Growing a small business from a little start-up to a sustainable revenue-churning machine takes practice, and building an ideal company means the owner has to evolve alongside their venture.
The best financial plan is adaptable, and many small businesses are founded by young entrepreneurs looking to carve a niche for themselves. If this is the case, making the right changes over the years is a potentially difficult task, with some serious ramifications for the wrong decision.
Therefore, sustainable growth is formed in the early stages of an enterprise, and thinking ahead is always recommended.
Planning for the Next Decade
Successful entrepreneur Will Schroter recently contributed to Forbes magazine regarding some helpful tips for small business leaders. He explained the benefits of preparing when aging, and the lessons he learned at a younger age would have been extremely helpful later in life.
Sound financial tips involve learning from the trials and tribulations of other start-ups, and the first place to start is with a little focus. For example, Schroter’s first company, Blue Diesel, was widely successful and grew to make $2 billion in sales. That early victory prompted him to expand into some other ventures, and at one point, he was juggling five at once.
Naturally, it didn’t work as well as the first time because Schroter lost focus. Younger generations of entrepreneurs are ambitious, but while being a 20-something business leader is great, blind faith that everything will succeed isn’t always the best idea. A decade later, it is time to take all the hard knocks and apply the lessons to the business world.
Create a financial plan focusing on one company at a time, or hours could be wasted on a business that isn’t going anywhere while a potentially good idea sits idle.
Financial services are designed to help small businesses, and using these properly is critical to success. Even though there are many tools to help a company, solid financial gains are not instant.
Everything takes a little time, and Schroter pointed to giants such as Google and Amazon, each taking multiple years to reach their current status.
Take a Realistic Approach
Dorian Boyland was once a Major League Baseball player, but then he became an entrepreneur and did quite well in the automotive industry, according to Black Enterprise magazine. His financial tips include setting realistic goals and planning.
“Don’t forecast or make projections based on guesswork or anything that you haven’t seen yet,” Boyland told the magazine. “All of your projections and forecasts should be based on prior history, of prior performance.”
In addition, many small business owners can get ahead of themselves. While optimism is great, don’t let it dictate the financial plan. Instead, keep debt low, and Boyland recommended a 1:1 debt-to-equity ratio. He explained that a company could suffer if the debt level ever exceeded the equity amount.
Prolonged financial growth requires some key steps along the way, and one solid idea for sales-oriented jobs is to provide salary incentives. Boyland explained that pay should reflect a percentage of profit, which will keep employees motivated for continued success.
A small business owner should take control of his or her finances, which means accepting responsibility for the bad times instead of relying on others to maintain positive gains.
“Those things, as an owner and operator of a business, should be 100% solely dependent on you,” Boyland told the magazine. “You can always change the players but you cannot change your goals and operations, and controls, and the things you want to accomplish.”
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