Business growth is a challenge for many small business owners. I frequently find the reason for their struggle is they are focused on the wrong objective for their stage of business growth. All small business owners should be focused on accomplishing 3 things and in this order:
You see business growth is systematic. Therefore the objectives are already set. You need only apply the formula and your business will grow. Now, I won’t tell you that it is easy to do. But, it is simple and not a mysterious secret that only certain people can decode. If you are willing to do the work, just follow the recipe and success can be yours.
Consistently Achieve Breakeven
Breakeven is your first goal toward business growth. While it seems pretty straight forward, you’d be surprised how many small business owners struggle with breakeven years after they have been in business.
Consistent breakeven means you can pay your bills every month. The problem is most small business owners don’t know how it happens and cannot systematically make it happen month after month.
For example if you know we need 3 customers every month to pay our bills, then what is your plan every month to make sure this gets done, step 1, step 2, step 3 and so on.. Once you have defined the process train someone else to do it. It happens automatically and you don’t have to worry about it ever again!
When you accomplish this you now have achieved the existence stage of the small business growth cycle. Now you can focus on the next goal – profitability.
Increase to Steady Profitability
Profitability is your next focus. Once you know you can pay the bills consistently you need not worry about this any more. Next, focus on what it takes to be consistently profitable every month. This should be pretty simple if you already know what it takes to breakeven add one more and you’re profitable.
So, how profitable do you want to be? Do you have the excess capacity to sell to create this level of profitability? And, what step does it take (step 1 step 2, step 3, etc.) in order to consistently create this profitability month after month.
Again, once it’s defined train someone else to do it; stop worrying about it; and move on. At this point you have achieved the survival stage.
Scale the Operation
Now that you can systematically pay the bills and create profitability, growing your business is just scaling the systems you’ve already create! This can get tricky. Because as you add more resources, it cost you more to run the business, thus your breakeven might change. But, if you’ve already mastered this formula it’s just adjusting it to work on a bigger scale.
What I often find is because small business owners have mastered the first two systems when they get to this stage the business stagnates. The reason is the formula has changes but they never understood the formula in the first place. So, they get here and don’t understand why it isn’t working any more.
Once you’ve figured out how to adjust your formulas for breakeven and profitability as you grow then you’ve achieved the success stage of the business growth cycle. At this stage you have created independence for yourself. You can grow the business or just sit back and it will generate a comfortable income for you and your family.
Where are you at? Do you understand how to create consistent breakeven for your business? Or, have you moved on to profitability? If you’ve figured out these formulas for your business share how you got there. This is a journey every entrepreneur will take. Sharing your journey may help someone else navigate the process more easily.