Last week I wrote about the idea that in a business you don’t need to be making millions upon millions to feel financially successful. You can feel that now. Or that by adding one more sale or one more goal or one more dollar isn’t going to help you feel financially free (sometimes it can help, but most times it doesn’t).
Why? Because financial success and financial freedom are well, feelings. They focus on the quality of life, not the quantity of some thing in your life (and how to get there differs for everyone.)
In my own life, I know that to feel more freedom or success does not relate to me putting ONE MORE TASK OR GOAL ON MY TO-DO LIST. Can you relate?
This concept is so important because I’ve seen million dollar businesses be financially frazzled (and sometimes go bust) and 5-figure businesses be calm and clear about their financial decisions and feel like they’re killin’ it. And I have noticed that the path to up-levelling your business can be much smoother, if your finances are well-understood (transparency is priceless!) and managed (mindful choices are key 😉)
Feeling great about money is not about the dollar value.
So if you’re looking at the women in biz next door and are wondering why she’s all chilled about her financial ‘stuff’. Then this article is for you. Oh, and the last article is for you also (you can get it here). In it, I wrote about the first step to feeling wildly, financially free.
And the two key steps to get there are… drum roll please.
Cash flow management and Profitability!
I just heard a lot of accountants cheer, but maybe not business owners. Please, stick with me here…
To read all about ninja Cash Flow tactics that you can do even today. Go here.
And to find out about PROFITABILITY in your biz, you’re in the right place.
Profitability matters because it the vehicle to making money, remember profit essentially is income less expenses. And the more income you have compared to expenses, the more money you get to take home. The more choices you have. The more freedom you have to run your biz and life in a way that suits you. And then you’re no longer relying on selling more and more to build a financially successful business.
So here are my tips to nail more PROFIT:
Price for profit from the BEGINNING
Don’t wait to see what’s leftover at the end. It is an actual component you need to factor in to the price of your product, and even move it aside when payment is received so it doesn’t get spent on other biz items.
Make sure you know and set a price that is well above your break-even point
This means adding up DIRECT COSTS + OPERATIONAL COSTS (rent, wages, tech, etc) + TAX + a portion of YOUR OWN TIME/WAGES (if not already factored in as other wages). Cover everything you spend money on, what you sell needs to cover all expenses (at a bare minimum). Then price above this.
Review your prices twice a year
This is important because as the year progresses, I see a lot of operational expenses increase. More sales can mean more tasks to be completed. There may be new staff or freelancers, additional costs as your customer base grows or an increase in subscriptions to tech as you grow your business. You need to adjust your prices to reflect this, otherwise you’ll be recouping the cost of these from other places. Usually it’s the biz owners wage that decreases when times are tough, and nobody wants that!
Your present prices, need to be able to fund your future business!
At times your prices need to have a margin to fund new projects. Let me explain.
So you’re looking at rebranding and building a new website. If you’ve priced your offerings pretty ‘lean’ where will you fund this from? At the moment, you’re working 60 hours/week. You know you need a new staff member. Where will you fund that from? Your price today, needs to contribute to funding your business of tomorrow.
I get that at times you feel that you can’t increase your price any further, you may need to build in profit another way. Either through expense reduction or efficiencies. But these, my friend are a topic for another day!
Just know that when you allow a margin for profit in your business, you not only start to change the way you feel about money, but you will see your business truly begin to thrive. This is because business owners that have clarity around their prices + profit, not only feel well remunerated by their business, but they start to make more strategic and aligned business decisions.
Let me know your thoughts below on how you plan to feel more financially free in your biz. How can you factor in more profit in your biz? Would better cash flow management and more conscious-driven profit in your biz help you feel more financially successful for you?
P.S. If you’d like help in your biz going through some of these ideas to feel financially free, contact me, I’d love to chat!