In the last 2 weeks I’ve been talking about what financial freedom is, and why you need to know what it means to you, and about not abdicating responsibility for the financial success of your business.
As part of my special 4-part series on building financial freedom, this week is all about getting out of financial survival mode.
I meet far too many businesses that have been trapped in survival mode for too long. It’s all part of the process when a business is young – working through the inevitable challenges and getting to a place that’s stable. But we need to move beyond that as quickly as possible if we want control over our future.
The signs of financial survival mode:
- Just getting by. Either loss making or running at break even
- Making a very small profit but not enough to build the future you want
- Living for today without much thought for the future
- Spending more than you earn, both personally and in your business
- Permanently tight cash flow
- It’s a battle to hit sales targets each month (or worse, you don’t have any sales targets!)
- There’s no money to invest in training or growth, a vicious cycle keeping you where you are
- Chances are things feel pretty stressful
Why does it matter?
We need to get out of survival mode as quickly as possible. It’s a stressful place to be and it won’t move us towards financial freedom.
Being stressed stops us thinking creatively and strategically and just keeps us exactly where we are. And it makes us lose our confidence and drains our energy.
All that work and effort and yet nothing to show for it.
Why you need to take action
If you’re in survival mode then you’re accepting the accidental financial results that come your way. Rather than choosing the results you want.
Which means you stay stuck, just hoping that things will change, hoping you’ll get a lucky break. Waiting to be discovered?
So you need to take action to break this cycle and create a plan to get out of survival mode.
An action plan to get out of survival mode
Just Decide To.
Decide that you’ve had enough of things as they are and that you’re going to break the cycle.
Be prepared to take action. Consistently. The things that make us successful are the ones we do week in, week out.
1) Start with cash flow. Tight cash flow is debilitating and will never bring the best out in you. If you’re juggling cash in your head get it onto a 13 week rolling forecast spreadsheet (email me if you’d like a template) and make sure your cash is mapped out so you can see where the real pinch points are and can plan how to get through them
2) Take a good look at your business model – does it stack up? You need to take some time out to think through and pin point what exactly isn’t working. For example:
a. Are your overheads too high, making it difficult to make money
b. Are you paying yourself more than you can afford to?
c. Are you paying staff you can’t afford to; is everyone adding enough value to warrant being there?
d. Are your sales too inconsistent or too low? If they are then you probably don’t have a marketing or sales plan that’s working. Don’t gloss over this one as we can never have control over our future if we can’t influence sales
e. Do you have a robust route to market – if you don’t know exactly who your target customers are AND how you reach them, you’re always going to get random sales. I really do believe this is one single most important things we need to get right. This isn’t necessarily an easy thing to nail, but couldn’t be more critical if you want to get out of survival mode.
These are just a few ideas to get you started, but if you’re in survival mode then something about your business isn’t quite working at the moment. Don’t be disheartened though. Despite what you might see in the press it isn’t easy to make a business work!
How many more years will you waste by not being in control of your finances?
I’m hoping that you’ll say “no more” and this stops right now.
Financial success isn’t something we can get instantly, and financial freedom is most likely to come from making and keeping profit in a consistent way, month after month, year after year.
It comes from making small steps and building strong financial habits that become your new way of life.
Signs that you’ve moved beyond survival mode:
Hopefully you’re reading this thinking “that doesn’t sound like me”
And if that’s the case then congratulations!
Here are some signs that your business definitely isn’t in survival mode:
- You’re making and retaining at least 10% net profit after tax and dividends each year – keeping and reinvesting your profits in your business
- You don’t worry about cash flow
- You regularly put enough money into your pension fund –enough to give you the X number you want
- You have all of your taxes put away in separate bank accounts
- You have buffer cash set aside in your business and in your personal finances
- You have a marketing plan that consistently brings in enough leads to give you the sales you need
Have great week and next week I’ll be talking about the tools and habits you’ll need to build your own Financial Freedom.
And if you missed the 1st or 2nd blog in this special 4-part series you can read them here