Whether you’re looking to cash out in a year or two or looking to stay self-employed for another couple decades, you need to look at the ability of your business to go the distance. You’ll want to have a marketable product or service that is in demand, efficient delivery channels, and much more. Add to that list a solid cost structure built upon the following principles:
- Make sure you have sales targets and that you’re hitting them, quarter after quarter and year after year. How do you determine your sales targets? A breakeven analysis is a good place to start. By determining your breakeven point, you’ll know how many coaching sessions, speaking engagements or consulting gigs you need to sell in order to cover your overhead.
- Increase your efficiency. For every hundred dollars that you’re bringing in, how many dollars are going out to overhead expenses? Do you even know? Once you calculate that figure, you might be motivated to see where you can cut out any unnecessary expenses or get more out of the services you decide to keep.
- Learn what financial controls are and make sure they are in place in your business. Small business fraud and employee theft are more common than we like to think.
- Diversify your services and products. You know the old adage, “Don’t put all your eggs in one basket!” As one service faces market saturation or simply sees a drop in demand, you should have other, complementary services to resell to your existing customer base. You can even begin upselling some of these services to your current clients. This isn’t simply an opportunity for growth, but also a defense against concentration risk.
- Don’t be afraid to invest in infrastructure, both in your office and in the cloud. In our increasingly “virtual” world, it seems you can run your business off of an iPhone and iPad and ignore that “Equipment” line on your balance sheet. In fact, you need to keep abreast of technological improvements and be ready to invest in new technology to keep your business running. Think about backup systems, security software, and even something as simple as a scanner.
Not sure where to start?
Interested in learning more about breakeven points, internal financial controls, or concentration risk?
Take a look at our newest offering, Virtual CFO Services. This new service takes our existing Virtual Bookkeeping service and kicks it up a notch, managing the whole financial picture for your small business. Contact us today for more information!
Deb Howard Greenleaf, EA, CEO and Principal, of Greenleaf Accounting Services provides virtual accounting and bookkeeping services and specializes in financial management to consultants, coaches, solo professionals, and other small business owners across the US. Deb is an Enrolled Agent (EA)—an IRS-licensed tax professional—and specializes in small businesses and entrepreneurs filing Schedule C or as an LLC. As an Advanced Certified QuickBooks ProAdvisor, Deb spends her day in QuickBooks Online and specializes in providing QBO support.