Why can’t I take a vacation?
Why can’t I grow my profits?
Why can’t I stop worrying about cash?
I work so hard – why don’t I have more cash in the bank?
I wish I had someone to talk to…
These are thoughts many business owners have. You’re not alone.
The Master of Your Craft
A main reason you started your business is because you’re a master of your trade, your skill, your craft.
You had visions of more time, more money, more freedom.
While you’re a master of YOUR craft, you struggle with being the accountant, the lawyer, the HR person, the sales leader, the marketing expert, the IT help desk and on and on and on.
Life, business, happens and you find yourself working IN the business and not ON the business. Why? Because you’re the best person to do it. (Remember, master of your craft…)
Again, all normal. You’re not alone.
You’ve decided it’s time to master your business, not just your craft. But how?
Here’s five steps you can start TODAY to have a more profitable business, generating the cash flow to give you the freedom you desired when you started your business.
Step 1: Define Your Personal Goals
“Wait a minute, I thought we were talking about my business?”
I’m glad you asked! You need to define your personal goals so the business can help you achieve them. You spend over 50% of your waking time working in/on your business so it needs to reward you personally! You need to define how much you want to eat, so you can make your business produce it.
Note: If you just laughed and said, “psssh, I wish I only spent 50% of my waking hours on my business, we need to talk. If you do it by choice, more power to you, but if you do it because you feel like it’s the only way to survive, there’s a better way. Schedule a call with us and we’ll find 2-3 things holding you back from more profit and more freedom.
Thought starters to define your personal goals:
1. How did you get into this business?
2. Where do you see YOURSELF in 5, 7, 10 years?
3. What do you want to be/do/have/give?
Step 2: Define Your Business Goals
Now that we have your goals out of the way, let’s address your business.
You need to define some bigger picture goals for your business so you know where you’re going. Imagine you’re taking a road trip. Most of us don’t get in the car, stock up on food/drinks, fill up the gas tank and start driving without a destination in mind.
We know where we’re going – we have a destination – a goal. Without that, you end up in a random place and you don’t know if anything is wrong because you don’t know where you should be.
The same applies to your business. It doesn’t have to be a complete exit-strategy, but have some goals for this year, next year, 5 years.
Thought starters to define your business goals:
1. Where would you like your profits, cash flow, to be in 3-5 years?
2. Do you want to build to sell your business? If so, how much would you like?
3. What changes need to take place to achieve the prior two goals?
Step 3: Make a Plan for This Year
Now that you’ve set a destination, or have one in mind, you can begin planning your next steps. See how we’re working backwards here? Destination –> route –> starting point. We’re now building the route from the starting point.
Thought starters to define your plan:
1. How much cash/owner pay would you like to have this year?
2. What do you need to spend cash on other than paying yourself? Do you need to purchase new assets or pay-off debt?
3. How much profit do you need to generate to accomplish the above cash objectives?
4. At your current net profit margin, what revenue is required to produce the needed profit?
5. Now that you have a revenue and profit target, can you reduce costs or gain efficiencies to either reduce the revenue need or make more money on the same revenue?
Step 4: Act, Measure, Act
Now that you have a plan, it’s time to act. Define the actions necessary to make your plan achievable and bring it to life. Once you begin taking actions, you’ll need to have a process/system in place to measure results and make course corrections to your actions.
Make a plan, act on the plan, measure results to the plan, make corrective actions. Rinse and repeat.
Note: Remember, when measuring success there’s leading indicators and lagging indicators. Revenue is a lagging indicator because it’s looking backwards – it’s using the rearview mirror. Leads, opportunities generated, etc. are leading indicators because it’s looking ahead. If you know you need 100 leads per month to hit your revenue target and 20 days in the month you’re at 90, you’re probably going to hit your revenue target.
Thought starters to help you act, measure, act:
1. What are your leading indicators for revenue, gross margin and net profit?
2. How can you track your leading indicators to know if you’re on target for your plan?
3. Do you have a system in place to accurately measure your monthly results so you can make necessary corrective actions? Don’t over-complicate this.
4. Put time on your calendar each month to dedicate to corrective actions. Remember, Act, Measure, Act? This is the 2nd “Act”. This is where you work ON your business. You have to treat this as sacred time and protect it.
Step 5: Make a 3-to-5-Year Plan
You’ve created a plan for this year, you’ve started taking action, now it’s time to plan how you achieve those long-term business goals (to help you achieve those personal goals). List the high-level metrics of your business for this years’ plan and the next 3-5 years. Revenue, gross profit, expenses and net profit. Make small changes year after year to create a big change by the most distant year.
It’s easy to get lost in the weeds with this but the key here is for you to realize what your path looks like, not to solve all your problems in one exercise.
This can be an enlightening process – you may find you’re under-shooting goals or you may find you have a harder road ahead than you thought.
After you develop your high-level long-term plan, you can begin backing into your leading indicators to know where the real work needs to begin. Maybe you currently get 1,000 leads a year but to achieve your goals, you will need close to 5,000. If you can double yearly, then great. If you typically grow 10-20%, you’ve got work to do!
Thought starters to help you long-term plan:
1. Where does revenue, gross profit, expenses and net profit need to be in 3-5 years?
2. What areas will require the most action or improvement?
3. Again, don’t overcomplicate the long-term plan. You’re trying to figure out your path. Keep it high-level.
Do You Need Help Creating the Business You Desired?
If you'd like a personalized plan to achieve your personal and business goals, we can help. We walk side-by-side with our customers to help them have a more profitable business, generating more cash flow and achieving the freedom they desired.
Book a complimentary call with us today. We will talk about your goals and what's holding you back from being more profitable.