Are you uncertain about the level of success you achieved? There's a quick way to get an overview of your finances.
Not enough companies run a profitability analysis - a defining indicator of profit. Such an analysis relates to costs and overall revenue and it can provide insights into how a business runs.
The occasional analysis can also indicate if it's time to make some changes.
Maybe some clients require too much time for the money. Perhaps there are other opportunities around the corner that you can jump on.
Either way, it should be on your list of tasks if you want to ensure long-term business growth. And here's a simple blueprint to follow for a successful profitability analysis.
Two of the most important variables in a profitability analysis are gross and net profit margins.
You can get the gross profit margin by knowing your sales revenue minus the cost of labour.
For the net profit margin, you must subtract all expenses from your revenue to get the magic number - the margin - and then divide the previous result by your revenue.
Don't forget to look at the segment profits, too.
Odds are you offer a suite of services that each has its own revenue stream. Take the numbers for each segment, subtract the costs, and include overheads in your calculation.
If you do this, you get a more detailed insight into how money moves in your business.
Here, you must look at each client and figure out how much each of them brings.
Performing a client valuation essentially means to determine the worth of each client. So, subtract from the revenue all of your costs, such as marketing, hourly labour, travel expenses, and so on.
After all, you want to find out the costs of keeping each client satisfied.
Some clients may not pay a lot for your services. But you may have a better profit margin with them if their projects take very little time from you or your team.
Maybe you have good cash flow. But it's possible that when you draw the line, there's not a lot of profit in it.
A thorough profitability analysis looks at past quarters over the years.
Although your current numbers may look good on paper, you need something to compare them to if you want to know where you stand.
Your numbers only mean something in the context of your niche. It’s because profitability numbers aren't the same in accounting as in health care, education, e-commerce, etc.
If you look at your past and current numbers, you can figure out your business's progress so far. But what about compared to your competitors?
What about your position in relation to the market?
Always be sure to check average industry ratios to give you a better sense of where your company is as opposed to where it should be.
A good profitability analysis can help curb anxiety when it comes to your business. At the same time, it can tell you what you should be doing to improve and grow it.
If you ever find your business lacking direction, remember that an analysis can help you spot issues that you couldn't otherwise.
It’s a game changer.
Four Ways to Reduce Costs and Boost Your Profitability
Not sure why your bottom line isn’t pretty? Sometimes, overspending can hurt your profitability despite your record sales.
Profitability doesn’t only come from sales numbers. And a profitable business isn’t always the one with the most customers and the highest sales.
The sign of a business profitable depends on what’s left in the account at the end of the month or the fiscal year.
It’s important to account not only for the money coming in but also the money going out. That’s why cutting costs is one of the best ways to boost profitability… assuming that you do it right.
Sellers of products are most concerned with raw material costs. That’s why increasing profitability can be as simple as lowering manufacturing and or development costs.
You’d be surprised at how much this move can make your business profitable.
Is there something in your business that you can replace with an automation system?
Have you considered hiring a VA as opposed to an on-site assistant?
Reducing the amount of money spent on wages can also boost profitability when you draw the line on your finances. So, evaluate the daily tasks that your team members perform and look at some of your own duties as a business owner.
In today’s environment, outsourcing is one of the best ways to cut costs. It’s also one of the smarter ways to hire as you may have access to a wider pool of experts.
Properly executed, you can lower costs and maintain a high level of quality with outsourcing.
Many businesses are overpaying for marketing.
For example, hotels may work with a variety of travel agencies even though a couple of them may be bringing in the bulk of the bookings.
In that scenario, it may be a good idea to drop the non-performers.
The same principle applies to all other expenses and services. If you pay for things and they don’t end up improving your business or what you offer, these may be expenses worthy of the chopping block.
Needless to say, this would affect your bottom line directly.
If only cutting costs were simple, right?
Most business owners don’t know where to start. If you’re one of them, it’s ideal to start by performing an internal audit of your finances.
Identify where all the money comes and goes and decide what you can or can’t cut.
Many industries work with vendors, which happens to be a great area to look at if you want to boost profitability.
You may already know that it’s possible to renegotiate vendor contracts, though it’s easy to be put on the back burner. Getting better deals, however, doesn’t always have to involve other vendors, as you can also leverage your relationships with existing vendors.
You can even consider changing service providers and utility contracts.
You don’t have to make massive cuts in a single department. Even small amounts add up to significant savings if you make enough of them here and there.
These tips are particularly helpful to anyone operating a cash flow-dependent business. That said, they apply to both B2B and B2C companies looking to boost their bottom lines.
Cash flow forecasting can show you the ups and downs in your business. If you want to know what action to take, this is one tool that can help.
A few budgeting tips here and there might help you remain profitable in the long run. And they can even help you achieve success.
But beyond the tips, one of the surefire ways for you to reach your goals through cash flow forecasting.
This is a tool that gives you a pragmatic projection of where your business is heading. This then puts you in a perfect position to take action in whichever situation demands it.
Of course, it has some additional benefits, too.
The cash flow forecast targets three particular entities:
It offers a fair amount of visibility and control over a business’ finances. A good projection, albeit still rough, can build confidence in all of the entities above.
Owners can see if they’re on track. If not, they’ll know when and how to take action.
For instance, investors can see the current standing of a company. A cash flow forecast may persuade them to put more funds in and help jumpstart new projects.
Banks, meanwhile, may use a cash flow forecast to assess the liquidity of a business. The health of this forecast can be the difference between getting and not getting a loan.
A cash flow forecast may even help you renegotiate your rates, thus improving your cash flow and financial stability.
Both good and bad decisions come from the top. As a leader, you want to make as many good decisions as you can regarding your business, yourself, and your team.
Before you take any action, it’s critical to know how money moves in your company.
But here’s the thing - you can’t always rely on current or very recent data.
Cash flow forecasting takes into account a lot more information from the past months and years. And the final report can give you a better idea of what’s going on with your business.
Right now, you may think that you have had a great three-month stretch.
But what if it’s an anomaly? What if you can’t rely on the same numbers for the next quarter or the one after that?
Forecasting helps you gain much-needed perspective. At the same time, it forces you to think strategically about your next move.
Ideally, this is a job best left for a company’s CFO. But in a small business, other people can handle it.
If you have an accountant, they should be able to manage your cash flow and build a forecasting model.
And if you have finance experience, you can even do it on your own. That’s probably best since you’re already the one that has to put the information to good use.
As your business grows, you’ll want to assign the task of cash flow forecasting to your finance team.
If you see warning signs of falling cash flow, forecasting may help. It can let you know what’s wrong and where to take action to prevent the same thing from happening again.
Small businesses often put off hiring an accountant until they’ve grown bigger, but that’s a mistake that can actually delay growth. The services of an accountant extend beyond simply minimizing your tax bill, although that’s an undeniably valuable advantage. In addition to saving you time and money, a good accountant helps you to manage your cash flow, plan ahead, make smart decisions and reduce any risks to the financial health of your business.
Here’s why investing in a quality accountant beats the DIY route every time.
1. Save Money On Your Tax Return
Let’s start with the most obvious advantage of hiring an accountant: to save money in taxes. Filing your taxes is notoriously complex and even a small, innocent mistake can result in a hefty fine. Chartered accountants train for years in order to be able to complete this process accurately, so doing your own return puts you at risk of making expensive mistakes.
Furthermore, a qualified accountant will have up-to-date knowledge of tax breaks, loopholes and business incentives to save you a sizable sum of money that you can re-invest in scaling up. If you do your own accounting or go with a very cheap firm, you’re unlikely to benefit from these savings.
2. Free Up Valuable Time
In addition to saving you money, an accountant will also save you a lot of time that you can put to far better use. As a small business owner, it’s vital that you keep accurate financial records and stay on top of your accountants. However, it’s equally true that your efforts are most valuable when concentrated on your area of expertise. Hiring an accountant allows you to ensure that your accounts are being managed well whilst allowing you to focus on growing your business.
3. Startup Advice
As mentioned, many small business owners are reluctant to hire an accountant in the beginning stages. However, an experienced accountant will be able to provide valuable advice during the startup stage that can accelerate your growth on areas such as:
Hiring an accountant from the very beginning can help you build a solid financial foundation to ensure that your business is around for many years to come. They can advise you on which legal structure to choose and offer unbiased, constructive criticism of your business plan. It’s also worth noting that an accountant-approved business plan is more attractive to prospective investors.
4. Manage Cash Flow
Managing your cash flow well is essential to the growth of your business. Poor cash flow management is a serious threat to even the most profitable businesses, so it’s very important to get it right. Accountants are experienced in managing cash flow and can produce regular forecasts to ensure that you always have enough funds to continue operations as you scale up and market conditions change.
5. Growth Management
A quality accountant can help to fund and manage the growth of your business. Firstly, an experienced accountant will help you to identify sources of funding and present your case to potential investors. Additionally, they can also help you manage sudden growth spurts and ensure that they don’t overwhelm you and damage the financial health of your business, as is often the case.
6. Market Knowledge
It pays to hire an experienced accountant who knows exactly where your company is positioned in relation to your market sector. You can leverage this knowledge to create your unique selling point, price your services appropriately and gain a competitive advantage. In short, an experienced accountant allows you to benchmark your company which is incredibly useful for growth.
An Accountant Is An Investment
It pays to hire a high quality, proactive accountant. Whilst there are many cheap services out there, you’ll see the greatest return on investment from hiring an accountant who has the time, knowledge and experience to grow your business. A good accountant will do everything they can to not only save you money on taxes but to provide valuable advice, manage your cash flow and secure the financial health of your business for years to come.
How to Create a Realistic Business Budget
Your business needs a budget but when you’re starting out it can be tempting to skip this step. That would be a mistake, because a budget is a powerful tool to ensure the financial health of your small business. A realistic budget enables you to make confident financial decisions and save money for future investment and expansion. On top of this, your budget will prevent you from overspending and provide concrete goals against which you can measure your success.
It can be difficult to know where to start when it comes to creating a budget, particularly during your first year in business. You’ll need to work with estimates if this is the case, but it will still make financial planning much easier. Once you’ve laid out a realistic budget, you’ll be able to adjust it as necessary rather than starting from scratch. Here are six easy steps to creating a realistic budget for your business.
1. Calculate Your Income
Business income is the money you receive from customers for your goods or services. This is easy to work out from your records if you’ve been in business for a while, but if you’re just starting out you’ll need to make an estimate. Try to be as realistic as possible but if in doubt, always err on the side of caution. It’s better to be conservative with your budget than risk overspending.
If you’ve been in business for a year or more, take some time to analyse seasonal trends. If you’re new, do some research on patterns within your industry. Many businesses experience a boom in sales at Christmas, followed by a lull in January. It’s important to plan for these peaks and troughs as accurately as you can.
2. Determine Your Costs
Once you’ve worked out your projected income, it’s time to take a look at your expenses. Business costs fall into three different categories: fixed, semi-variable and variable.
Fixed: these costs are the easiest ones to calculate. Fixed costs are the expenses that are likely to remain the same for the next year or so, such as rent, internet and insurance.
Semi-variable: this is a bit of a grey area. Semi-variable costs are fixed costs which may increase or decrease in proportion to your workload. For example, a boom in sales might result in increased hires, phone bills or power usage.
Variables: these expenses are directly linked to your number of sales, such as commissions or raw materials. This is the part of your budget that you’re most likely to have to tweak over time. You can calculate this by adding together all of your variable costs over a given period of time and then dividing them by your production volume.
3. Factor in One-Off Expenses
You need some wiggle room in your budget in case things go wrong. Unforeseen expenses do crop up every now as then, so you need to be ready for them. For example, if a piece of equipment breaks down, you’ll need to replace it as soon as possible so that it doesn’t impede productivity. Of course, some one-off expenses are planned, such as facility upgrades or conferences. Keep a separate fund for this type of cost and don’t be tempted to put it towards your regular expenses.
4. Work Out Your Profit
Your profit represents how much money you’re actually making. You could have a huge income, but that doesn’t mean much if it’s outweighed by even larger costs. To calculate your profit, subtract your costs from your income.
A budget doesn’t mean much if you don’t review it regularly, and a lot can change in a surprisingly short amount of time. It’s vital to keep checking your budget and making adjustments whenever necessary. Each month, set aside some time to check your finances and compare them against your plan. This will keep you on track and allow you to keep your budget relevant to your business.
6. Use Bookkeeping Tools
Staying on top of your budget can be time-consuming, especially when your business is growing and you’ve got a million other things to do. Cloud-based bookkeeping software is the easiest and most reliable way to keep track of your expenses and you’ll have 24/7 access to your records from anywhere in the world, so long as there’s an internet connection.
The Importance of Budgeting
A realistic budget for your business makes it so much easier to plan for the future. However, regularly reviewing and adjusting your budget is essential, or it could quickly become outdated. Your budget is a roadmap for your business and it helps you to prepare for all manner of situations. Most importantly, it gives you control over your finances, which will help your business not just to survive, but to flourish.
How to Set Ambitious Yet Realistic Goals
Adjusting your goals and expectations to what's within your possibilities will ensure your success. Not to mention, it can help you avoid unrealistic planning frustrations.
Having reasonable goals can be a driving force behind individual, team, and company success. If you precisely determine what you're aiming at and do it early on, your efforts will have a clear direction and appear more meaningful.
However, setting goals isn't without its challenges - poor orientation, succumbing to perfectionism, and lack of motivation are among those that are quite detrimental.
That's why we've compiled a list of steps that will help you determine and set optimal goals while avoiding the common pitfalls.
The importance of thorough planning can't be overstated.
A goal without a plan is, in essence, just an abstract idea you can't act on. That's why the first thing you should think about is exactly how you'll achieve your goal.
The most effective way to make a plan is to start with the big picture in mind and go more and more into details.
Start with a general road map - setting a certain finish line and marking every bump and turn down the road. Then take a look at the individual stages of the journey and define the challenges you could encounter.
Keep in mind that this is a crucial step - if there are too many obstacles requiring more energy and resources than you can expend, you will do well to reconsider your main goal immediately.
Finally, once you know where you're going and how you'll get there, start preparing contingencies.
A good plan will take you a long way, but it would be wise to expect something to go sideways. Prepare to adjust your tactics accordingly.
Setting goals includes envisioning a certain point in the future. However, it would be best if you didn't stop at a general, low-resolution picture.
You must define all of the details of what you want to achieve.
For instance, aiming to increase your company's sales is a low-resolution goal. It could be a good starting point, but if you want to ensure you're progressing in the right direction, you should consider the specifics.
Exactly how much of an increase would you like to see in your sales? How would you want your business to change before and after you've reached that goal? Would you be willing to make sacrifices to get there and what would that entail?
There's plenty of details to flesh out when setting your goals. If you do it right, all your efforts will become focused on the specific necessary tasks and the progress will become apparent.
A common mistake in planning goals is that people tend to aim for the grandest achievement, disregarding the smaller but vital victories.
This approach can become draining very soon - you might be overwhelmed by how unattainable the set endpoint seems. To avoid the fatigue and discouragement, make sure to have several smaller goals set as milestones.
Reaching the milestones will give you that precious sense of achievement and progress and motivate you to keep going.
Aiming for something you can realistically achieve and having a good plan of getting there will set you on the right path.
When you're convinced your goals are the right ones, pursue them with determination. Great results will follow.
Learning how to improve the conversion rate for the existing traffic can be more beneficial than expanding product lines or cutting costs.
Sites with the highest traffic do not necessarily have the best conversion rates. In fact, a conversion rate of only 0.2% means getting only two customers in every 1000 visitors, which can be extremely low even for a high-profile page with loads of traffic.
Here are some of the best ways to improve conversion rates quickly and efficiently.
Forcing users to sign up for a new account before they can purchase a product or service is one of the quickest ways to lose them as a potential client. Most people find it tedious to enter their information for every product they buy.
Making the purchasing process intuitive and waiving the permanent account requirement will allow visitors to buy on the spot and increase your conversion.
There are a few ways to simplify the purchasing process beyond the sign-up.
For example, removing unnecessary fields from surveys and purchase forms can lead to a better conversion rate. Furthermore, making the steps of the purchase process prominent and easy to follow can be the key to getting a user to buy.
Simplification can’t go too far, however, or the marketing and sales teams could lose the ability to conduct proper lead management.
Users are most likely to trust what other users have to say about a company. That’s why adding testimonials from satisfied customers can lead to a sense of safety and security in your services.
Logos of prominent companies that use your services on the homepage will build future visitors’ trust and increase the click-through rate.
Some users don’t look at the content of a website beyond the headline. If there are a few viable choices for the website copy, an A/B test will ensure that the best version is presented to the consumer.
A/B testing can work on any part of the webpage. However, the standard practice is to compare one change at a time and conduct separate tests to optimize your digital asset.
Most people won’t buy a product when they aren’t sure about the company behind it. Fortunately, there are several ways to build trust with potential customers.
It’s best to keep the business’s contact information, such as the address, publicly available and readily accessible. It’s because visitors are more likely to purchase something if they can see the company behind it.
Additionally, it’s advisable to keep pop-ups and ads to a minimum. Frequent distractions will move users away from the website. But if ads are a must, clearly point out sponsored content.
Blog posts and websites also need regular updating. A website that was last updated two years ago is less likely to attract new customers. Cheap-looking pages and graphics also tend to have a similar effect.
Keeping the website clean from distractions and annoying pop-ups and sounds will allow users to read through its content unimpeded. And simplifying the steps between introduction and purchase and streamlining the process will help visitors decide to buy the product on short notice.
Market research is a continually growing field, and there are many lessons to be learnt for even the most experienced companies.
How to Define Your Unique Selling Proposition
Formulating a good overview of what's different about your offer could set your company apart from the competition.
In today's highly competitive market, many companies work within the same niche and may often offer similar services of comparable quality. And this plenitude of choice is good news for the customers.
However, every business that wants to rise above the rest will need to define the elements that make it stand out.
In marketing, this is where defining your unique selling proposition or USP comes in. Here are some of the key points to cover when fleshing out your USP.
The first step in any marketing campaign is to precisely determine who your ideal customers are. But when it comes to USP, you'll need an even more detailed picture.
When thinking about the people who will use your service, be as specific as possible. Aim at the narrowest audience that's most likely to purchase from your company and offer them a well-defined product or service.
Consider what your ideal customers need, want, or lack and focus on those that will find the perfect solution in what you're offering.
You should answer several questions about how your product affects your customers.
Concentrate on the unique aspects of that relationship and what your product offers that others don't. For instance
Are there specific ways of using your product?
Can your customers get a different experience with it, compared to the competitors?
What are all of the benefits your product provides?
How does your offer differ from the rest in the marketplace?
These aren't questions you should answer in a rush. Rather, they are guidelines for examining what's unique about your service.
Your USP should reflect your business's confidence about the product or service and leverage its advantages over similar products. Simultaneously, it should be practical and assertive rather than aggressive or confrontational.
It would be best to keep the claims and promises realistic and grounded in practice.
While you want your USP to be impactful, unsupported allegations and flights of fancy will only hurt your brand reputation in the long run.
When you've defined the most important points of your USP, try to formulate them in a couple of sentences. This will require finding the core of every idea and expressing it in a fluent and engaging manner.
You should adjust the language to what will be most understandable to your potential customers. Avoid sounding too technical and make sure to use the most effective terms. Aim to get your message through and clearly.
Once you've done that, go over your USP and try to condense it even further. If you can make your point in a single sentence, don't hesitate to do so.
Finally, make sure that the final result is a meaningful message, not a generalised slogan. Remember, the U in USP stands for 'unique'.
Defining your USP can significantly boost your marketing, sales, and business growth. And if you take the time and put in the effort, the results could push your business to the next level.
Four Ways to Set Your Brand Apart
Being like everyone else may be a safe option, but it doesn’t mean a lot. The rewards could be plentiful if you aim for uniqueness.
Running a business in the modern environment isn’t an easy task. With competition abound, it can be challenging to reach the target audience without appearing like a clone of another company.
However, setting up your company’s unique selling proposition (USP) can be useful in more ways than one.
Making the brand of your company distinct from the multitudes can be a reason for success and celebration. Developing proper management and marketing skills, as well as keeping an inventive mind, is necessary to excel in this regard. Here are some of the ways to set a brand apart from the crowd.
When encountering difficulties in reaching the target audience, it’s best to take a step back and approach the problem from the very beginning.
The product or service needs to be functionally unique compared to those offered by the competitors.
But even if there is a functional difference, the marketing campaign won’t be any good unless that uniqueness is the main selling point. The unique part of a product doesn’t have to be in the ingredients, as it can also be found in the delivery process or the system used to implement it.
Even when the product offered is virtually the same as the competitors’, there are still ways to achieve a USP. One of the methods is to focus on a previously unremarkable feature that makes the product work in the first place.
Furthermore, a pre-emptive advertising strategy can be useful to allow your company to grow and invest in improving the product to set it apart.
It’s important to note that a direct comparison with similar products is ill-advised.
Maintaining a positive brand image can be vital to surviving in a crowded market. Rather than broadening a marketing campaign, it can be beneficial to narrow the focus down to a select part of an audience that is most likely to need and purchase the offer.
Brand separation does not need to come with a unique design if the delivery method is captivating enough to make it inconsequential in the long run.
It’s advisable to keep the audience informed about other improvements, such as those in quality and delivery methods, through future marketing efforts. Doing so will ensure the audience keeps consuming the product even without future innovations.
Whatever the choice or idea behind the brand’s identity, the company must remain vigilant in displaying a consistent message across all platforms. This would serve to enhance customers’ sense of familiarity and bonding, in addition to making the brand memorable.
In the end, a brand is supposed to evoke a specific memory or emotional response in the user in a way that prompts repeat purchase or enhances brand loyalty.
Maintaining a consistent message and story, and giving users access to communication channels with the company, will provide them with enough exposure to the brand to keep them as repeat customers.
For a brand, future uniqueness rests on today’s efforts and ingenuity.
Keeping an open mind to present clear ideas that resonate with the audience is the best way to make a brand relevant in the sea of companies vying for attention.
5 Useful Motivation Tips for Solopreneurs
Working for yourself sounds great in the beginning but many solopreneurs soon discover that giving up the day job isn’t always as glamorous as it seems. Loneliness and a lack of motivation eventually in creep and you might even find yourself missing your 9-5 more than you thought possible. However, you went into business by yourself for a reason and lost motivation can always be found again. It’s important to mentally prepare yourself for these bumps in the road and understand how to motivate yourself to keep moving, even when the going gets tough. Here are some top tips on staying motivated as a solopreneur.
1. Make Your Business Fit Your Lifestyle
Freedom is often listed as one of the top reasons solopreneurs leave the corporate world and go into business by themselves. Entrepreneurship offers you the chance to fit work around your lifestyle, not the other way around. Therefore, the key to staying motivated is actually putting this into practice. Particularly during the startup phase of your business, you may feel as though you need to dedicate every waking hour to your budding enterprise, but is really that why you started out on your own?
Aligning your business with your lifestyle will boost your overall satisfaction and give you the motivation you need to keep on working, so make your schedule work for you. For example, if you love hitting happy hours with your friends, why not adjust your working schedule so that your days start and finish early and there’s time for socialising afterwards? Or if you’re a keen fitness fan, you could take advantage of your flexible hours and hit the gym midday when it’s most likely to be quiet. These are just examples, but take time to think about ways to balance your business with your other interests.
2. Find A Coworking Space
Being able to work from the comfort of your own home is indeed fantastic, but not seeing another soul all day can also get pretty lonely. Plus, you run the risk of going stir crazy. On the other hand, if you’ve got noisy family members who are also at home all day it can be difficult to concentrate.
Find out if there’s a coworking space near you where you’ll be able to meet like-minded individuals and work in a relaxed, but focused, environment. Coworking spaces also run lots of useful events like workshops and seminars which can help you to learn new skills and develop your ideas.
3. Find A Support Network
One of the biggest advantages of co-working spaces is the chance to meet and learn from your fellow solopreneurs. They can empathise with you in a way that most of your friends and family probably can’t, and boost you up when you need it. Plus, they’ll be able to offer more valuable insights and advice to help you work through your problems.
Of course, co-working isn’t the only way to meet other entrepreneurs. Mastermind groups are an increasingly popular business growth tool. A mastermind is a peer-to-peer mentoring group where you can find inspiration, bounce ideas around and enjoy the support and advice of fellow entrepreneurs. Participating in this kind of group also helps to keep you accountable, which is essential when your motivation is lagging.
4. Balance Your Workload
Balancing your workload is easier said than done, but it’s a crucial part of staying motivated. Studies show that small business owners tend to work longer hours than the average worker. In the UK, companies can’t make their employees work for any longer than 48 hours per week, but there are no such constraints on the self-employed. However, it’s definitely worth setting yourself a time limit to ensure that you stay both productive and sane.
You might not get it right at first, but keep on making small adjustments and find out what works for you. If you work too hard, you’ll burn out but if you don’t put enough hours in, you won’t make any progress - and you’ll probably get bored. Keep your long term goals in mind and remember that your journey as a solopreneur is a marathon, not a sprint.
5. Reward Yourself
Instant gratification is undoubtedly more motivating than slogging towards a long-term goal. The problem is that entrepreneurship is all about the big picture and it may be a while before you reap the rewards of all the hard work you’re putting in.
The easiest way around this is to set yourself small goals and attach rewards to each one. For example, if you struggle to work an eight-hour day, motivate yourself with the promise of your favourite dinner that evening. You can choose more extravagant bonuses for bigger milestones, such as a new pair of shoes for finally finishing your website, or a fun day out for landing a new client.
Ultimately, the key to staying motivated as a solopreneur is to enjoy the journey and remember to have some fun along the way. Self-discipline is crucial, but you can’t sustain a punishing schedule for long. It may sound cliche, but finding a work-life balance is truly the secret sauce for success.
The Three KPIs That Every Business Should Track
Discover for yourself whether you’re tracking
the three most important KPIs. And if not, learn how to start doing so.
The only way for a business owner to know if their company is meeting its goals is to define and track key performance indicators. However, the first
part may be trickier than the second.
How do you even come up with the right KPIs to track?
Know that there are two groups of KPIs that every business should track, which are industry-specific KPIs and universal KPIs.
This article is about universal KPIs that are essential for every
The gross profit margin is one of the most critical KPIs. After all,
the profit motive drives most businesses since if there’s no profit, there’s no business.
But some companies make the mistake of spending way more than they earn. While this is okay in some stages of a business, it can spell troubles in the long run.
That’s why it’s important to keep an eye on your gross profit margin.
Here’s how to calculate it:
Divide the gross profit by gross sales. The number you get is the
fractional profit margin, which you can multiply by 100 to express inpercentage.
If your profit margin is going up, that’s great! But if it’s lower
compared to the same quarter of last year, maybe it’s time to make a change.
There are two ways to increase your company’s profit market, and they have to do with the gross profit formula: gross sales minus cost of goods sold
(COGS). So you can either decrease COGS or increase sales (at constant or asmaller increase in COGS).
You can accomplish the former by cutting costs and saving money onsuppliers, utilities, and suc h. As for the latter, you can improve your products or services so you can raise prices.
How can you tell if your business is going in the right direction?
Your revenue ratio is a good way to measure your company’s growth in a particular period.
The revenue ratio is the ratio of the current period’s revenue
compared to the same period of the year before. It shows how fast your revenue is growing, and the best way to increase this ratio is to increase sales or
If the revenue ratio is higher than 1.0, your revenue is growing. The
higher it is, the faster your company’s revenue growth.
The Internet has enabled business owners to track conversion rates
more precisely than ever. If you’re spending money on ads, for example, it’sessential to find out which ads work and which ones do not.
It’s also possible to calculate the conversion rate for anything, not
just paid ads. It could be the percentage of people who clicked on your link or bought your product, for instance. To do so, calculate the conversion rate by
dividing the number of conversions by the total number of leads (those who saw
your ad, for example).
Conversion rates give powerful insights and they can help optimise or fix things.
The most critical KPIs may depend on your business. Among others, you might want to track your profit margin and revenue ratio.
In the digital world of today, it may also interest you to monitor
specific conversion rates.
Tracking these KPIs will let you know the state of your business so you can come up with ways to make it even more profitable.