It's time to focus on profit not just revenue
It is easy to focus on revenue, wanting to hit £100,000 is one of the goals many of is set as we first set out.
But what does this mean in terms of your profit?
As your business grows, and you enter the rapid growth phase, likely so are your costs.
You need a copywriter, a marketeer, a freelancer, employees..... etc!
These costs are often vital to your business growth but it is also vitally important that you don’t lose sight of what profit you need from your business to enable you to build wealth for yourself.
Revenue is important, but it is the profit you make that fundamentally defines your success.
How to hold on to your £100,000+ revenue
Become wealth aware inside and outside of your business.
Naturally we want to outsource the things that takes our time and energy. And we are told to this "if you don't enjoy it or want to do it, outsource it".
I don't disagree with this to a certain extent, but we often ignore the things that don't come easy or we dislike, like our money, and outsource the responsibility of your money to our detriment. we often we don't want to do be doing.
Knowing your numbers isn't something that a growing entrepreneur should completely outsource. Yes have a book keeper and an accountant, but it pays dividends for you to keep a watchful eye on your cashflow and your profit continually, not just at tax year end when you need to give the accountant what they need to do their bit.
By becoming wealth aware, aware of what is coming in and out, you can get a handle on what you need to do to plug any gaps, and you can get ahead. But importantly you can plug those money leaks when you have the chance to, before it is too late to do anything about it.
Workout what profit you need to make to fund your lifestyle
We say, often promoted by social media, we want £10k months, or a £100k business, or a multi six figure business..... this is success. Or maybe you tell yourself that you want to earn what your corporate job paid you, a subconscious limit to your earnings potential, or just a goal that feels achievable because that is what you are used to earning.
Instead of being defined by what others tell you should be making, go back to the drawing board. Work out what profit you need to hold on to, after tax and expenses, so you can pay yourself the correct amount to fund the lifestyle you want to lead, as well as funding your financial future, aka your pension.
There are two numbers you need to work out for this:
Your financial freedom number, which is the monthly amount you want to spend on the lifestyle you want to lead.
Your financial independence number, which is the amount of money you need invested to fund your financial freedom in the future when you no longer need to go to work.
With these two numbers you can work out easily how much profit you need to make, and then back solve how much revenue you need to bring in.
Give your financial goals meaning so you can pay yourself first.
Decide how to invest the profit you make as your business grows
As we are on autopilot 95% of the time (as shown by scientific research) we naturally lose the act of making conscious decisions each day, about how we spend and invest our money.
This leads to us taking on expenses that we aren’t completely aware of. It leads us to invest in another course, to make us worthy of being paid, even though we don't really need it.
We then invest our profit on things that aren't aligned with your business and personal goals.
You need to make a conscious decision on how you will invest your profit, like knowing how much you want to pay into your pension and how much to invest that will genuinely grow and scale your business to that next level.
Be the 5% and decide for yourself.
Don’t leave working out your profit to tax year end
When we don't take ownership of our numbers and we leave it to tax year end, it leads to hidden and unexpected costs and tax implications that may have been avoided with a bit of planning.
Planning or having a wealth strategy, isn't a nice to have, it is a must as you scale and enter rapid growth. The impact is huge and you need to ensure you are in control of your money.
Do you need a wealth review?
Arrange a complimentary wealth review HERE.
Whatever stage of business you are at there is a way of working with me. I am passionate about helping business owners navigate these challenging times and not losing out by not taking any action at all.
If you’d like my business owner guide to wealth you can get your hands on it HERE.
Don’t waste your time and be the one in 10 years' time saying ‘I wish I had…..’.
Emma Wright, a Chartered Financial Planner and Certified 'Vouched For' top-rated Financial Coach.
This isn’t financial advice, it is education. I do not know your personal circumstances and I do not know what will happen moving forward.