You’ve made it through your first year in business. Congratulations! But as the excitement and flurry of first-year success begins to fade, businesses often realize that while they’ve survived, they may not have thrived.
If this sounds familiar, it’s time to get serious about turning a profit in year two. Learn from other small business owners on how they turned first-year survival into a more lucrative second year in business. Here are three tips to get your balance sheet on track, so you can be sure your business makes it into year three — and beyond.
1. Keep your eye on the prize
Remember that being busy isn’t the same as being productive. Don’t just do a lot of things. Instead, get things done that help improve your company — you can’t say yes to every event or marketing opportunity. Make sure that, however you spend your time and resources, it fits into your business plan and where you want to go in the future. For Shampooches Dog Grooming, a business in Alton, Illinois, featured on Season 3 of Deluxe’s Small Business Revolution — Main Street series, the key to financial growth was to establish a game plan to focus the business’s operations.
Shampooches owner Alicia Jeffreys says, “I was getting overwhelmed with what I had to do for payroll.” With one full-time employee and looking to hire another, she didn’t know where to start with a payroll program. She found that a solution like Deluxe Payroll Services allowed her to save time and energy, while ensuring that payroll was properly executed every time and that she is in compliance with all applicable federal and state laws.
Well-oiled operations like outsourced payroll keep things running smoothly, but make time for marketing as well. Jeffreys looked to Deluxe to help her provide branded promotional products that would serve clients’ needs for things like dog toys and collars — while doing double duty as Shampooches advertisements. By selling these items, Jeffreys could grow her revenue while promoting her brand via her customers.
The combination of operations and marketing improvements have made an impact on Jeffreys, who says, “This feels like a real business!”
2. Do more than survive
Even if you expect profitability to be high, keep expenses as low as possible — so don’t hire a position unless absolutely necessary or spend money on fancy programs when you could find a cheaper solution online. Often, the better option is to outsource work or look for someone new in the field trying to get their name out (these contacts typically have lower rates than their more experienced colleagues). Don’t buy things simply because an article said your office needs a certain thing to make you productive. Instead, create a budget and only purchase what you need now to keep the business running.
Be realistic about finances. In your first year, you may be working for free. Make sure you have money set aside in case of a slow month or several. In fact, it’s a good idea to have enough money saved to live off of for a year. And if things go well, you’ll still want to be disciplined: Take the money you could pocket and invest it back into your business. Use it to improve your products and marketing, or outsource something that’s slowing you down. Don’t be afraid to outsource important tasks like marketing; it’s not always as expensive as you think.
Survive while finding ways to thrive. It’s a delicate dance, but while you handle the everyday operations, look for ways to grow your business. In the upcoming season of Small Business Revolution — Main Street, we’ll see how a woodworker went from losing precious time to time well spent. He just had to make slight changes to his process and accept help to grow his business.
Be patient. Perseverance is key, and tools like automated email marketing can free up time during your day. You can’t do it all, and that’s okay. In year two, devise a game plan, create a budget and think about your marketing plan — consider including an expert to quickly and effectively implement parts of your plan.
3. Focus on profit
At some point, passion can only go so far. You need to go from dreaming of survival to maximizing your time and turning a profit. Dig into your numbers so you can get to the heart of your expenses, what you’re making and how it stacks up to expectations.
If you’re not bringing in as much as you hoped, consider what Miguel’s Riverside Barber Shop from Season 2 of “Main Street” did to increase his funds in lieu of an expansion: He built momentum by rebranding, raising his marketing efforts and planning new ways to generate sales. By creating promotional merchandise, Miguel’s could sell hair and beard products to up its sales. Because national averages for salon product sales are typically 20 percent of a shop’s total revenue, and Miguel’s were less than 5 percent, branded hats and dopp kits helped amplify his existing product lines. Those branded items meant he could extend his shop’s reach after clients have left the shop.
Consequently, the shop is enjoying an increase in clientele, with the branding efforts boosting visits from repeat and new visitors.
How does your business stack up?
You survived year one with blood, sweat and tears. Make year two the year your passion turns a profit by following these 3 steps to success: Stay focused, do more than survive and focus on profit. With a bit of effort, your business will be heading into year two stronger than ever. As Velez says, “It’s not easy running any business, but if you’re passionate enough about it and have the right guidance, it can become successful.”
Is your business ready to go from being your passion to turning a profit? Take this free quiz to see where you stack up for year-two success.