4 Habits Of A Highly Profitable Business
No matter how successful you are in making sales and providing an amazing service.
If you want to have a profitable business you need to make profit a priority because there are always things to spend money on…
The good news are that there are some habits that you can start right now which result in constant profit and you paying yourself more!
Here are some habits that highly profitable businesses have:
1. They Look and Plan Ahead
When people think of accounting and business finances they think of recording transactions: receipts, invoices, etc…
Whereas this is important (boring but important!) because you need to have the records, what are also doing at the same time is collecting data.
The thing is that most people collect the data but that’s it, they don’t do anything with it.
Instead they keep it all in a spreadsheet until the end of the financial year, at which point they send it all to their accountant, who then take another month to use that data to create their financial statements: The Profit and Loss Account and their Balance Sheet.
Well, guess what: that is too late…! Those figures don’t have much meaning by then…
Instead what you need to do is: every end of quarter you plan the following quarter.
A lot of people plan their sales for the quarter but they don’t go deep as to include their direct and operational costs and by doing that they are not planning to making a profit…
Three months is not too long a period of time that you can’t predict what your costs may be and once you see there listed, costs and revenue you will be able to have much better clarity on what you need to do.
2. They Check Their Figures Once A Month
After the plan for the quarter is done, as the months go by, you will then check what you forecasted to what actually happened.
This way you have the change of challenge the assumptions you made when you were doing your planning.
You will also be able to take corrective actions on a timely manner.
The sales were not as great as you expected? No problem, you delay the website retouches you were planning to the following month and make sure that you are still profitable this month.
3. They Pay Themselves First
When your business was smaller and your operational costs were quite low, it was okay not to have a clear separations between your money and your business money.
If you needed some cash and there was money on the business bank account you would take it…
Or if the business cash flow was running low you would take money from your personal bank account and put it back in your business.
As your business revenue grows, the costs will also grow and therefore it becomes trickier to cover cash flow shortages.
That is the time for you to start paying yourself first.
In order to do that you can use the planning you made to calculate the percentages that you need to allocate for each area: operations costs, taxes and paying yourself and then keep within these percentages.
The reason why you do that first is because if you leave the money in the account there will be always things for you to spend money on…
Therefore you need to make sure that before you find something else to spend money, you are paying your business’ most important employee: You.
4. They Split Their Money in Different Bank Accounts
In the same reasoning as the above, to remove temptation, move from your main bank account, not only your salary but also the other money which is not really yours: your taxes.
Make an estimation of what they will be and as you receive revenue on the account, move your salary to one account and the taxes to a different account.
Leaving on the operations account only what you need for paying operation costs.
This way you are making sure that you always have enough for everything you need.
If that resonates with you and you fancy having a planning session for you to use these strategies in your own business, book a complimentary call with me.
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