How often have we heard the words “Financial Freedom, “and do we really believe it is possible for us, especially if we are Business Owners? We know that others seem to have achieved this lofty goal either through hard work, a thrifty approach to finances or by some incredible stroke of luck or rare entrepreneurial genius.
We have read articles on Financial Literacy and seen that many have taken back control of their finances and learned the basics of Financial Mastery, after they lost their life savings, suffered a major setback or just went broke.
Can it be achieved by ordinary mortals and more specifically by us? Well, the answer to this question is a definite YES!
In essence, there are a number of steps to achieve Mastery.
Firstly you need to get a grip on your Business Finances and have a long, hard, analytical look at these; without doing this all your other steps will fail. You might well be bringing in sales to a sinking ship, simply increasing the load without calculating the profit.
Secondly, you will need a far better handle on your time management, because most business owners also struggle with TIME; this is because they are constantly putting out fires without any real deliberate action or plan in place.
Thirdly, as they invariably have no written plan in place and just fly by the seat of their pants, they battle to get the right employees and team members believing that no-one is as good as them and that it’s not possible at all. Thus, what’s needed is to get a really sharp and tailored team recruitment system in place.
This first step of gaining financial awareness is a vital step and the start of securing the cash flow needed and profitability required that will enable them to invest for growth. In any business planning model it usually runs like this- Growth, Funding and then Exit if they have had strategies in place.
When any of us start a business, mostly we are satisfied if we can pay the bills, have a decent holiday once a year and get continuing work. More often than not, we fail to plan for a bigger picture or a brighter future; in short, we fail to plan.
It can be dangerous not to take stock of where you and the business are at financially, and certainly keeping an eye on Financial Mastery is ongoing.
Know the percentages, such as, what are the wages as a percentage of sales/revenue, what are the wages as a percentage of net income, what is the gross profit margin, what is your break-even point every week and so on? Are these figures in line with the Industry benchmarks? If not, do something about it.
The most helpful business approach carries with it the absolute necessity to ask the real questions a Business Owner needs to hear, and to help them build a picture of how profitable their business could be if they took the steps needed.
Without asking all these questions, business owners often labour under the illusion that all they need is more Sales and not more Financial Control.
Cheers
Chris Borrett
