Do You Really Need To Grow Your Business? Help Your Business Serve You!
As business owners, we want to succeed. For most of us that means growing and scaling up the business to bring in more money. We put our head down, work hard and take on as much work as we can.
Everyone you talk to and everything you read says grow the business and the world will be your oyster. New doors will open, financial freedom will be yours. All you have to do is “grow”.
Pretty soon “growing the business” loses nearly all meaning. You’re serving the business, feeding it, scaling and it becomes a habit. Everyone is working like hell and you enter a never ending cycle of thinking “if only turnover was $200k…$500k…$1m…..$3m…..$5m…..”.
There has to be a better way?!
A New Way of thinking…
You could keep trying to scale and work your backside off with no real reason to, other than to grow the business. Or, you can try to understand your needs better so that your business works to achieve your ideal lifestyle!
So, how can your lifestyle tell you how big the business needs to be? How do you know what the optimum size is for your business and, more importantly, how much you need to earn from it?
When I started as a partner in a firm of Chartered Accountants in London in the early 1990’s I never asked myself “How much do I need to earn?”. I just took on pretty much any client, no matter what the fee and the time impact it had. I just thought that I had to earn.
It took me a few years before I learned that I needed to understand my lifestyle, not just at that point in time but what I wanted it to be in the future. Once I did, I quickly learnt to concentrate on what I needed from my business, not what I thought my business needed from me.
Identify YOUR Needs – The 3 Step Process
If the idea of identifying YOUR needs seems like a totally foreign topic, you’re probably not alone. So many people become so engrossed in their business that taking a minute to think about what they actually want can seem like a scary prospect.
It’s not hard to figure this all out and make your business work for you though. In 3 easy steps, you can get a whole lot clearer on where your business and your lifestyle meet.
Assess your lifestyle
Assessing your current and future lifestyle can be as easy as creating a simple spreadsheet that calculates all of your expenses. Don’t think of this as just bills you have to pay though. Include all the fun stuff you do or want to be doing in the future (hence why it’s a “lifestyle” calculation rather than an “expenditure calculation).
If you’re unsure what to include as lifestyle expenses, start with household costs (rent, rates, power, mortgage etc.), living expenses (clothes, food, kids toys etc.), modest forms of entertainment (cinema, theatre, sports, dining out etc.) and holidays.
When you feel like you’ve covered everything, divide this figure by pay periods or weeks, months etc and that’s your lifestyle cash requirement!
To make things even easier we’ve created a simple lifestyle cost calculator to help clients understand exactly where their money is currently going.
Assess your business
Next you need to assess the current profitability of the business. To make this easier, you’ll need a current profit and loss report from your accounting software.
You need to take a look at your business costs and split them between fixed, variable, opex, materials etc.
Once you’ve checked your current financial position you can compare that to your lifestyle cash requirement and easily see what size business and revenue you really need.
We’ve made this process even easier by creating a business size calculator for clients. Simply plug in the figures and it will automatically do the calculations for you.
Identify optimum size
Now you should be able to easily identify the optimum business size to meet your lifestyle needs.
If turnover is below your lifestyle requirements, work on reducing business expenses and increasing margins BEFORE trying to grow. Try to find ways to run lean and be more frugal with expenses.
If turnover is above your lifestyle requirements, then work on efficiencies, systems and processes so that you can delegate to others. Streamline processes so that you have a better work/life balance.
Imagine yourself a year from now, no longer beholden to the hamster wheel that is growing and scaling a business.
Instead, the two of you are in harmony, each getting what they need from the other rather than always demanding more. Your business is serving you at a level that provides the ideal work/life balance.
A business and an owner, both with the same goals – yours!
If you feel like you need a little more help with these steps, I made an easy to follow video walkthrough of the lifestyle calculator and a video explaining how to use the business size calculator as well.
Still feeling overwhelmed? We can help you work through the process. Book a call today and get some clarity on how your business can serve you!