Don't Let Money and Fame be the Foundation of your Business
When a CEO let money and fame to take over the business foundation, financial mistakes were made. The falling of WeWork should be lessons learned for many entrepreneurs who believe growing fast based on false metrics such as higher revenue and multiple products are the way to have a sustainable business.
Why not paying yourself a CEO level salary hurt your business at the end
Are you hurting the future of your business with this fixable mistake? When you started this entrepreneurship journey, it makes sense for you to accept a temporary drop in income to make it happen. On the other hand, after you reach 7 figures and above, paying yourself far less than you’re worth, or nothing at all paints an unrealistic picture of the stability of your business for both you and any investors you hope to appeal to now or in the future.
3 questions to answer how to pay yourself
You have been in business for more than 3 years. You also have figured out a consistent lead generation. Now you want to know how much should you pay yourself as the CEO of a successful business. There is no one size fits all to answer this question. And sadly, there is no magic bullet either. But you can start by figuring out your priorities. Is it contributing to your household income? Is it focusing on growth in your business? Is it scaling your business? Now, let’s discuss the thought process for each priority and how each priority can impact how much should you pay yourself as the CEO.
Why you need to analyze your product profitability
Have you heard about the 80/20 rule? In order for you to spend 20% of your effort to create 80% of your profit, you need to understand your profitability at the product, client, division or region level, not at the total profitability level. Total profitability is the common metric out there. However, it is more accurate for any business to analyze your profitability either by product, client, division or region.
How to create an emergency fund during the slow months
Do you have a process in place to lower your financial stress level during the slow months? When your revenue drops in certain months, your stress level rises. Watch this 3-minutes video on how to eliminate business cash flow stress during the slow months.
How to avoid cash comatose after a product launch
I was listening to a podcast that spoke about cash flow. The host mentioned if you need more cash during the month, then turn on the "lead" faucet and sell more. I agree that we need to have a solid lead generation machine as that's how cash comes into the business. However, this mindset about selling more and more when you need cash leads to cash comatose. Cash comatose happens when entrepreneurs don't understand when revenue is actually earned. They use the cash received before they serve the client.
How to forecast sales with confidence and clarity
There are many marketing metrics out there that we can measure. But you shouldn’t track all marketing metrics simply because they are measurable. You track marketing metrics that will guide you toward future decisions that increase profitability. As an On-demand CFO, I make sure that my clients have clarity and confidence in their sales forecast, which leads to revenue. The marketing metric is definitely a key component in forecasting sales. Watch this video as I share a few other steps that you need to consider to forecast sales for your 7 figures business and the key steps that have given clarity and confidence to my clients.