You want to become financially free to spend time doing the things you love with the people you love, right? So you thought the perfect way to do this, is to build a profitable business. But instead of working less, you are actually working harder, spending more time and not making much progress.
In the process of it all, looking at your financials is not something you have the time for…. Believe it or not, this is a big reason why a lot of businesses are just not profitable. Business owners don’t realize that the sales they are making just get swallowed up by all the expenses + the taxman!
Building a profitable business that makes money (because that’s the only way to financial freedom) takes time and an intentional understanding of what is working and what isn’t. Your financial data will tell you a lot about what you might need to change to become more profitable. It’s also important to remember that the performance of your business in no way indicates how good or bad of a person you are, and many businesses are unprofitable in their first few years of operations. Think Uber, Tesla, etc – these innovative companies have been around for a while but not yet making enough sales to cover their expenses…
That being said, here are a few things that you can do to get your business on the right track:
1. Set and track your financial goals
- Where do you see your business in the next 5 years?
- Set a goal and break it down into a short-term goal for the next 12 months
- Break the goal down further into a monthly goal that is easier to achieve
- What does this monthly goal mean for your everyday? Break your monthly goal further down into smaller, daily actionable steps that you can take to reach it.
2. Focus on 3 revenue-generating items every day
It’s so easy to get overwhelmed with the “busyness” of being a business owner, and worse if you are the only one in your business.
Using my time management techniques mentioned in this post, prioritise your to-do items and mark the 3 items on your list that generate the most revenue for your business.
Getting these three items done on a daily basis will not only make you feel like a champion (because you are a champion!). But will also get you closer to building a profitable business and a strong foundation for your business to truly thrive.
3. Which products or services are bringing in the most revenue?
Can you guess what Tesla, Apple and Facebook all have in common? They have all mastered just ONE product and made a killing from it. I know you want to grow multiple revenue streams, but before you start creating a hundred and one products to sell, first specialise on the 1 or 2 products that bring you the most sales, and make them so amazing that your customers want to sing your praises about how great your products/services are, from the rooftops.
4. Take time to reflect on what is working and what isn’t
By now, you should be tracking your income and expenses on a regular basis. Keeping track of your financials goes a long way in helping build a profitable business so do it as often as possible. Go back and analyze the good months when you made profits:
- Are there expenses that you didn’t have then that you now have? Do these expenses make sense? Can you do away with them until the sales in your business pick up again?
- Are there any other actions you took in these months that contributed to the good performance?
- How can you repeat these actions and apply them in your business today and consistently?
5. One bird in the hand is better than two in the bush
If English was your favourite subject back in high school, you have probably heard this phrase. You may be focusing so much on winning more customers that you forget to give the best customer experience to your existing customers.
Focus on giving your existing customers the best experience and services ever, and allow their testimonials and feedback to sell your services even more. This will put even less pressure on you when it comes to marketing because social proof is one of the most powerful forms of marketing in this age.
6. Plan for huge expenses ahead of time
Your business might be doing well in terms of sales, but one large unexpected expense could wipe out months of good performance. Plan for all your expenses ahead of time. Make sure you keep some cash aside for unforeseen expenses. Do what you can to run a tight ship (budget), and be in control of how you spend cash in your business.
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