How Profitable Should Your Business Be?

As an entrepreneur, you have worked hard to get your business off the ground. People measure success in different ways but in business you need to at least be profitable to have a sustainable business for the long run & to receive bank loans & investors. You ought to even be able to enjoy the fruits of your labor of affection without 80-hour work weeks. So ask yourself the following questions to measure the success of your business.



How Do You Rank Against Your Peers?

Are You Able to Pay Your Bills?

There is always someone trying to capture your customers. You need to be aware of what is going on in your industry & competitors to make definite that you are providing the best product or service offering to your customers. This can be achieved by periodically determining the way you measure up against the industry & competitors in the areas of market share, revenue growth, customer growth & share of promotion voice. Share of promotion voice can be through net site traffic, pay-per-click promotion, newspapers ads & other types of promotion.

This ought to be a simple calculation in case you have the right systems & processes in place. You ought to not must wait on your outside accountant to decide profitability. You need to have something in place that you can gauge quickly the way you are doing financially so that you can quickly make adjustments if needed.

In case you are not profitable or are not hitting your profitability goals, then you ought to (one) review operations & make them more efficient, (two) review expenses & eliminate unnecessary ones or find less expensive options such as insurance & (three) create new revenue sources or increase number of customers through strategic promotion efforts.


There's plenty of reasons why you became an entrepreneur. Possibly reason was to maintain or better your lifestyle. You ought to be able to comfortably pay yourself from the proceeds of the business. In case you are struggling to pay yourself, then you need to execute a number of the recommendations in the earlier section to increase revenue and lower expenses.

Are You Able to Comfortably Pay Yourself?

Given the long hours and stress of owning your own business, you need to do a gut check and make sure you still love what you are doing. You need to make sure the work is worth it. If everyday you detest what you are doing, it is time to make a modify.

Are You Still Happy Being an Entrepreneur?

In case you cannot basically answer these questions, you may need a part-time CFO on a project basis to help you measure your profitability and put the right method in place. These are things you ought to be able to answer. Loftis Consulting, a Chicago-based boutique firm, offers these services to small and mid-size businesses to help them get to and surpass their profitability goals.

There's plenty of other measure of success, but this will get you started on measuring the profitably of your business, personally and financially so that you can either grow your business or exit. Whatever you select, make sure it is the right decision for you.