How Big Do You Need to Grow Your Business For Self-Sustainability?

How Big Do You Need to Grow Your Business For Self-Sustainability?

Paths to Your TargetIn the past few weeks I have had several small business owners who I’ve met with that were interested in creating self-sustainability in their business.  They loved the idea that the freedom and independence which they wanted when they first started their business could be close at hand.

They, like most business owners, thought their business revenue needed to be $5 or $10 million annually in order to get there.  This is the big fallacy. Many believe a business needs to be enormous in order to develop self-sustainability. This is not true at all.  It just needs to be built right!

So, how big does your business need to be in order to be self-sustaining?  That’s the wrong question.  The right question is, “how much do you want your business to pay you even when you’re not their?”

Calculating Your Revenue for Self-Sustainability

The answer to this question is different for everyone.  Here are a few examples that we can use to show you how to figure it out for yourself.

One owner beginning to realize that they haven’t saved anything for their retirement decided they wanted $500,000 annually at retirement.  Their business has returned a net profit of 20% – 25%.  So, if we divide $500,000 by 25% the business needs produce $2 million in revenue annually.

Another couple wants to go off and do something else in their life.  But after spending more than 10 years working the business, they don’t want to just walk away.  They only want $60,000 a year.  The business has been retuning an average of 17% annually.  Calculating for this situation ($60,000 / 17%) shows the business only needs to be $352,941 in annual sales.

What’s your number?  It may surprise you!  I find that it is way less than what most small business owners think.

The problem is most small business owners are working their business for an income – like a job.  Or, they may think they’re just going to sell their business and retire.  Problem is neither is really focused on building the business so it runs by itself, without them there.  Under this scenario, objectives become different and I find business owner achieve more, faster.

Additionally there are some incredibly positive benefits from building a self-sustaining business:

  • Protecting your family’s financial position
  • Reducing your business’ overall risk
  • Increasing revenue and profitability
  • Maximizing your business’ overall market value

What’s holding you back?  Not sure how to get there or afraid of the unknown.  This blog will help you understand what to do and how to create self-sustainability.

If you are struggling with the fear of the unknown contact DE, Inc.  One of our consultants can help you understand what growing self-sustainability in your business can mean for you to help you get past the fear.

 

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