As a business owner, it’s very easy to work on your business; it’s what we do. We put focus on trying to grow and build it. You must stop and realize that the business must also work for you. Though you may not have consciously realized it, it’s one of the reasons you began one.
People don’t see the behind-the-scenes. They aren’t there when you’re grinding away in your office, car, or house, working on your ideas before hunting down the next opportunity. We live off the concept that we must get business to have a business. The fact is that a lot of people fail because they aren’t aware of the commitment and drive it takes to build a company. Regardless of how great an idea is, it’ll never ripen without the work mentioned above.
Ask anyone who has succeeded. They’ll tell you that success comes alongside ignoring the rejections while still driving forward. In the wake of setbacks, they get up, go to the event, resubmit a proposal, or knock on another door. If you appreciate what it takes, then you must also structure your business so that it gives back what you put into it.
Building A Roadmap For Your Business
The first is whether you have a business plan. Some people will quickly respond that they have a business plan because it’s what they built their company on. If you’ve ever met with investors or asked for a loan, you know firsthand how important they are. But what about now? You should redo your business plan every eighteen months. You and your external circumstances will change.
A business plan is a roadmap. A surprising number of business owners don’t think about where they want to go and how they will get there. Yes, it’s a basic concept, but people get so caught up in the day-to-day that they separate themselves and take the time to write down where they see their business eighteen months from now. Your business plan forces you to look inside yourself and assess where you are and where you want to be—as an individual.
Remember, a business should serve you. If you don’t know what you want, how can you create a company that will do it? You’re not here to serve your business. There are seven parts of a business plan:
- An executive summary of your business
- A description of your company
- Your products and services
- Market analysis and research
- A strategy and how it gets implemented
- How your company is organized
- A financial plan
These components force you to think about where you’re going and how to get there. Understand that this is a roadmap and will change in 18 months.
Should I Pay Myself First?
This may seem obvious, but it’s more about when you pay yourself. You own a business to be profitable. It supports the things you want to do personally. If you’re paying yourself first, then your business is running you. Don’t get me wrong, reinvesting money in your business is essential to growth. It shouldn’t come at the expense of paying yourself. Question whether you are the master or the servant.
Easier said than done. In certain months or quarters, the cash isn’t quite right. You look to keep the lights on making payroll. You figure you’ll be ok. The problem is that this mindset becomes a pattern. One book I highly recommend is Profit First by Michael Michalowicz, which outlines a straightforward cash flow management system. While there are many similar systems, the key takeaway is to find one that works for you and stick to it. The profit-first method divides all income into separate accounts based on predetermined percentages. For example, if $100 comes into your business, you might allocate 10% to a profit account, 5% to a tax account, and 40% to an operating expenses account. This practice ensures that you constantly set aside funds for essential areas, such as taxes and profit, before covering expenses.
By consistently following this approach, you create a financial cushion for your business. The exact percentages apply during high-revenue months, so your accounts continue to build. This cushion supports you during slower periods when revenue might be lower, providing stability. Additionally, profit first emphasizes paying yourself by making your salary a fixed expense in your budget. This ensures that you prioritize your compensation as part of your business's overall financial plan rather than treating it as an afterthought.
Stop Letting Your Business Run You
For the next blog in this series, we’ll look at two other questions you must ask yourself. The Griffith Law Group protects your business. We’ll guide you through disputes, litigate when necessary, and serve as outside general counsel. Schedule a free consultation to learn more about how we can help you and your business.