A Profitable Business Starts with Knowing Your Numbers
I have spoken with hundreds of business owners over the years and one of the first things I have to do with people who want to join our Content Boot Camp is give them a wake up call about what it takes to run a profitable business.
99% of the time, when I ask their revenue goals and then follow up by asking about their life and business goals, there is a giant gap between the two.
It goes something like this:
Me: How much do you want to make per month?
Them: If I could just get to $5k / month that would be amazing.
Me: What are some of your life goals in the next 3 years?
Them: I want to be able to travel twice a year with our family of four and I’d love to retire my partner.
Me: And what do you want your business to look like?
Them: I’m really bad at (bookkeeping/marketing/sales) so I’d love to hire that out. And I definitely need a virtual assistant to handle tech and admin work. And I only want to work 20 hours/week so I can spend more time with my family.
Me: Mmmmm… (doing math in my head). That’s not a $5k/month business, that’s more like a $20-$30k/month business.
Know Your Profit Goals from Day 1
I’m not suggesting that everyone has to have giant money goals or that you can’t start small and grow.
But you need to have a serious come-to-Jesus about what is realistically possible based on your vision, goals, and needs. And far too many of the business owners I speak with have never even sat down with a spreadsheet to figure out what their basic life and business expenses are so they know what they need to generate in their business.
- Do you need support in an area you’re not good at? How much will it cost?
- Do you want to invest in growing your skills with something like Content Boot Camp?
- Do you need help at home to have more time for your business?
- What software do you need to run your business?
- Do you want to donate part of your profits to help organizations you love?
These are all considerations that should go into your revenue goal planning.
If you do this work, you will have a much better idea of how much you can afford to invest in your business in order to reach your goals.
Making Revenue is Not the Same as Generating Profit
Another common epidemic in entrepreneurship is the broke business owner who is generating lots of revenue and spending it all just as fast. ??♀️ No judgment cause I’ve been there! At some point you have to commit to growing into your next level and becoming profitable.
When you’re ready to do that, a book like Profit First will be immensely helpful!
In the meantime, I made a short video to show how you can very simply start to get a handle on your own numbers. I even included my essential software recommendations for service-based business owners and the current pricing for each.
Special thanks to my friend Megan Hale and her Money Map tool for inspiring this post. Megan is a certified Profit First Professional focused on helping business owners make Feel Good Money. Definitely follow her if you want another great perspective on growing a sustainable business.
- Profit First: Transform Any Business from a Cash Eating Monster to a Money Making Machine by Mike Michalowicz
- Megan Hale - Profit First Professional
- Content Boot Camp