Get CPM So Your Business Won’t Need CPR

Do you know what are the three things every business needs to have in place in order to be a sustainable, profitable venture? I will give you a hint: Without any one of these three things, your business will SURELY fail. But if you have at least ONE of them in place, you can get the other two. Can you guess what they are?

1. Capitalization

Too many entrepreneurs begin their businesses by flying by the seat of their pants without an appropriate cash reserve. Cash flow, more than equity or the uncertain promise of profits, is what gets a lot of small businesses into hot water. It is what makes a lot of entrepreneurs’ dreams fall flat on the ground before they ever had a chance to take off into the stratosphere. So be proactive about it:

* If you are thinking about starting a business but haven’t yet, make a budget listing every single start-up cost you will incur. This is your start-up budget. Then make another budget for every monthly operating expense you will need to cover in order to keep the business running, regardless of whether it turns a profit or not. Take that subtotal and multiply it by 12. This is your yearly operating budget. Now add your start-up and operating totals, and this is the amount of money you need to have access to in order to keep the business running for at least a year before it can be expected to sustain itself.

* If you have already started your business, but are struggling to survive, create your yearly operating budget, as outlined above. Then multiply it times 3. This is the amount of money you need to have access to in order to turn your business around (maybe settle old debts, catch up on late payments, etc.), keep it running and get some breathing room so you can make a plan for growth.

* If you have a business and are profitable, then use your yearly operating budget and pad it with your desired profit margin. Depending on your industry, a 20% profit margin is more than enough. For others, you want to see your profit double every year, especially if you have outside investors looking for their Return on Investment (ROI) from your company.

2. Plan

I know, I know, you want to be out there getting customers and delivering your product or service. If you’re just starting out or struggling, you figure you don’t have time to plan, you “must get out there and hustle.” And if you’re doing well, you figure you don’t NEED to plan, just keep doing what works. But here’s the faulty logic there. It is the PLAN that keeps you from slipping into survival mode and gives you the roadmap you need to avoid pitfalls. Some things you just can’t plan for, as many businesses in New Orleans can attest to. But having a plan in place can give you the guidance and focus you need in uncertain times. And in placid, profitable times, it can give you the push you need to take your business to the next level.

3. Metrics

An old saying goes, “You cannot improve what you cannot measure.” How do you know what advertising venue to keep investing your marketing dollars in unless you know which one yields the most leads or prospects and, out of those leads, the most customers? How do you know if it’s a good move to purchase that equipment unless you are clear on the tax advantages of capital assets and the effects of depreciation on your cash flow?

Am I talking Geek to you yet? I shouldn’t be! If you are unfamiliar with ANY of these terms, then don’t beat yourself up about it. Just get the tools and resources you need to intelligently manage your business! Like Sears says, “it’s all inside!”


Author: Monikah Ogando, Business Coach

Monikah Ogando, the Business Explosion Coach, is a well-known business strategy expert and the author of the popular report:

“12 Things You Must Do Before Quitting Your Job and Starting Your Business!”

Head over to http://www.ogandoassociates.com to get your FREE copy now!

Also, quickly download her FREE course, “How to Get Your Business to Make Money Within 24 Hours”at no cost!