what isn’t week-to-week is how you unlock higher profits and more consistent cash flow.

It is also how you identify the equivalent of irregular tire wear, either across the tire tread or around the tire’s circumference.  The presence of either of these wear problems indicates a wheel problem that needs to be fixed.  The same is true for your management team.  Uneven performance involving sales, operations, or admin will create problems across the whole business.

For example, sales and ops are realizing their goals, yet admin struggles to record transactions and collect payment.  If this is not addressed, it won’t be long, and you will have cash flow problems that could lead to a blowout within the management team, affecting everybody.

Business misalignment happens when employee actions are translated into planned results.  While tire alignment is confirmed through a series of measurements and adjustments to establish the exact alignment position for a vehicle according to a recommended set of specifications that must be sustained for proper alignment, your profit plan does the same for you.

Your profit plan sets your targets for Net Sales, Gross Profit, Operating, and Net Income.  Your financial statements report on actual-to-planned results.  Failing to have profit targets to work towards is equivalent to trying to align a vehicle without alignment specifications.  Any success will come by chance.

High-quality profits are like a vehicle that drives in a smooth, straight line, as intended

No vehicle, no matter how old or expensive, will drive in a smooth, straight line without properly aligned wheels.  The same is true for a business that isn’t earning quality profits.  Trading one dollar for four quarters is never good.  Most businesses struggling to make money are struggling because the people working there are misaligned with one another.  Below on the left are indicators of a misaligned vehicle, with the column on the right representing the business equivalent:

Wheel Misalignment Indicators	Business Misalignment Indicators
Uneven or rapid tire wear	Operating costs don’t vary with sales
Vehicle pulling to the right or left	Sales and operations unable to work together effectively
Steering wheel shakes	Too much Accounts Receivable greater than 60-days past due
Crooked steering wheel when you drive straight	Negative year-over-year variance with no understanding as to why
Noisy steering	Tight cash flow makes it difficult to meet payroll and payables
Fighting the steering wheel to keep the vehicle straight	Not enough sales to cover overhead costs at a profit
Bumpy ride even on smooth surfaces	Owner isn’t paying themselves a fair wage for the work they do
Vehicle tracks grooves in the road	Owner is stuck in a rut doing what they have always done
Squealing tires	Employees who don’t buy into what you are trying to change and improve

Below on the left are causes for a misaligned vehicle, with the column on the right representing the business equivalent:

Wheel Misalignment Causes	Business Misalignment Causes
Driver error: hit into a curb, pothole, too fast over a speed bump, or had an accident	Owner too busy working in the business and not on the business to steer the business to higher sales and profits
Loose steering and suspension components	Underperforming assets.  Particularly financed assets costing more than they produce
Under-inflated tires	Not enough cash flow from profits to cover expenses
Failure to rotate tires as recommended	Keeping “bad” customers and not turning over poor performing employees
Vehicle modifications such as lifting or change in tire profile	Investing money into non returning assets and expenses

Business alignment is like vehicle alignment; it begins with maintaining the recommended pressure

Tire pressure recommendations are found in the owner’s manual or on the label on the driver’s side door jamb and the tire’s sidewall.  Keeping all tires inflated to their recommended PSI is the best way to avoid uneven wear.  You do this by checking your tire pressure once a month and adjust it accordingly.  The bonus of keeping your tires properly inflated is better gas mileage.

The business equivalent of pounds per square inch (PSI) for a tire is Gross Profit Margin (GP%.)  Just as you protect the safe operation of your vehicle and prolong the life of your tires by keeping the recommended PSI set by your vehicle manufacturer, the same is valid with the Gross Profit you generate.

Gross Profit is the first level of profitability, representing the monies remaining from Net Sales after all direct costs have been deducted.  Gross Profit Margin is the percentage of Gross Profit earned as divided by Net Sales.  The higher the percentage, the more money available to cover overhead and nonoperating costs at a profit from each dollar sold.

The number one preventable wheel alignment problem that causes a vehicle to pull to one side is misinflated tires.  The number one problem in business is failing to earn sufficient Gross Profit on your sales.  Any tire that shows more wear in the center of the tread than at the two sides has been overinflated.  This is a rare problem in business when you consider overinflation as having too much cash in the bank from operations.

If the two sides of the tread are worn more than the center, the tire is under-inflated.  When tire pressure is too low, too much of the tire’s surface area touches the road increasing friction. Increased tire friction causes tires to overheat, leading to premature wear, tread separation, and blowouts.  In business, insufficient cash flow from Gross Profit is the number one cause of business failure.

The cheapest and easiest way to prevent irregular tire wear is proper inflation, according to the manufacturer’s recommended standards.  The best way to prevent business failure is to generate profits from your sales.  While you can find the tire pressure recommendations in a number of places, it is your profit plan that sets your recommended Gross Margin.  Achieving your planned Net Sales and Gross Profit is how you avoid patchy cash flow.

The last similarity between maintaining proper tire inflation for your vehicle and Gross Profit contribution for your business involves checking pressure once a month and adjust it accordingly.  This method works pretty well unless you know you have an air leak.  If you aren’t leaking air from your tire or cash from operations looking at either PSI or GP%, once a month works pretty well.

It’s when you have a leak that you want to increase the frequency of pressure checking until you get the leak fixed.  Failure to do so puts both your vehicle at risk from low tire pressure and your business at risk from insufficient cash flow from Gross Profit.  Just as the added bonus of properly inflated tires is better gas mileage, the added bonus of consistently outperforming your Gross Profit plan is more money in the bank.

Protect your cash from business misalignment

If you think your business is suffering from the equivalent of wheel misalignment, click here to see how your financial results can tell you where your business is misaligned.  Within thirty-six hours of receipt of your multi-year P&L Statement and Balance Sheet, you will receive back by email three areas you can start working immediately with your management team to improve your business results.