You are an entrepreneur with passion and purpose but what about the third P? It’s time to focus on profitability. It’s time for you to become a highly profitable entrepreneur.
As a professional in Corporate America, one of the most coveted achievements is to hit the 6-figure mark. So, when I finally reached that milestone in my career, I was over the moon happy. However, being in the 6-figure club didn’t manifest itself the way I anticipated because I was not focused as I needed to be on savings and telling our money where to go. Once we embraced transforming our mindset and money habits, our bank account changed as well.
The same holds true for many business owners today as well. In an age where the focus is on making money (the revenue side), with little emphasis on taking money (the profit side/your bottom line), I want to declare that it is time to reset. To run a successful and thriving business, both revenue and profits need to remain top of mind. Revenue is cash flowing into your business but can easily be cash flowing right back out the door in expenses if you are not careful. Profit on the other hand is money in the bank and future capital for growth and expansion, and generational wealth that you can pass on to your children’s children. 2021 is the year to begin running a highly profitable business and I am going to share with you
HOW in 3 key steps.
(1) Have a clear vision for profitability in your business
(2) Develop a business plan that supports running a highly successful and profitable business
(3) Prioritize profits and take action with gazelle intensity
HAVE A CLEAR VISION
There is power in vision. Your vision is where you see yourself being. Where you want to go. To make it specific to your business, your business vision is where you see your business in the future. What do you as a business want to be known for? Your big picture vision is your destination. Your destination has to be clear. Only when you are clear on where you are going and where you are today can you map out the route to get there. And only with that clarity and roadmap will your business thrive.
You have to know that you have the power to dictate what your future looks like. You have the power to dream and aspire to what you want to become as a company. The same way, you have the power to decide how profitable our business will be. Have a clear vision for profits not just revenue. This will enable you to identify and follow through on strategies. This will keep you and your team focused and motivated. This will help you to think long term rather than short term. Your vision for profitability matters.
DEVELOP A BUSINESS PLAN
Many business owners run their business on a wish and a dream because as Antione de Saint-Exupery said “a goal without a plan is just a wish.” So, let’s discuss the plan. A good business plan not only helps business owners focus on the specific steps necessary to keep their business from failure and move it towards success, but it also helps the business to achieve short-term and long-term goals, including profitability.
Think of your business plan, which does include your profit plan, as a roadmap. Now, we know that you can set out on your journey without a map. But you will most certainly get to your destination faster and with less hassle of getting lost if you had a clear map. So, why even start out without that map? If you have been operating without a clear fully developed business plan. I challenge you to change that immediately. Consider right now the time for you to get to the head of the line by laying a firm financial foundation in your business and increase your chances for success and profitability.
Don’t follow the thinking that your business plan is an extensive waste of time document. That is not true. It provides clarity. It helps you make critical decisions in your business. It helps you iron out kinks. It helps you avoid the big mistakes. It moves you beyond passion to a viable business model. It helps you set better objectives and benchmarks. It causes you to think through your competitive advantage. It helps you to secure financing. And it simply serves as your guide. Don’t move forward any further in 2021 without a business plan.
PRIORITIZE PROFITS AND TAKE ACTION
Profit is the key to basic financial survival and accumulating profits over time is the key to long term success and building wealth. You must take action to accelerate your vision and your plan to drive profitability.
A few years ago, I was introduced to the book Profit First by Mike Micalowitcz and learned to flip the accounting formula from revenue – expenses = profits to revenue – profits = expenses. The money piece of your plan includes pricing your products and services, how revenue is generated in your business, how recurring revenue has to be a part of your successful business model, and as Profit First teaches, how to allocate that revenue once it comes in. What will you put aside for profits? What will you pay yourself? What portion gets put aside for taxes? How much do you allocate to operating expenses? This profit prioritization strategy forced us to think about profits even before we bring revenue in. That has changed our business and our clients’ businesses as well.
All the questions above need to be answered as part of your plan ahead of time so you are ready to take action and implement when revenue is generated. You cannot wait for revenue for the plan. The plan will help you make the money and keep the money. Nelson Mandela said “Vision without action is just a dream, action without a vision just passes the time, and a vision with action can change the world.”
I know you are about changing the world evoke so much more change by running a highly profitable business. Ready? Then let’s recap: have a clear vision, develop a business plan, and prioritize your profits and take action to accelerate that vision and plan. Then and only when will you be on the road to becoming a highly profitable business.
About Dr. Ranelli
Dr. Ranelli A. Williams is a Certified Public Accountant, financial educator and profit strategist, best-selling author, and award-nominated speaker, empowering service-based entrepreneurs to take control of their money as they work towards building a strong financial legacy.
She co-owns a tax and accounting business, ERJ Services (www.erjservices.com), along with her husband Eric, helping their clients organize their financial data so they build a strong financial foundation, prioritize cashflow and profits, and strategize to pay only the minimum legal taxes.
She is also the founder of R.A.W. Legacy Solutions (www.ranelliwilliams.com) as well as Profitable Entrepreneurs Network, a community of career professionals turned service-based entrepreneurs who are looking put a solid financial structure in place so they can focus on getting paid for doing what they love and building their business to 6-figures and beyond. Her ultimate goal is to help her tribe experience continued growth and expansion, keep their hard-earned dollars secure, and build a debt-free legacy.