Your weekly number is the amount of income the business needs in a week to exist and to move forward. Once you have it, every week gets a plain answer: you were above it, or below it.
One number that changes the others
If you take one thing from the booklet, the booklet itself recommends taking this chapter. In it you work out a single number that changes every other one.
The base is a checklist the source gives for the fixed costs of a business. The same question repeats in every line: how much is that per week. You could fill it in tonight.
Two things on the list surprise most people who fill it in. The first is that everything is counted by the week, including what you pay once a year. The second is that the reserve sits inside the list, as a fixed cost, rather than at the bottom as whatever is left over.
Suppose a garage owner goes through the list and finds that his weekly cost is $4,600. Until then he was sure it was somewhere near $3,000.
Or take a consultant who discovers that her insurance and licence fees alone come to $170 a week. She had never thought of them as a running cost.
Or a studio owner who adds the reserve to the list. Her number goes up, and for the first time it is right.
You can work all of this out yourself, with no accountant and no software.
Why weekly
According to the source, what comes out of the calculation is clear. After you have carefully worked out your weekly costs, you know exactly how much income you need each week in order to exist and to promote. And if a week falls short of that amount, “you will know at once that you are spending more than you are making”.
The important words in that sentence are at once. Without the number, you find out at the end of the quarter that you were short. With it, you know this coming Thursday.
Suppose an installer's weekly cost is $3,700, and in one week he turns over $2,500. That is a week that calls for an action, and a feeling that something is off will not do the job.
Before he worked the number out, the same man knew it had been a weak month three weeks after the month had ended.
That is the difference between a weekly number and a feeling. A feeling arrives late. A weekly number arrives while you can still do something.
It is also the booklet's first rule, income greater than outgo, in a form you can check every week. Instead of asking whether the month was good, you ask whether this week cleared the line.
I have money today, and will I be a business tomorrow
Here the source adds a distinction that is easy to miss. The cash-bills statistic, when it is computed accurately, tells you whether you are solvent. It tells you where you stand in the present, week by week.
Viability is a completely different concept, because it deals with the future. You may have enough cash to cover every bill at this moment, and the open question is whether you will be able to go on surviving and prospering.
Two numbers answer two questions: do I have money today, and will I still be a business later?
The source ties them together through the financial plan. It gives you the make-break point of the business, and when you compare your income against it, you can tell whether the business is viable.
Your weekly number is that make-break point. It is a line that decides, and each week your income lands on one side of it.
A big balance, a small balance
Suppose a business owner has $40,000 in the bank. Her weekly income is $2,000 and her weekly cost is $3,500. She is solvent today, and she is not viable. At that pace her cash runs out in twenty-six weeks.
Set against her an installer with $1,500 in the bank, a weekly income of $4,500 and a weekly cost of $3,700. He looks weak, and he is viable.
If you look only at the balance, the first one seems to be in far better shape. If you look at the line, the picture turns over.
A big balance that keeps shrinking is a clock counting down. A small balance that keeps growing is a business that works.
The booklet gives this chapter two short exercises, a calculation and a comparison, and the full checklist of items is there. In the practice section at the end you will also find one called the weekly cost.
A number you work out once and check every week replaces the feeling that the month was weak with the knowledge, in time, that one week fell below the line.
The booklet is general knowledge, not financial advice for your business.