The Main Thing in your business is Profit. Everything in your business hinges on the business being profitable.
If the business is not profitable, it is broken.
This can be a bitter pill to swallow. I’ve had to reflect on this numerous times in my business.
I remember at the beginning of July 2010 sitting frustrated with my business.
- In 2008 I had revenues of $4,580 and expenses of $9,522 for a net loss of $4,942
- In 2009 I had revenues of $18,023 and expenses of $24,032 for a net loss of $6,009.
I had quadrupled my income, and I was losing more money than ever. I had racked up $17,043 in business credit card debt on five different credit cards.
At the time, I had two children, a loving wife, and a mortgage with no other income besides what I was making from my accounting business. I had depleted my personal savings, and my back was up against a wall.
I realized something had to change, and I had to be that something that had to change.
What I was doing wasn’t working.
I then had a profound thought. I had forgotten the first law of money.
Pay Yourself First!
I had an epiphany. Of course, my business was failing.
I wasn’t paying myself first.
How could I realistically expect to financially succeed if I wasn’t paying myself first?
On 07-09-10, I opened up a second business bank account. I called that my Damon bank account.
Then every time I got paid from a customer I transferred 10% of that customer payment from my operating business account to my Damon bank account.
This was a true game-changer.
In 2010, I had revenues of $79,406 and expenses of $66,868.
Part of the $66,868 was $10,000 that I paid to myself as salary. My business had a profit of $12,538.
Every year since 2009, my business has been profitable, and I’ve gotten paid a salary. I’ve even been able to build a nice nest egg in my 401(k).
I had turned the direction of my ship.
That decision to pay myself first forced me to make my business profitable
Profit should be the sole focus of the business.
When a decision has to be made you should immediately ask yourself the following questions:
- What choice will make the biggest impact on my business’s profits?
- How long will this choice take for me to recoup my investment of time, energy, and resources?
- What is the short term result I can expect from this choice?
- What is the long term result I can expect from this choice?
Think into those questions and look at the answers you get.
This will provide you the direction you need to move your company to higher profits.