Is your business built on the wrong foundations?30th April 2019
If you’re building a shed in your garden, you can build it on a slab of concrete. It does not need deep foundations.
But if you’re building a skyscraper?
In many cases, the foundations can go down 50 metres or more.
Well, that’s what Google tells me, anyway. I wouldn’t rely on my measurements if you’re in the building trade.
But the principle is solid. You wouldn’t build a shed on the same foundations as a tower block, because the latter needs to support a much heavier load.
And it’s much the same for your business.
In my last few articles, we’ve been talking about the first step in our 3-stage process to build a business you love.
Together, we develop a really detailed vision of what your business will be like if it’s going to work for you, make you happy and support a lifestyle you really want.
Once we’ve done that, we move on to step 2.
That is getting to work creating that business - starting with the foundations.
Now, you probably know what the foundations of a building look like.
But what foundations do you need in place, if you’re building a business?
Like so much in life, it comes down to money.
Hiring and training the right people, buying the right equipment, securing the right premises, getting raw materials to create your product, marketing to your ideal customers --- it all takes cash.
Money is the lifeblood of your business. You need it to grow.
If you don’t have enough for any reason – or if it just doesn’t come in fast enough – then you will stall. And if you run out of money completely, then you go bankrupt. Game over.
Now, if you’re aiming to run a £300,000 business, then you’ll need a relatively modest amount of cash to fund the necessary pieces of the puzzle.
But if you’re aiming to run a £10 million company?
Well, you’ll need much deeper foundations… Or should I say, pockets.
You’ll probably need bigger premises, a bigger team, possibly more equipment… And all that costs a lot more.
You might have to secure significant funding to build that company, or to become much more profitable much earlier.
But having the right foundations to build your business involves more than simply having oodles of cash.
It is just as important to have efficient financial systems and processes, which will stand you in good stead as you grow.
For example, if you are going to be invoicing lots of clients, you need a process in place to make sure they pay you on time.
If you are constantly chasing clients for payment, you will end up with no cash and no business.
Again, there is a big difference in the mechanisms you will need in place, depending on whether you are invoicing 15 clients (can possibly be done manually)…. Or 400 (You will need a bigger team and lots of automation).
You also need good cashflow reports. You can’t safely invest all that money in your business without a clear view of how much money will be in your account tomorrow, next month and in two months’ time.
Again, if you spend all your cash prematurely, your business is finished.
But a small business with relatively stable cashflow can survive with fewer such reports than a large business with large fluctuations in income and outgoings.
There are actually dozens of financial systems and processes you’ll need to run your business smoothly.
Exactly what you need to have in place will change, depending on the type of business you are aiming to build.
The bigger and more ambitious your vision, the more sophisticated the systems have to be to support it.
When we work together to implement our 3-step system, we spend several months putting in place the exact financial foundations you need to build the business you want…
…Whether that is getting much clearer financial information…. Or upgrading your accounting software…. Or working out a more profitable pricing structure…. Or securing funding… Or making sure your accounts are actually correct…..
….And often all of the above!
Then you are ready – ready to start building a business that you enjoy, instead of one that stresses you out…
A business that suits your lifestyle, rather than one that has you working day and night, doing work you resent….
And one that brings you the real, long-term financial security you crave.
To find out more about how our 3-step process can help you build a business you love, get in touch with me today.
And watch out for my article next week, where I’ll explain the final step in the process!
PS. The last thing you want is to start building your £10 million business…..
….Only to discover, a few years down the line, that you only have the foundations for a £500,000 business.
That is when you will find yourself struggling to afford the equipment you need to serve more customers…. Wishing you could launch a big marketing campaign, but the money just isn’t there…
Working more hours than you really want to, doing work you have come to hate, because you just can’t afford the additional staff you need to free yourself from the day-to-day drudgery.
If that’s the situation you already find yourself in, it’s not too late to change course.
We can still help you develop a clear vision for your business – and then put in place the financial foundations you need to build it.