Growing a small business from a little start-up to a sustainable revenue-churning machine takes some practice along the way, 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, then 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
Recently, successful entrepreneur Will Schroter contributed to Forbes magazine in regards to 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 for 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 a number of other ventures, and at one point, he was juggling five at once.
Naturally, it didn't work as well as the first time around, 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 of the hard knocks and apply the lessons to the business world.
Create a financial plan that focuses on one company at a time, or else 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 bit of time, and Schroter pointed to giants such as Google and Amazon, which each took multiple years to reach their current status.
Take a realistic approach
Dorian Boyland was once a Major League Baseball player, then he turned entrepreneur and did quite well in the automotive industry, according to Black Enterprise magazine. His financial tips include setting realistic goals, and plan ahead.
"Don't forecast or make projections based on guess work 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 level of debt ever exceeded the amount of equity.
Prolonged financial growth requires some key steps along the way, and one solid idea for sales-oriented jobs is to provide salary incentives. Pay should reflect a percentage of profit, explained Boyland, and that will keep employees motivated for continued success.
A small business owner should take control over his or her finances, and that 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 percent 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."