Step One: Plan for your first million dollars, and never stop growing!
Your business can become a million-dollar enterprise if you have a strategy put in place. Setting goals to promote growth or to make sure your company can withstand emergencies may not be the easiest to do, but is manageable once you learn how. Andi Gray, president of Strategy Leaders offers advice on how to plan for business success.
Plan for Growth
First things first: form a plan to make your first one million dollars. Yes, that may sound daunting at first, but that’s actually a minimal goal. At under one million dollars, which most small businesses make, there often isn’t enough money to adequately cover business expenses. A two million dollar benchmark is what is needed to comfortably keep the company running. Figure out what products and services you have to sell and at what cost in order to earn your first million. When you accomplish that milestone, keep going and create a goal to make your first two million dollars. The objective is to never stop growing. It’s recommended that your business grows by 10%-15% every year. “That’s something that not a lot of companies know how to do,” says Andi. “But once you figure it out, it becomes a habit in the business. It becomes a much stronger tool to help the business forward.”
Plan How Your Business Is Structured
Reconsider how you assign employees to certain tasks. “A small business is a business made up of a whole bunch of multitaskers,” says Andi. As the business grows it may be inconvenient for the business owner and demoralizing for the employees to have them assigned to several different tasks at the same time. Have employees specialize in an area where they have expertise and delegate extra roles to other members of the team.
Plan for Profit
Many times, business owners focus on tax planning when going over their business financial plan. That is actually counter-productive. Limiting your profits so that you pay less taxes isn’t as beneficial as earning more money even if you have to pay the taxes owed. “Let’s maximize the profit of the company, pay our taxes, and build wealth into the company,” Andi advises.
Plan for Succession
Many entrepreneurs are good at establishing their business but don’t create a plan on how they are going to leave. “Many owners build great companies. They are valuable, they are worth something, but they don’t get over the finish line,” Andi says. Having an exit strategy is just as important as starting off with a business plan. You should also include your employees in your succession plan. They helped get your company to the place it is in, make sure they are included to help carry on the business when you leave. The Small Business Administration (SBA) works with employees who want to purchase the company from their employer when the employer is ready to exit. Take advantage of opportunities such as this.
Plan for Emergencies
If COVID-19 has taught us anything, it’s that anything can happen – even the unexpected. It’s good to have an emergency fund if you want to keep your business going during lean times. “You want to have enough money in the bank to keep the company safe. That’s usually a year worth of overhead spent,” says Andi.
If you want to learn more about business planning, check out our webinar (Re)Building for Business Success co-sponsored by the Westchester Hispanic Chamber of Commerce and presented by Andi Gray, president of Strategy Leaders.