Five Tips to Game Changing Your Business
In his new book, Money. You Got This, Justin Krane says that if you’re ready to shake up your business, ask yourself these five key questions.
First: Why are you in business?
Sure, having a passion and doing what you love are important, but the mindset you must adopt is: “I am in business to make a profit.”
Second: What steps will you take to build a profitable business?
Key factors to building a profitable business are your fixed recurring expenses; how much money you need to live (business owners often underestimate this); and your sales – the top things you sell. You must track all this.
Third: How are you going to track and analyze your numbers?
- Find a system to track your numbers such as Quickbooks & work with a bookkeeper.
- When working with a bookkeeper, set up a customized system. For example, don’t just track sales, but have them break out sales by the top three things you sell.
- Review your numbers each month and look at your profit/loss statement, balance sheet and statement of cash flows.
- Look at trends by reviewing current year and comparing to prior year. You can do a rolling 12-month comparison each month.
- Look for red flags. For example, no profit and very little cash in bank. Your sales might be going well, but your overhead is so high, so you are barely making a profit or you could be taking too much cash out of the business to live.
- To get control of money, build up a savings of one to two months of business expenses in the bank. Open up separate bank account and put 10% of sales in that account and pay yourself first.
Fourth: How are you going to scale your business?
The goal for making a business scalable is finding a way to not have to spend a lot more money to make more money.
- Review what you’re selling now and how much time and money you’re investing in it. Are you charging enough?
- Offer trainings, coaching or webinars to teach others to do what you are doing.
- Look for other markets in which to expand. Are there other stores that would sell your product? Is there another business that can sell your service to their clients?
- Collaborate with others to cut expenses. Share office space. Buy in bulk together. Plan a cross-promotion.
- Expand online. For retailers the easiest way is to participate in a specialty website such as Ebay or Etsy.
- If you sell a product online or in a store, consider selling wholesale to other businesses
Fifth: How are you going to hold yourself accountable?
- Write down your goals and review them. Make sure they are specific and set a deadline for yourself.
- Find an accountability partner you trust, then set up a time to check in weekly to keep each other on track.
- Form or join a mastermind group with other like-minded small business owners who have different skills to offer.
Taking these five steps, and monitoring your progress closely, will greatly improve your chances of turning a mediocre business into a winner.