Every business owner dreams of breaking through that million-dollar business barrier but not many seem to make it.
Having worked with many business owners that have smashed their way past this holy grail of business development I have identified the key steps required to make this dream a reality.
- Tune up to scale up.
It is absolutely essential that you understand how your business makes money. In order to do this, you must know the numbers in your business back to front.
This is important because it allows you to identify any inefficiencies in the way you generate money.
If your business has fundamental problems with cash flow, profitability or sustainability while it is small, it is unreasonable to think that your ability to handle and extinguish these problems will improve as your business grows.
Business growth will accelerate and exaggerate any fundamental problems and or flaws in your businesses financial and economic models. Therefore, these problems need to be handled while they are small and prior to any real attempt at business expansion.
- Understand the challenge ahead (capacity)
Business growth has consequences and it requires time, money and other resources in order to it to happen – it’s not magic.
It is therefore important that you understand the pressures business growth and expansion will put on your businesses capabilities relative to the acquisition and consumption of resources in terms of people, operations, funding and sales.
All 4 key areas of the business should expand, grow and increase in capacity at the same time because your business will only ever be as strong as its weakest link.
- Quantify Future expectations
If you can’t see where you are going, then you can’t possibly know where you are going or have any idea what to expect next. You cannot run a business this way. It is therefore very important that something highlights the path ahead.
People find it hard to believe in what they can’t see. To shine a light on where you need to go in business you require the assistance a tool that can illustrate a clear linear progression towards an ultimately predetermined end.
The only tool available to you that will enable you to achieve this outcome are financial statements. This is because the globally accepted format of financial statements can be combined with your market, industry, SWOT and competitor knowledge and analysis to predict and create a futuristic picture of your businesses financial position and performance.
This will take the guess work out of your business because you will be able to establish exactly what is expected of you in order to achieve a specific financial goal and or target.
- Create a Business Map using proximal objectives
Rome wasn’t built in a day and building your business to the point where it exceeds a million dollars in turnover, gross or net profit will not happen overnight.
It is important that you establish a number of achievable milestones each progressing closer and closer to towards your million dollar goal.
It is important that your milestones are proximal or achievable because overly optimistic projections can result in failure and disappointment.
Building a business is about limited resource management. Business growth requires resources to be acquired quicker than they are consumed. In order to achieve this result business growth must be managed and the best way to manage growth is with realistic expectations and achievable targets that provide a clear route to and over the million-dollar business barrier.
The best way to create your business map is by using the format provided by your financial statements because this tool can be used to clearly communicate and illustrate linear progression in business results through your million dollar business barrier.
- Value chain Control (economies of scale)
Your value chain encompasses the process by which your business adds value to the inputs and purchases it converts into a saleable item that is distributed and made available to the consumer.
In order to increase your economies of scale you must have a degree of influence or control over your value chain. As you grow you will need to produce greater volumes of product which means you must be able to access supply in greater volumes, at greater speeds with better quality at cheaper prices and longer terms so that you can control costs and increase your margins as you grow.
As your business grows you and your business must become more efficient and effective. This means that you must become faster at producing more for less money. This will require a combination of technology, capital expenditure, people, systems, procedures, practices and organisation.
Now that you can produce more product or service you must also consider your ability to sell more. There is a misconception that the ability to sell more means better sales, marketing to attract a constant flow of new customers; which can be expensive. In order to grow your market-share and an accelerated rate more economically you are going to need to focus your sales and marketing efforts on the multiple distribution channels available who already have direct access to large groups of target consumers.
The key is scale. To accelerate your business to a million dollars or more you must change the way you think about business and how you access the resources you need in greater quantities at better rates of return.
- Responsibility & Accountability
Doing it is different to knowing and planning it. Most business owners become overwhelmed by the sheer volume of tasks and the level of organisation required to implement strategies that will produce million dollar results. Overwhelm can create procrastination and suddenly things come to a grinding halt.
When you are your own boss one of the biggest problems you face is letting yourself that you tend to let yourself off the hook for missing targets and lack of achievement. In order to get things done you must develop an implementation program that breaks strategies down into a number of steps that are again broken down into manageable daily tasks so that can be easily executed.
You must hold yourself responsible for business outcomes. This can be hard to enforce upon yourself so it is important that you develop the discipline to ensure that your implementation plan is executed. When strategy is executed results will follow. Regardless of the result you must also be held accountable for the outcome. The best way to ensure that you remain accountable to your outcomes is to find council in external parties willing to assist you in administering the overall direction of your business and to whom you will report your results for analysis.
To become a multi-million-dollar business you must act like one and all bigger businesses are held responsible and accountable for their actions and outcomes.
- If you don’t measure it, you can’t manage it
If you can’t manage it, you can’t improve it! It is essential that you know the extent to which your business has progressed at all times. In order to assess progress, you must measure its output both in terms quantifiable and qualitative performance indicators.
This means that you must be able to ascertain whether or not your actions are effective and resulting in the financial progress defined in your financial business map. This means having a clear understanding of the cause and effect relationship between strategy, actions (doing the right things) and results (doing things right).
Each business has its own specific way of doing things and is unique in some way or another. It is therefore essential that you are able to devise performance indicators that will communicate the relative success of your actions against the financial results attained.
Why is the relationship between actions and financial results so important? Financial results represent the reality (outcomes achieved) of your businesses situation and these results are used by a number of internal and external parties to assess your businesses position and performance. This information is used to determine by different users of financial information to make business decisions as they relate to your business.