Did you know that 80% of businesses today either barely break even or lose money? That means when you run a profitable company you are literally in the top 20% of the best business owners – just by making some money!
We start our companies for a variety of reasons – maybe it’s our passion, or we got pink slipped and needed to create our own job. It could be we were pulled in as a partner and then ended up taking it over, or were just born with that entrepreneurial “bug” and have to do our own thing. Whatever the reason, we go into business to make money. It’s not a charity or a non-profit, it’s a for-profit business.
To truly enjoy the entrepreneurial lifestyle – the one we dream about – your company absolutely must see positive cash flow. It’s not optional. Nobody lays in bed at night dreaming about being in debt, with no idea how to make payroll, and trying to just make ends meet and keep the doors open another day, although that IS the reality for many business owners.
For the 80% of you out there who are barely breaking even or losing money every month, there is one big profitability blocker that must be overcome to have a truly profitable company.
What is it?
The answer is simple, and it may surprise you.
The biggest profitability blocker is YOU.
That’s right. You.
While you are the reason the company has achieved its results to date, you are also why it’s not seeing the profits you have dreamed about. There could be many explanations as to why:
- I’m too busy working “in” the business to look at the numbers
- I don’t understand my financials so I just avoid them
- I know things aren’t good and it’s easier to avoid it than fix it
- I know it needs work but I have no idea where to start
Whatever the reason, as the owner of the business, it’s still on you. Until you put profitability on your radar it will almost certainly continue to elude you.
So what can you do to turn this around and put PROFITS on your radar? Here are my top 3 Tips for removing profitability blockers:
Tip #1 – The Power of Planning
Take a look at your daily work schedule. Where is your time going? Very few business owners schedule time to work on their profitability – but that’s the first step to getting it on your radar. It just won’t get better on its own so set aside some quality, distraction-free, time to work on it.
Even if you can only find 30 minutes a week to work on it – start there. It’s much better to spend at least 30 minutes a week, than NO minutes. Over time, that half hour adds up. Then, when you are able, you can increase the time until it’s just a part of your weekly routine.
Tip #2 – Know Your Numbers
It’s true what gets measured gets managed. If you never look at your financials they just won’t get better on their own. It’s important to know which of your products/services are your most profitable. When was the last time you calculated your profitability? Does it need to be updated?
If you have identified your least profitable product/service what are you doing to increase profits? Or should you discontinue it so you can focus more time on your most profitable items? Asking better questions and digging into the numbers is essential for top profits.
Tip #3 – Hold Yourself Accountable
This is a HUGE step any business owner can take to guarantee their success, but many rarely do. Let’s face it, having somebody like a coach, group, peer, board, or a tough friend holding our feet to the fire isn’t always much fun. But it is absolutely the difference between those who succeed and those who fail.
If you are willing to let yourself off the hook, then you will do just that. If you are serious, invest in competent accountability. While you may not get it done in the most ideal timeframe, at least you WILL get it done!
When I started my first software company in the 1990’s, for years I thought if I just sold more, it would fix my cash flow. I got up to over $1M a year in sales and guess what happened? It didn’t fix my cash flow, in fact it made it worse. It wasn’t until I fixed the underlying foundation of the company, removed the profitability blockers and made it profitable, that I was able to scale and grow, and see the money in the bank.
Money in the bank beats showing a “paper profit” any day of the week.
Today, I work with companies large and small who are having trouble making payroll and staying current on their debt obligations. It may not even seem possible that a 7-figure business couldn’t pay its bills, but sadly it is.
Because they haven’t fixed their profit issues from the ground up. It starts with what I like to call the 5 Pillars of Profitability. But the GOOD news is when they learn about these key pillars, and then begin to address the issues, make changes to correct, and get into the habit of running in the black, profit takes care of itself. It almost feels magical!
Then, they are in a much better position to grow, scale, or even sell their company – whatever their goals are, they become much easier to attain.
The concepts are certainly easy to understand – but they can be quite difficult to implement on your own. That’s where getting help is key to success. Working with a professional who can help analyze your business and optimize it for profits is essential.
You can certainly waste a lot of time and effort trying to figure it out yourself, but why? You can get the help you need, shorten the curve, and get to where you want to be faster and easier than going it alone.
If you would like more information on how to optimize your business for profitability join me on November 15 where I’ll be hosting a FREE Master Class “The 5 Pillars of Profitability Every Entrepreneur Needs to Know”.
In this educational 45-minute class I’ll be covering the five keys for profitability in your business and specific actions you can take today to see more cash in your pocket – right away.