Small Business Set to Succeed

How do you define success? Money, power, fame, relationships, simplicity, complexity, responsibility, achievement. Success is as individual and unique as each of us when considered on a personal level. Business success can be unique as well, but typically three milestones can be used to gauge the success of your small business. For many success won't happen over night, but with consistent focus and application of good business practice results will begin to show themselves. Here are three common measures with which to compare your business's progression. Affirmation #1: You Break-even From idea conception to business plan, financing, start-up, and successful selling and operations, your business has begun to stabilize and cash is finally starting to come in as quickly as it goes out. If you have calculated your "burn rate" (the amount of capital you will "burn" through until revenue equals or exceeds expenses) successfully there will come a time when the business will begin to stabilize. Sales have become more consistent and a customer base is beginning to build. Many of the inefficiencies early in the start-up have been identified and improvements made. Momentum is building and for the first time it looks like the amount of money your business takes in will match what you pay out. You officially BREAK-EVEN. Of course the ultimate goal of any good business person should never be to break even. But as any entrepreneur can tell you, the moment your business begins to consistently break even things change dramatically. The business is no longer burning investment capital and is beginning to self sustain. Pressure begins to subside as it easier to make payroll, purchase materials, and pay vendors. A growing client base reaffirms that your business is viable and that you are doing things right. Break-even is a HUGE milestone in any small business progression. At the break-even point I suggest the following: 1. Celebrate - recognize the achievements of the individuals and teams that have contributed to the success of the business. Without going overboard, take some time to single out individuals and thank them for their contributions and acknowledge the role each person played in the success. 2. Reflect- look back at what worked, what didn't, and make adjustments for the next phase the business is entering. 3. Plan - now that you have gotten to break-even, set a plan in place that will rapidly propel you towards your next goal of profitability. Without proper planning many businesses can get stuck at the level of break-even. This may be fine with team members that are paid regardless of company profitability, but ultimately entrepreneurs and business owners are rewarded for their efforts out of profit. It is imperative that you don't allow the break-even success to lull you to sleep. You may wake up 2 years later and still be breaking even! fold-phones fold-phones fold-phones fold-phones fold-phones fold-phones fold-phones fold-phones fold-phones fold-phones fold-phones fold-phones fold-phones fold-phones fold-phones fold-phones fold-phones fold-phones fold-phones fold-phones fold-phones fold-phones fold-phones fold-phones fold-phones fold-phones fold-phones fold-phones fold-phones fold-phones fold-phones fold-phones fold-phones fold-phones fold-phones fold-phones fold-phones fold-phones fold-phones fold-phones fold-phones fold-phones fold-phones fold-phones fold-phones fold-phones fold-phones fold-phones fold-phones fold-phones fold-phones fold-phones fold-phones fold-phones fold-phones fold-phones fold-phones fold-phones fold-phones fold-phones fold-phones fold-phones fold-phones fold-phones fold-phones fold-phones fold-phones fold-phones fold-phones fold-phones fold-phones fold-phones fold-phones fold-phones fold-phones fold-phones Affirmation #2: You Pay Yourself an Honest Wage In the early phases of many small businesses the owner will forgo a consistent reasonable wage and will often take a minimum salary to slow the "burn rate' of investment capital. Noble, and often necessary in the business infancy, the second milestone in any small business occurs after break-even occurs in conjunction with the owner taking a salary commensurate with what the open market would pay for the service. What does this mean? If you would have to hire someone to do what you do as a business owner, what would that salary be? Often the responsibilities and roles of the business owner would dictate a premium in the labor market paid only to the top percentage in each industry. As an owner, once you are able to pay yourself a salary comparable to what you would earn on the open market to perform similar tasks for a profitable company, you have affirmed milestone #2. Affirmation #3: Consistent Profitability Your business truly becomes successful when you can begin to consider it an investment. Whether you continue to work in the business for a wage or not, at this stage the business is consistently beginning to realize profits on a consistent basis. As profits are realized and cash flow improves, as a business owner you reach the third and final milestone in any small business. Freedom of choice. Now that your business earns a consistent profit you can choose how much and how often you want to work in the business. At this point you are able to afford a general manager that can handle the day-to-day operations and you have the choice to "work on the business" exploring improvements, relationships, and education, instead of "in the business" performing daily job tasks. At this stage in business development things are stable and your initial "risk" has now turned towards reward. With a stable business you can choose to continue to hold ownership in your portfolio, or you can look to market your business for sale and consider cashing out. Whatever your final desire - ultimately freedom of choice is yours as you choose to work in the business, manage and own the business, or sell the business and move on. The path of any successful entrepreneur follows these three common milestones of development and achievement. What stage is your business at and what things need to occur for you to move forward?