Writing this blog sometimes puts me on mailing lists that I don’t recall subscribing to …
But, I am usually pleasantly surprised by what I see (if not, the <delete> key is a quick’n’easy solution) … so, I am usually quite happy to see some ‘surprises’ in my in-box (please don’t send me Viagra ads or other spam!).
In February when I pulled together all my financial information for taxes, I had an “ah ha” moment. I spent too much on my business last year! My profits would have been much higher if I had been more conscientious about my spending.
Here is how you should look at your business …
… exactly as you would yourself!
That means that your business also goes through three stages:
Making Money 101 – where your business is struggling to get ahead; not making as much as it should.
You need to apply exactly the same money-saving and budgeting techniques as you would for yourself. Here is what Leigh Ann recommends:
It hit me like a ton of bricks, that I need to apply these same [Making Money 101] principles to my business. I need to budget each month and only make purchases that I can pay cash for. I must admit that I have sometimes been a little loose when making purchases for my business, rationalizing that I could “write it off.” Now, I am thinking about every penny I spend.
I agree … 99%.
But, you should NOT be stingy about any expense that DIRECTLY helps you grow your business (that means that you can track the $1 that you spend today to at least $2 to $3 earned within your current financial period, say, no more than a few months to a year).
Because it is this thinking that will take you into:
Making Money 201 – where your business is doing better than breaking even … now it’s full steam ahead!
You are saving money and watching costs, sure. But, you have realized that there is something that you can – and should – be doing that produces a far better result than mere cost-cutting …
… that is, accelerating your income!
Cost-cutting is limited in scope … you can’t cut more than 100% of an expense.
Income-earning is unlimited in scope … the sky – nay, the stars – are the limit!
But, when the income is the greatest, you need to watch your costs even closer because bad habits – leading to hidden gotcha’s – creep in.
It is the Making Money 101 habits that will help you survive the increasing drain on your cash-flow that uncapped growth can bring.
If you do, may be one of the lucky ones who ends up in:
Making Money 301 – that idyllic stage where the business is floating in orbit, spinning off cash, controlling costs and just being … well… damn profitable!
Watch out for stagnation, though, because this is where product life-cycles wind their course, competitors come in, commodity pricing appears.
The secret to Making Money 301 is NOT to sit there for long … either:
But, it all starts with a business that survives the Making Money 101 stage … unfortunately, the odds are against you.
But, Leigh Ann has a great Making Money 101 tool to help you out:
Here is her Where do I $tand Worksheet …
Why don’t you try it out?