this article originally appeared on Changemakers Unite as Measure What Matters: Is Your Business Leading You to Financial Freedom?
Starting a new business is both exciting and terrifying. You’re often building something that’s never been done before or, at the very least, has never been done before by you. When you’re just starting out, the learning curve is steep.
But the rewards are worth the effort.
Measure what matters
If you’re doing all this hard work, you want a reward for that effort. So, right from the start, focus on creating measurable progress in a reasonable amount of time. Sustainable growth takes time, but make sure you’re actually making progress toward your goal.
Next, apply this principle to the impact you want your business to make, how to meet the needs of your team members and how to create Financial Freedom outside your business.
Consistently tracking your progress positions you to respond quickly to challenges. And there will be challenges. No business has ever launched without at least one thing going wrong!
But don’t think this process only applies to your launch. The idea of creating measurable progress in a reasonable time should shape not only the decisions you make on a daily basis, but also how you plan growth.
The change you want to see
The decisions you make have impact. Each one either brings you closer to the change you want to see in the world or moves you further away.
If you don’t track your progress, you can’t know where you are on your journey to change. You have a goal, and you always need to know where you stand.
What questions do you need to ask to accurately measure your progress? They’re different for every business, but generally you can start with:
- How many of my products are being purchased?
- What is the follow-through rate?
- If people drop off, how many? Why?
Understanding and recording these numbers shows precisely how close you are to your impact goal. And if you have a low rate of purchase or follow-through, you can start looking into why, and quickly get back on track.
Profitability and sustainability
What many Business Owners forget is profitability isn’t just about paying for today. You also need to fund future programs and the expansion of your team.
Where do you need to grow to reach your impact goal? And how will you get there? Because as your business grows, you’ll need more team members, more resources and more funding.
If you don’t work to make your business profitable and self-sustaining, you can’t survive long term. You won’t have the income to take care of your team or yourself.
So regularly — and by that I mean quarterly — answer these three questions (at a minimum):
- Which of my products is most profitable?
- What is the cost of onboarding new clients?
- What is the cost of supporting the administrative needs?
Collect your data, set aside some time every quarter and look at these numbers. Don’t just pop in to your books, look to see if sales went up and go off on your merry way. Because the monthly income flowing into the business is truly irrelevant if your expenses are outstripping your income. You really do have to engage with your data in a meaningful way to ensure you’re steadily moving toward your goal.
If you’re not reaching the goals you set, take decisive action to change what you need to for the next 90-day cycle.
Your business may have quite a bit of revenue right out of the gate, but that’s not the case for most businesses. What’s important for your profitability and sustainability is monitoring performance even before you launch.
Freedom lies outside your business
What is the personal result you want from your business? Dig deep into who you really are, and you’ll probably find that no matter how much you love what you’re doing, at some point you want to stop trading your time for money.
When you’re starting a business, you have the opportunity to plan to secure Financial Freedom outside of your business. Because you don’t want to depend on your business to survive financially.
And you’re not going to live forever. There will come a time when either through your own choice or the circumstances of life you’ll no longer be able to work in your business as you do now.
If your entire financial life is built on a foundation of working for money rather than sending your money out to work for you, your life will come crashing down the moment you stop.
So the next question you need to address is: How do I reach Financial Freedom — that’s not dependent on my business?
Your personal Financial Freedom has to be a priority. Resist the urge to put off focusing on your personal finances. You have to make answering this question a part of your quarterly review.
Measure what matters
So many Business Owners make the mistake of believing if money is coming in, their business is all good. Nothing could be further from the truth.
If you don’t know whether or not you’re getting closer to your impact goal, or if your product is even making the intended changes for your target audience, how can you make educated decisions on how to modify your plan? And you’ll never be secure that you — and your team members — are on the path to personal Financial Freedom.
Don’t just assume you know how well your business is doing or how well it’s operating. Measure what matters to you.
image credit: Bigstock/visivasnc
Dr. Tony is the co-founder of MindShift.money and the best-selling author of three books on personal and business finances. Having achieved Financial Freedom at 27, Dr. Tony believes that through Financially Fit Bootcamp and Cash Flow Cure everyone can get there. He has made it his life’s mission to help others live a life where their money works for them—not the other way around.