Is it possible to grow your business AND stay profitable? Yes! But you need to understand your numbers and create an intentional financial plan in order to set yourself up for success. You’re going to cycle through phases of growth and stability in your business - growth mode and profit mode - and whatever phase you’re in, there are a few key things you need to do to grow your business without losing all your money. It all comes down to being proactive vs. being reactive by being intentional about how you handle your finances.
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First off, what do we mean when we say, "grow your business profitably?"
Usually, people mean two things - first, you are able to continue paying yourself a salary while some of your other expenses are also increasing.
And second, you're making investments to grow that ultimately pay off, and aren't a waste of money.
Realistically speaking, as your business grows, sometimes your profits dip because you have to spend money on hiring a team, or taking on a project to improve some element of your business, or to work with a coach or mentor. In a lot of cases, it takes time to see the payoff from these investments!
There are a few things I think you need to do in order to navigate seasons of growth.
Have a financial plan
Having a plan for how the numbers are going to work is key for being proactive, instead of being reactive and getting caught on your heels.
Your business is going to go through phases of growth and phases of stability. During those times of stability, you need to make sure that your business is profitable so you can sock away extra cash!
Then, when you head into a phase of growth, you have a cash cushion that helps you to afford your big investments. And you have a financial plan for which investments you need to see the biggest return.
Learn how to manage your money
As your business grows, you'll have more and more moving parts and more cash to manage.
Do yourself a favor and set up solid financial systems when you're in a slower phase so that when you bring more dollars in via sales, they end up going where you want them to go rather than flying right back out the door.
Learn how to manage your mindset
With more growth and cash flow swings, your mindset has got to be solid.
Otherwise, you'll end up feeling more stressed and anxious as you navigate the ups and downs.
Growth mode certainly has challenges - you go through a lot of changes, sometimes things don't work out the way you planned, and you have to stick to your long-term vision despite the setbacks. Sometimes cash flow gets tight and it can be easy to get stuck in a scarcity mindset or sabotage your plans, so you have to learn to be the ship in the storm.
And profit mode can have its own mindset issues too! Having the discipline to maximize your cash, not spend money on things you don't need, and allow your business to work for you can be hard for entrepreneurs who thrive in times of uncertainly and who love to problem-solve.
Check out this week's episode of the podcast to hear a deep dive on these three steps to growing your business profitably.
In this episode, you’ll learn:
03:40 Why business growth doesn’t necessarily mean profit growth
08:40 Growth mode vs profit mode: what’s the difference?
13:55 How I learned to recognize when I was in growth mode vs profit mode
17:44 Three plans every business owner needs
21:25 Manage your money so your dollars go where you want them to go
27:32 Manage your mindset
29:40 Make a long term plan and revisit it.
31:16 How do you turn your cash flow into $100K in wealth?
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I’m Sarah Young - a CPA, Virtual CFO, and the Owner of Young + Co! I have over a decade of experience in helping entrepreneurs scale their businesses and build wealth at the 6- and 7-figure levels, and I started the Profit + Prosper podcast to help you do the same. Profit + Prosper is a business finance podcast created to help entrepreneurs build their wealth in a way that’s fun and empowering. This is NOT a boring numbers podcast - I will share tactical tips to increase your profit so you can truly prosper in your business and in life. I hope you’ll subscribe so we can Profit + Prosper together!
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