Small Business Talk
The Podcast to Grow your Business Faster
4 Things That Could Save Your Business
Show Notes
Have you been in business for a while? Do you have a business or have you created yourself a job with a very unreasonable boss – yes, you.
After the excitement of a being a business owner, founder, the entrepreneur has worn off, sometimes you look back and wonder why you want into business at all.
Yes, being in business can be a romantic dream of freedom, calling the shots, having time off whenever you like not being tied to the 9-5. For some people, that is true. However, for the majority, it’s just not the case.
Today, let’s get real and talk about 4 things that could save your business and maybe your security.
Watching Your Numbers
“If you want to be successful, you need to know your numbers” James Schramko
What that means in your income coming in and your expenses going out.
Do you know what actual money is coming into your business every week and how much your expenses cost you?
As a business grow changes and ages your needs and expenses will change too. When was the last time you looked at your ongoing subscription?
Subscriptions are a wonderful business module for the person/business taking the payment but for a lot of businesses they can be an unnecessary cost for a service you are no longer using. Unfortunately, in a lot of cases, it is a service that you may not have ever used.
We get caught up in the sales pitch, the marketing hype and impulse buy. Then after the sale is over, we ding that it doesn’t do what we thought it would, we
- We need other software to go with it
- We don’t have the skills to make it look like the picture
- If we don’t keep paying, we lose it
- We plain forget that we bought it
- Things have changed and we don’t need it anymore
The list goes on.
Please go and check your subscription. You will be surprised at what you can save per month/year.
Know Your Costs
Cash Flow
Businesses live or die in cash flow. Many seemingly very successful businesses have gone under due to lack of cash flow. Mike Machalowicz from Profit First is famous for wanting to eradicate entrepreneurial poverty.
What this means is to stop business owners and founders working a million hours little money.
When you work out the amount of hours you are working for the amount of pay (wages) actual money you are getting you might be horrified. What is yours hourly rate once all the expenses are removed from income/revenue?
Profit First basically flips the old sales equation.
Sales – Profit = Expenses
What that means is work out what profit you want to make, then the cost to deliver that profit. Now you have the amount you need to sell the product.
If you want to make
$100 profit
$50 expenses
$150 sales price
Then you need to see whether your market will pay that price. See Value versus Price.
Is this a realist price for the item/service you are selling?
The other thing that Mike is very big on is paying yourself. Generally, he talks about a percentage.
If you have never paid yourself and we are talking about actual money, not just the business paying for a thing then you might need to start slow.
Put a percentage away each week or month for “your pay”.
Think of profit first rather than profit begin what is left over if any after all the expenses are paid.
It is well worth checking out Mike’s book Profit First which you can buy very cheap in kindle form.
You must have more money coming in.
Value Versus Price
Value is also why some people do exceptionally well in multi-level marketing companies and others don’t. They are all selling the same product for the same price but it is the value that they are offering that sets one seller apart from the other.
- Is it how to apply makeup tips that come with it.
- Being part of the tribe.
- Seeing the success stories of other customers etc. etc.
It is the value that the seller adds that makes you buy or not.
Think about what value you are giving your customers. It might be that you join their “dots” make the light bulbs go off or cement other training they have done before.
Being seen as the expert can take years or minutes depending on the value that your customers are seeing in your offering.
“You can always afford to be generous”, Chris Cooper
Remember that being generous doesn’t always have to be money. In a lot of cases, being generous with your time is far more valuable than money which is why famous and successful business people change tens of thousands of dollars to have 1 on 1 on group sessions with them.
4 Things That Could Save Your Business
Or make it better are
- Watch your numbers
- Know your costs
- Cash Flow
- Value verse price
Now your homework is to take a look and your profit and loss sheet especially your expenses and see if you need to do some tweaking.
And yes, it might be that you need to put your prices up. That is a whole new subject for another time.
Links
Listen to Small Business Talk Episode 103 for the full episode.
