Our last blog discussed making your business work for you. To achieve that level, you must first have a business plan. Think of it as the GPS in your car. It tells you where you are going and how you will get there. Granted, you’ll encounter roadblocks, traffic, and other unforeseen obstacles. That’s life. Pivot and adapt. This is why you update your business plan every 18 months.
Secondly, we went over the profit-first method. It’s a system for paying yourself first and ensuring you run your business rather than letting it run you. Today, we will look at two other questions you must address.
The Numbers Behind Running A Business
Question number three is near and dear to my heart. Granted, this is a law firm—but it’s also a business. By definition, lawyers don’t do numbers (probably why we chose to go to law school instead of another route). But do you know your numbers? When you’re running a business, as opposed to it running you, you must know its financial condition.
You can’t manage what you can’t measure. Put yourself in a position to make decisions based on metrics. Otherwise, you’re left with nothing but emotions. Imagine an opportunity coming your way; how will you know whether you should pursue it? We’re not here to argue against instincts or feelings, but a more consistent way is to make decisions based on whether they make financial sense. Every business should have three basic reports and a system in place to create them.
- Profit and loss statements (income statement)
- Balance sheet
- Cash flow report
Have Your Systems Documented In Writing
The final question is whether you have written systems and procedures. Although employee handbooks fall under this category (and they are crucial to have), it’s one of many things you should have documented. When your business works for you, it means you are not doing all the work for your business. You’re no longer doing all the work to make a profit and get revenue. That doesn’t mean your products or services aren’t at the level you want them to be.
Having written systems and procedures is a business owner’s way of ensuring their business is run as they want it to be. Systems also educate and inform the rest of your staff. This encompasses everything from knowing how to answer the phone to sending an invoice. The more consistency you have, the easier it will be to replace your employees when they leave. It’s also easier to determine whether a problem is because of a person or system.
Run Your Business, Man
We’ve covered the four critical questions every business owner must ask to ensure they control their business rather than the other way around. From having a solid business plan and adopting the profit-first method to understanding your numbers and documenting your systems, these steps will help you streamline operations and position your business for success. If you’re ready to take the next step in gaining control and setting your business up for long-term growth, schedule a free consultation with us today. Let us help you build a business that works for you.