Your business makes millions - congrats! Are you keeping any of it?
Great business owners get rich. They are successful in business because they know how to run the business end of their business.
They pay attention to managing the money - not just managing sales or fulfillment.
They work at creating sustainability. Sustainability always comes from knowing what you are doing and measuring your progress.
Not so good business owners don’t keep as much as they should.
Businesses don’t run themselves. The goal of owning a business isn't just to be successful, it’s to be successful and stay that way.
The goal of businesses is to make money selling a product or service AND keep a generous amount of money as profit and cash. So you can enjoy your life.
Sadly most business owners focus only on the next sale or launch. They spend less than an hour a month looking at their numbers. In my experience, there is a direct relationship between how much time a business owner spends with his numbers and the number of digits they have of profit.
In my experience as a fractional CFO there are 3 things business owners that are making millions need to be doing to KEEP money:
1. Spend at least an hour a week reviewing your financial statements. Specifically the Profit & Loss statement and the Statement of Cash Flows.
2. Meet with your bookkeeper at least once a month to understand all the costs coming OUT of the bank account.
3. MEASURE MEASURE MEASURE. Measure your financial results, identify the activities that are sabotaging them and then know how to correct those mistakes so that the results you desire can be achieved. This should be done weekly as well.
Learn the language of business! Do you know what that language is? It’s ACCOUNTING. Accounting is the process of converting business activities into numbers and reporting them on accounting reports. Every business on the planet. Regardless of size, has to account for its sales and account for its expenses to the government. Hence the term!
Ultimately, how much you have to spend has very little to do with what you make and everything to do with what you keep.