How to make money from your business without putting it in danger 2021

 

How to make money from your business without putting it in danger 

In 2015 I started working with a few of entrepreneur brothers who have an industrial equipment rental business. At that point , they earned slightly below 20 thousand pesos each.


The business was very successful, growing at interesting rates year after year and with an percentage of quite 80%. All the profit that came in was reinvested to shop for machinery and make it grow more. thus far everything sounds good. However, therein equation, the brothers forgot to line aside a number of those earnings for themselves.


What happened? That even their own families resented things .


Today they earn 250,000 pesos each and their business continues to grow; the last year by 30%, and in fact their families are the happiest.


What was the catch? Between growing their business or making money, 90% of entrepreneurs will prefer to grow the business.


It is common to listen to some entrepreneurs say that you simply shouldn't take a fifth of the business which everything must be reinvested and reinvested. Almost as if it were a binary decision: you grow otherwise you make money.


But what if both might be achieved?


This was exactly what the brothers and that i worked on, and it had been nothing quite following a series of straightforward rules.


The first was to place the whole administrative and accounting so as to know what proportion money the corporate was really generating. Having the right financial information to the penny was a requirement to be ready to balance growth (the purchase of more equipment) with the “distribution of dividends”.


Once we did that, we used Mike Michalowicz's book Profit First by Mike Michalowicz as a technique .


Let's take a mean month. we've a particular collection during those 30 days, but from there we make payments (suppliers, fixed, etc.) and if within the end there's money left over, then we could plan to give something to the shareholders, and if there's no excess, then we pay nothing.


This way of running the business, which is additionally the foremost common worldwide, has one major drawback: we'll always find what toil away money.


Think about it: when your business features a excellent quarter, a year, or several years, you modify the trucks, take the vehicles to repair to the agency, improve the computers, hire extra people and fire personnel without much problem. But when the business has bad months or years, then we don't change the truck, we do the services during a workshop, we don't touch the computers, we don't hire so easily and you are doing not give yourself permission to fireside so quickly.


The example within the book is ideal:


When your toothpaste reception is nearly gone, you remember that you simply need to shopping , but subsequent day you forget it and thus now you've got an almost empty toothpaste tube. Somehow you manage to urge enough money out of him to "survive" that day, and you create a attention that now you are doing need to choose pasta.


The next day, history repeats itself: you forgot to shop for pasta and now you've got less. Yesterday you thought there was no way you'll get more paste out of the damn tube, but since you've got no other option, you get a touch more out of it and brush your teeth another time .


What does one think happens subsequent day?


Again an equivalent , you'll not attend buy more pasta and once you get to the toilet you simply need to hit the sink angrily because you forgot again, but since you've got to brush your teeth, again you are doing your best to urge more toothpaste from the miraculous tube.


And so a couple of more days could pass, within the last attempt you'd take a knife, and you'd open the paste and as a cardiologist surgeon you'd remove the filling at any cost.


Now, what would have happened if you had three new tubes of pasta in your bathroom drawer? you'd have thrown away your nearly empty pasta from day one; a paste that also gave you many more days would have ended up at rock bottom of the ashcan in your bathroom.


What am I going with this?


When we have good times, we discover ways to spend our money during a looser way than once we have bad times; We roll in the hay with toothpaste, we roll in the hay with gas from the car (you drive faster with a full tank than with a half empty tank) and in fact , we roll in the hay with the business.


The problem then isn't that there's no money to offer to the owners, the matter is that giving money to the owners becomes our last priority.


What the author proposes (and what we did with the brothers) is:


Every month we'll take 2% of EVERYTHING collected, and that we will provides it to the owners. for instance we formalize a "2% commission" for the owner.


Apart from their salary, the brothers then earned 1% of everything collected monthly .


As the months and years passed, we increased this percentage and today we are removing 14% of the gathering month by month and therefore the business continues to grow.


The recipe looks simple, but it's tough . Some points to think about to form it really work:


1. Accounting and financial statements need to be 100%. during this case it took us a minimum of a year to realize it because they didn't have an administrative system that might give us what we wanted, so we had to implement one (and that takes an extended time).


My recommendation is that you simply search for an ERP.

2. The withdrawal of resources must tend in periods not exceeding 30 days , a minimum of once a month the cash must be withdrawn, otherwise the habit is lost.


My recommendation is that it's done weekly.

3. Start with alittle percentage (the intention again is to make a habit), and once you begin it's advisable to not stop. you'll have months or weeks where you are feeling that you simply shouldn't get anything, but that's the intention, that you simply force yourself to not have that cash for the business which forces you to enhance control of your expenses.


My recommendation is that if you begin with alittle percentage you'll not have the maximum amount problem, if you begin with a high percentage you'll have a true crisis, and you'll haven't any option but to prevent your commissions and once they stop for the primary time they're going to not be returned to restart.

This is one among the simplest books that as a business coach I can recommend you, here may be a link for you to shop for it on Amazon.

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