My business coach, Nikki Wild, talks of the ‘brick walls’ you face in your business – there is more than one. With the right planning and some financial security, you’ll still face them but your traverse across will be much smoother.
After the initial start-up phase, many business owners will hit the first brick wall when they start making good profit and the amount of money in the bank account grows. It delivers a false sense of security that the cash will always flow.
The business owner starts splashing the cash on themselves rather than investing in the business. They get a more impressive car, have better holidays, wear sharper clothes and premium watches. The children get sent to a fee-paying school and the family home is upsized.
In essence many of these changes to the personal wealth become regular payments and therefore the day to day living costs increase. A bigger mortgage, multiple car payments plus family expectations of better-quality holidays, more exclusive resorts and lavish gifts can quickly drain all the extra disposable income.
But what that business owner hasn’t contemplated is the next brick wall. It’s going to come and if you’ve indulged too many regular treats, this is where many become unstuck because when it’s time to pull in the purse strings – it’s harder and hurts more.
Never live to your means
The sensible solution in business is to develop a secure emergency fund. This should be enough to be able to pay your business and personal bills for at least 3 months. Then, at the end of your financial year, if there is some left money over that’s when you can indulge in the treats.
Upgrade the car, have a more exotic holiday (when we can), or do some home improvements. One-off payments that you’re not tied into having to regularly pay out for. There is much more of a sense of achievement when you can pay for something out right, rather than continually paying it off.
It also means that when that brick wall is in sight, you don’t have to worry about the financial implications. You can concentrate on the challenges in hand and steer your business in the right direction.
Life after selling your business – Keep the end in sight
Developing a well-rounded business in terms of processes, accreditations, people, customer service, sales and marketing will stand you in good stead for when you are ready to exit your business. This will potentially make your business worth more and means you will be in a much better position to face the many brick walls you will encounter along the way.
If you’re considering getting your business exit-ready and need help with your business growth strategies, give Brevity a call on Basingstoke 01256 53600 or Brighton 01273 286771 to see how we can support you.