Entrepreneurs, Let’s Bulletproof Your Business in 5 Steps

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Recessions, pandemics, growing too fast, slow revenue months… There's a lot that can take out a business if you’re not prepared. No need to fret, though! In this episode, I’m sharing five actionable steps to bulletproof your business so you can not only survive, but thrive no matter what season you’re in in your business.

I know that we all have heard the stats about business failure rates. This is data from the Bureau of Labor and Statistics, and I'm not saying this to be a Debbie Downer , but did you know that 20% of new businesses fail within the first two years and 45% or almost half fail within five years? Only 25% of businesses make it 15 years or more! So let me ask the question, why do businesses fail?

According to the stats, they fail because they're not in a good market or they have poor marketing, they're not able to bring customers in and their product isn't the right fit, they have poor planning, not enough cash flow, they're not able to pivot when things get tough, or they grow too fast and expenses increase faster than sales increase. I'm not a marketer so I can't help with the first two, but all the rest can be mitigated by taking steps to create a more resilient business!

Here are?5 steps to bulletproof your business:

1. Make sure your business is?cash flow positive. You should be bringing in more money than you’re spending every month. This might seem obvious, but a lot of businesses actually aren't super profitable, which is why the failure rate is so high! If you need to increase your overall cash flow, then look at ways you can create more consistent monthly income and/or cut down on expenses that aren't necessary or aren't giving you a good return.
2. Pay yourself a?market rate salary! So many business owners don't pay themselves consistently but it's SO important that you're taken care of personally (otherwise, what's your business for?). If this is you, then prioritize increasing your cash flow until you?can?pay yourself regularly.
3. Make sure you set aside money for?taxes. If you're at this step then that means you're cash flow positive, which also means that you'll have to pay some level of taxes. To avoid getting stuck with a huge tax bill, you need to set money aside to cover taxes throughout the year. I generally recommend putting aside 20-30% of your profits into a completely separate tax account every single month.
4. Set up a?cash cushion. We've all heard the advice about having six months of expenses saved up personally, and the same goes for your business. Out of your profits, prioritize saving up 2-3 months of business expenses in a business savings account so that if something does happen to your business - your sales decline for a couple months, you have to take time off, etc. - you have runway to figure out what to do next.
5. Pay off all your business debt and personal debt.?This will keep you from feeling scarcity in your business, because all your cash flow is eaten up by debt payments. I put both business and personal debt in this bucket because I find that if you as the business owner are carrying debt (especially if it's high interest!) you're more likely to feel stressed about your business's finances. Paying off your debt also ensures that you aren’t funneling a ton of revenue into high-interest payments when you could use that money to invest in something else.

In episode 8 of the Profit + Prosper podcast, I’m talking about How to Bulletproof Your Business in 5 Steps.

Here’s what we’ll cover:

• Why you need to create a more resilient business, and why businesses fail
• How creating a solid financial foundation helps you grow with more ease and profits
• 5 steps to bulletproofing your business

?? Click here to listen to the full episode - 08: Let’s Bulletproof your Business in 5 Steps

Let me know in the comments - Which of these steps will you take this week to bulletproof your business?

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