People in any economic state in life can start a business. They can invest a handful of dollars or several hundred, and start turning a profit. With that said, there is a difference between a rich and poor business owner: the rich owner knows how to read the numbers and analyze them, and the poor business owner can’t use those numbers to turn a higher profit.
The fact is even if you are a viable entrepreneur, you may not necessarily become rich, in either salary or time. In fact, A good number of business owners have to work day and night, without showing much of a financial return for their personal ventures. In fact, we have seen at DeepSky that entrepreneurs are the lowest-paid people when they start a business.
How Small Business Owners Become Rich
Track Relevant Metrics And KPIs
All good business owners keep track of Key Performance Indicators, also called KPIs. Let us reinforce that there is no universal KPI that applies to all businesses to ensure their success. With that said, there are certain metrics that can assist with that to set appropriate goals for the next business quarter. If you want to be rich, then you have to prioritize increasing personal wealth, by increasing your company’s profitability. The numbers will assist with that part.
First, always track your net profit overall. You don’t have to start big and calculate profit for every project or department. Small businesses are small for a reason; you should calculate the total for the business.
Second, you need to calculate your owner’s salary and separate it from the net profit. An owner’s salary can potentially distort your company’s financials because it can be a higher percentage. We use the example of an owner earning $120,000 a year from a company that is earning 1.5 million in revenue; that percentage can negatively affect your business strategy.
Organize All Of Your Costs, Salaries, and Expenses
Everyone needs to be paid in your company, from the maintenance crew to the office manager. The vendors and suppliers that provide the material you need to make the products are also important. You need to pay them on time.
Late invoices are one common problem for small businesses. Sometimes a supplier may not send it on time, or your accounting department is not on top of the issue. While you shouldn’t let a vendor bully you into paying, organize all of your bills.
Provide A Genuinely Valuable Product Or Service
You need to make yourself valuable to your customers. While you and your competitors may be selling similar products, your business can still gain a competitive advantage. This can apply to generic products such as notebook paper, or specific ones including laptop cases. What makes it valuable is that it solves a problem or fills a dearth in a customer’s life.
Does this mean that a product needs to be life-saving or crucial for an individual? Not necessarily. Items that may be seen as frivolous, such as Netflix and Redbox, become more valuable during different times when people need entertainment. Evaluate markets to see what people are demanding, and either provide what they need or solve an existing problem.
Build customer relationships and personal branding can also make a difference. If you can ship handwritten notes to frequent buyers, or send email newsletters related to their interests, then the customer knows that you care about them.
Improve Your Cash Flow With DeepSky
DeepSky wants to help business owners reach the next level with outsourced accounting services. Our Financial WingmanTM program is ready to provide business strategies and financial advice tailored to your business needs.
Reach out to us today to get started. At DeepSky, we can create wealth and make you and your business partners happy. Let us take you beyond passive income and help you earn more money, with less of a time investment.