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?

There is always somebody trying to capture your customers. You need to be aware of what is going on in your industry & competitors to be positive 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 marketing voice. Share of marketing voice can be through web-site traffic, pay-per-click marketing, newspapers ads & other types of marketing.

Are You Able to Pay Your Bills?

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 pricey options such as insurance & (three) create new revenue sources or increase number of customers through strategic promotion efforts.

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 select 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.


Are You Able to Comfortably Pay Yourself?

There's lots 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 require to execute a number of the recommendations in the earlier section to increase revenue & lower expenses.

Given the long hours & stress of owning your own business, you require to do a gut check & make definite you still love what you are doing. You require to make definite 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 require a part-time CFO on a project basis to help you measure your profitability & put the right system in place. These are things you ought to be able to answer. Loftis Consulting, a Chicago-based boutique firm, offers these services to tiny & mid-size businesses to help them get to & surpass their profitability goals.

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