Let’s Talk About Money
Yes, I love what I do. But, I also need the basic necessities of life. The roof over our heads, food in our bellies, and golf lessons.
And yes, I love helping people and supporting them to reach their entrepreneurial goals…but I can’t do this without paying the bills and keeping the lights on. If you are running a business like me, there’s one thing that can bring a sense of peace, a sense of purpose, and even a sense of empowerment. REVENUE. Or, let’s just say it:
If you want to grow your business, I truly believe that you need to take control. It starts with realizing: you hold the responsibility and influence over how much sales you bring in. If you’re like me, there might be some fear or resistance to taking control. Sometimes, you don’t even know what’s coming in and how the next set of bills are going to be paid. You just close your eyes and hope everything works out in the end.
That’s a path to disaster.
When I was an engineer working for a manufacturing company, we had a saying in our department. “If it doesn’t get measured, it doesn’t get done.” We thought it was super clever (in a geeky nerdy way) since we measured everything! Data was our friend. We also had another saying, “Humans are the only species on earth that has the amygdala and frontal lobe of our brains work together to keep us focused and moving toward situations and behaviors that lead to achieving the set goal.” Well, we didn’t say it exactly like that, but we did talk about our frontal lobe a lot. (insert dorky snort laugh sound here).
So, to summarize, if you want to keep your business growing and making money, you must measure it, review it, analyze it, and most importantly, set goals with it. If you want to grow, establish specific financial goals and monitor your progress.
That’s a path to success.
So, how do I establish financial goals for my business? Here are a few areas to consider:
- Increase Revenue Goals. Improving profitability simply means bringing in more than you spend on expenses. Take a minute to think about the various sources of revenue coming in (income from sales, interest from investments, etc), then get specific about where you intend to grow. We like using this formula as a model: “We will accomplish x (revenue goal) by x (timeline) because of x (strategy).”
- Improve Margin Goals. You can also increase your profits by looking at your margins – the percentage of revenue that exceeds operating expenses. Examine the ways you might be able to cut costs or eliminate waste. Consider the industry standard for profit margins in your field and aim to be on the higher end of it.
- Managing Cash Flow Goals. Cash flow is one area that most businesses could improve. Effectively managing basic expenses can prevent cash from flowing out the door. Pay attention to how you make payments and set goals to do so as efficiently as possible.
Don’t forget to monitor your progress weekly and monthly – do you know why? Because what doesn’t get measured, doesn’t get done. Count the steps toward your goals and prepare to count up more money too.