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Who cares about saving pennies on the dollar? What is the point in trying to squeeze every last drop of profit out of your business? Cannot you just make a lot of money and not worry too much about being frugal? I mean, sure. Of course, you can do that until you cannot. Until it becomes necessary to only spend what you absolutely must spend because you are about to file for bankruptcy. It happens more often than people think and typically, most entrepreneurs are unaware of what their actual expenses have to be to just get by.
I am not opposed t you driving a company car and having nice office furniture but these are not must haves for a business and they can easily get out of control. When it comes to keeping a business lean, the goal is really your own happiness. The less you have to spend, the less you have to make and therefore, the more you can enjoy. So, a great practice is to figure out how much you need to make in the business to be happy.
Do not so what many small business owners do which is sell as much they can, send most of it, then pay themselves whatever is left over. You will never have enough that way and always feel like you are catching up. Instead, figure out what your number is and then just pay yourself that amount in a salary. It is that simple. Then use the money leftover in your business. That way, you are never outstanding, you are keeping things lean and you are making enough to stay happy. Thant number, by the way, can be whether you want but knowing it is half the battle to feeling like you are financially in control of your business and not the other way around.
Make sure you look at your profit margin before hiring. Again, I want to be clear here when it comes to people. It can be really fulfilling to work with great people toward a common goal. But people are expensive and not always consistent in terms of their reliability and output. Human beings can do incredible things, of course, but investing in human capital is risky and requires a high level of commitment. Just because you are doing well this month does not mean you will be next month and it is a risk to immediately staff up in times of prosperity. Make sure you have got the money to invest in such a growth strategy and some reverse to weather the storms in case of inevitable ups and downs in the business.
If you want to business that allows you to live a good life, pay attention to profit. Keep your number as lean as possible, using software instead of people wherever you can. In the event that you need to scale back due to tough times, it is way easier to dump an app than it is to fire an employee. Trust me on that. Pay yourself what you need first, prioritizing your happiness above any arbitrary metrics for success. Learn to love what you have, be skeptical toward empty promises of when you get here, you can enjoy yourself and maximize what truly matters. In the end, all those fancy zeroes at the end of a bank account do not make you happy, you being in control of your personal life and work, however, will.
