We’re in business to have a business, which means making sure it’s profitable year over year. And even better is when your business grows over time–either slow and steady or more quickly.
Like anything in life, you get back what you put into business. If you nurture it with the right actions and tools, it will flourish. If you ignore parts of it, you’ll struggle.
One of the most difficult parts of business to talk about is the money side. There’s a lot of (needless) shame in talking about or focusing on money, which means that business owners are more reluctant to reach out for help when they need it. Instead, they ruminate and stew on it until eventually it negatively impacts their bottom line. Or maybe things are going really well and sales are up but they don’t have a plan in place to ensure their money is taken care of.
Getting long-term results requires putting a few good practices in place and repeating them over time. Do you have what it takes to make it in the long game?
Have a Plan
Sports teams have game plans. Athletes have training plans. Therapists prescribe therapy plans. Even recipes are plans. You need a plan for your business and for your money.
For your business, know what your future plans are and then plan backward from there. Ask yourself:
- What do you want your business to look like 10 years from now?
- What does your business need to look like in 5 years to realize that 10-year plan?
- What should your business look like in 3 years to set yourself up for that long-term plan?
- What needs to happen in the next 2 years to be on track?
- What do you need to do in the next year to set yourself up for success?
You’re essentially backing into that long-term game plan and creating benchmarks at different stages along the way. Then you can plan the next four quarters and, eventually, the next three months.
Knowing what needs to happen to get to where you want to be is critical.
Your plan should include revenue goals, income goals for yourself (owner’s pay), team growth, and more. If your ultimate goal is to build a business to sell, taking yourself out of the day-to-day is important to show that the business can run without you. That requires a lot of delegating and setting up standard operating procedures and systems so that everything is replicable.
Having a plan also includes being consistent with your marketing and your money, which helps you to bulletproof your business in the future.
All businesses go through stages of growth and contraction (or stagnation). It’s part of the process and both stages are necessary.
Sometimes you’re in growth mode, adding clients and team members, building out new offerings or systems, and adding new technology. This is an exciting time, though it can strain your finances and your patience if not done right.
Other times call for contracting back or standing still so you can take the time to cross-train team members, build out more processes, get clearer on your messaging, or even just take a breather for a bit. We don’t always get to choose when we contract, but when you feel it happening, take advantage of it.
Through it all, consistency is key. Consistency in your money management, your people management, and your visibility and marketing.
As a Profit First certified bookkeeping business, we think that managing your money right is the ultimate key to success. No matter your revenue, you can be profitable if you watch how you spend and keep your monthly distributions within the recommended percentages.
If you’re new to Profit First, we recommend downloading our free Profit First Overview to help you get started.
If you’ve been using Profit First for a while, it’s important to maintain consistency in your distributions and avoid getting complacent in what you’re doing. That means reassessing your Profit First distributions on a quarterly basis or any time there’s a big change in your business or the market.
Reassessing includes one or all of the following:
- Start from scratch and determine your target percentages based on your current revenue.
- Look at your OPEX account to see if there’s any surplus there. Determine what led to that surplus and start slowly reducing the OPEX. Maybe put the surplus into an Advanced Account for something like a continuing education class or as a buffer to hire more team members.
- Reevaluate your Owner’s Pay to determine if you’re paying yourself too much or, more likely, not enough. You deserve to earn a living wage!
- Talk to your accountant. If you’ve had a big revenue change in either direction, you’ll want to make sure that you don’t also have big changes to your tax liability too. Protect yourself and your money.
There are other money systems you can implement beyond Profit First that will really help you dial in your finances.
Team Management & Compensation
If you have a team, consistency is key no matter what stage of business you’re in. And this is especially true if you’re growing a business to sell. You’ll want to nurture team members who know the ins and outs of your business and who care about its success as much as you do.
That’s not always easy to find. Fair and competitive compensation is a good place to start.
Since payroll is one of the expenses that your revenue must cover, having the right pricing for your services is vital. If your pricing doesn’t cover the cost of delivering the services, you’ll run out of money in your OPEX account every time you run payroll. So be sure to analyze your expenses regularly to keep them in check.
If you’re considering your first or next hire, you will want to have one month’s worth of employee salary as a buffer in your payroll account before you bring them on board. Determine what that figure is, and then try to transfer 2-3% from OPEX into the payroll account each month until you’ve reached that figure.
The length of this process will enlighten you as to whether hiring someone now is feasible. Did it take just a month or two to accumulate that one-month salary buffer? Then you can probably afford to add that employee. On the other hand, did you struggle to make available 2% from OPEX each month to transfer to the payroll account? If that’s the case, you need to rethink your decision.
And once those new team members are on payroll, leverage them! It’s hard to do, especially when you’re not used to having help. You start to realize that no one does things exactly as you do. But that’s not necessarily a bad thing!
Once you grow to love your team (as we know you will!), you might start to think about different ways to compensate them. Some wellness business owners like to pay team members–whether they’re employees or contractors–based on a percentage of their revenue.
You can also compensate your team by giving them a portion of your profit bonuses. That money will come directly out of your profit account when you take your quarterly profit distributions. That should not be included in their livable wage pay. That money should be considered a bonus to encourage them to help you become more profitable in your business.
Of course, the only way you can make sure your team understands and is actually helping you be more profitable in your business is to be completely transparent with your numbers. This is also something we strongly encourage. You should be sharing some sort of numbers with your team, at least monthly if not weekly. This will allow them to see where the business is and what they need to do to get on track to receive their bonus. These bonuses also work to encourage your coaches to reduce expenses wherever they can.
And don’t forget that your team should include your money team. We recommend a tax professional, an accountant, and a cash management coach as well as someone to help you with personal and business investments. It pays to have your money taken care of!
Your Marketing Plan
If business is doing well and you’re steadily growing, maintaining consistency in your marketing plan will help it stay that way. Visibility is important and even though you might feel like your client roster is full, staying in front of your ideal clients will ensure that doesn’t change. And once you have the visibility you need, nurturing the people who are following you is key.
Looking at the marketing and nurturing piece, what are you doing to stay in touch with your customers and clients or the people who might be interested in your services but aren’t ready to buy yet?
You’re reading one of the things we do at Fit For Profit to maintain that connection. We publish regular blog posts, send weekly emails, and are active on social media to help educate and nurture our audience. We stay in front of people so we’re the first on your list when you’re ready to get more support in your business.
But creating content in this way is just one part of the equation. It’s difficult to get noticed online these days, even with the best search engine optimization strategies. That’s where the visibility piece comes in.
Getting in front of other people’s audiences, on a consistent basis, helps to ensure that you’re constantly bringing new awareness to you and your business. This looks like applying to speak at summits, doing in-person and virtual trainings and talks at conferences, appearing on other people’s podcasts, attending networking events, etc.
And when you show up in front of other people’s audiences, it’s important to have a way for audience members to connect with you. Do you have a free offer that you can give them in exchange for their email addresses? This ensures they get value from their interaction with you and that you can reach them again, in their inboxes, where you can give them more value.
Marketing is not something you should consider only when you need to drum up some business; it’s something businesses need to do for the life of their business. Consistently.
In the end, having a plan and maintaining consistency in your execution is what will determine the long-term success of your fitness or wellness business. And when something shifts in your life, business, or the market, shift along with those changes. Being flexible throughout the process ensures you don’t stagnate and become irrelevant.