Many small businesses are advised by coaches and consultants that business growth will fix their cash flow issues. I do not agree with that. In many situations that could be the worst advice and may even lead to the closure of the business. That is why I didn’t grow my small business. Today I share 3 things you should be aware off when it comes to growing your business.
You have all heard the old database quote: “Rubbish in, rubbish out”. That rings true to business growth as well.
The point I want to make is that if you are not ready and prepared for growth then it can ruin you easily with more cash flow issues.
So before you grow your business pay attention to the following:
Grow my small business #1 Know where you are bleeding money
Review your cost structure and make sure that what you are spending money on is bringing you a return or at least is not an expense with no purpose. If you spend money on something it should DO something for the business now, or in the very near future.
Grow my small business #2 Know where you are making money
Most small business owners have NO IDEA of what their profits on a job or product are. I have met people who have not costing on their product in 5 years and still run the same prices even though pricing from suppliers have gone up by more than 25% over the same period. Make sure you are making money and if not like you should, review.
Grow my small business #3 Simulate
Sit with your accountant and do a simulation to see what the effects of a bigger business would be. You might end up in higher tax bracket and that could erode all that you gain.
And that is why I did not grow my small business and I am proud of it because I stopped and prepared for growth first.