At Fit For Profit, our mission is to support businesses, especially those in the wellness sector, in achieving financial success through intelligent money management. Your wellness business started as a dream, and to see that dream crumble due to avoidable financial challenges is heartbreaking.
Even if your business feels like it’s booming (revenue is up, your client list is growing), there could be underlying signs hinting at financial instability. It’s important to recognize these early so you can take measures to correct them.
1. Reassessing Salary Structures: The Balance of Pay and Growth Evolving Pay Scales with Expanding Business
In the early days, paying yourself $150k from a $300k business might have seemed appropriate. However, as your business grows to pull in revenues nearing $1m, that initial salary could now appear stagnant. A stagnant salary in a growing business can hint at an imbalanced revenue allocation. It’s crucial to periodically reassess pay structures to reflect the current business demands, responsibilities, and growth trajectories. (This is one of the great things about using a money management system: It does this work for you!)
2. Financial Equilibrium in Business: Why Consistency is a Game-Changer
As business owners, allocating funds for both owner’s pay and profit shouldn’t be an afterthought—it should be a given. This isn’t about short-term financial gratification but about establishing a pattern. Consistent allocation not only provides stability but also ensures your business adapts smoothly to changing financial landscapes. Of course, the amount you’re allocating will change over time depending on your revenue; the given is that you’re making the allocations every single month.
3. Retirement Reserves: Thinking Ahead for a Secure Future
Receiving a consistent paycheck is comforting, but it shouldn’t end there. A significant oversight many entrepreneurs make is neglecting retirement planning. If your end-game plan is merely selling your business, remember, the future market is unpredictable. Incorporating retirement savings within your financial strategy guarantees a cushioned future. Make this part of your regular money management routine.
4. Diversification: The Strategy to Overcome Dependency
Reliance on a single client, vendor, or even offering can be risky. As businesses evolve, so do partnerships, teams, and business structures. Ensuring you’re not solely dependent on one revenue stream or supply chain is pivotal. Diversifying your business relationships and offers is your safeguard against the unforeseen ebbs and flows. Of course, having a safety net set aside is a huge plus too (keep on reading)!
5. Tax-Time Tranquility: Planning Ahead to Avoid Surprises
The very mention of ‘tax season’ shouldn’t spike your blood pressure. If it does, you’re likely unprepared. The solution? A systematic approach to finances, allowing you to earmark tax allocations well in advance, ensuring tax-time is a breeze, not a storm. Setting aside a small amount every month and knowing what your tax burden might be is the key to a stress-free tax season.
6. Growth Challenges: Scaling Up with Clarity and Strategy
Ideas are the backbone of business innovation. However, ideas without execution remain daydreams. If you’re brimming with growth plans but aren’t sure how to get there, it’s indicative of a financial planning gap. Growth needs funds, strategy, and precise execution. It’s frustrating for everyone involved to constantly feel like you’re sitting on your hands because there’s no money to grow.
7. Preparation for the Unpredictable: Building Your Safety Net
Unplanned expenses, be it equipment malfunction or sudden overheads, are inevitable. Without a dedicated emergency fund, these become major setbacks. By ensuring you have a reserve, you’re not only securing your business but also fostering a proactive rather than reactive financial approach.
8. Investing in the Future: Financial Blueprint for Upcoming Ventures
Determined to kick start another business idea? Many entrepreneurs are multi-passionate: once they’ve launched one business, they get the bug and want to start another. But, without the financial wherewithal, these ambitions may falter before they even start. Keeping your present business robust while accumulating reserves for future endeavors ensures you’re always one step ahead. (Yes, you CAN have one business fund another…if you have a plan.)
If any of these signs sound familiar, it’s important to take note and find a way to make changes before you truly feel the financial crunch. At Fit For Profit, we’re not just about identifying problems; we’re about crafting solutions. Let us help you create resilient financial strategies, propelling your business to its pinnacle of success.