Most entrepreneurs aren’t numbers people.
Our decision to start a small online business is driven by passion, not market trends or growth metrics. It’s fueled by a vision for a happier world where we empower people to get just what they’re looking for. Whether it’s the perfect summer swimsuit at a budget-friendly price, an individually customized nutrition plan, or anything in between, we live to offer people the thing that makes their lives easier and more fun. And guess what? Selling those things to them makes our lives easier and more fun!
We’re also motivated by the excitement of growth. Our businesses are our babies, and when they take those first wobbly steps forward, we’re over the moon, ready to give them everything they ask for.
What we’re never prepared for is the day that they start demanding more from us than we have to give. Time. Money. Additional products and services. Creative genius.
What most of us forget is that, unlike real babies, our businesses are built to serve us—that means YOU—not the other way around!
A Rock-Solid Path to Achieving Your Business Dreams
Think back to the dreams you had, when you first started your online business. You knew it was going to be hard work, a lot of hours and maybe a few sleepless nights of rushing to finish promotions and fill
orders. But what you really dreamed about, the vision that called you forward, was a life lived on your terms. A thriving business that ran efficiently, grew steadily, and allowed you to experience and enjoy the things that really matter to you.
This kind of business really does exist. And there’s one word that separates this kind of business from the kind that keeps you running in circles year in and year out.
That word is profit.
The Bottom Line exists to help small online business owners like you enjoy more profit, more pay and more play in your business and your life. (Because let’s face it—the two are connected.) The Profit Path membership is all about setting up a rock-solid path that takes you and your business, step by step, from wherever you might be now to the place you want to be.
Step 1 : The Systems
The cornerstone of a profitable business is a reliable accounting system. (FYI, this is different from a bookkeeping system.)
In the beginning, you can make do with a few income and expense spreadsheets—it’s better than nothing! But a good accounting system is one that can scale with your business, producing your income statement and balance sheet at any level of sales, from $1 to $1 million and beyond. A really good accounting systems will provide more within it than just accounting—it’ll offer features like invoicing, file storage, contact database, user permissions so you can expand it beyond just you to members of your team—features that track with your business as it expands and scales.
There are a lot of systems to choose from, but the main thing is that you choose a system you will use. It needs to be intuitive, easy to learn, and simple to train someone on. What you don’t want is a system that gets you so lost in the details that you avoid using it.
Step 2: The Facts
Once you’ve got the systems, they drive you into gathering the facts that let you make strong decisions for your business.
If you’ve been in business for any length of time, you know by now that as soon as you solve one problem, there will be something new demanding your attention. Having the facts on demand is critical for trusting yourself to create efficient solutions on demand. Do I have enough cash? Am I being profitable? How much did all this stuff cost me, and which costs could I cut if I needed to?
When people don’t have facts, they create solutions that chase nickels instead of dollars. A lot of clients will spend a lot of time and energy figuring out how to cancel out tiny expenses. While it’s good not to pay for things that you don’t really need, it doesn’t make sense to waste your time and energy going after the expenses that don’t affect your margin. Spend your effort on the decisions that will reduce your margin in one area from 10% to 5%.
Facts also reduce the impression of cash flow when the sales are high. There is a rush when the money hits the bank account, no question. But seeing that money in the bank without the big picture context creates this impression that you have cash, which in turn leads to making decisions from a false sense of security. For instance, you may have just seen a $30,000 deposit, but what do you really get to keep out of that?
This is especially prevalent in the eCommerce world around Q4. People make a lot of big, expectant decisions at the end of the year, only to sober up in Q1.
Let’s be honest: entrepreneurs are risk takers. It thrills us to take the chances and win big. But the facts let you ensure that those big wins happen more often, and aren’t built on crossing our fingers and hoping it all works out.
Step 3 : The Prep Step
Most business owners leave themselves out of the business. They don’t think about building the business to give them the income they want—they just try it on like a new dress and hope it fits ten years down the road.
Step 3 on the Profit Path is all about identifying your actual financial needs along with a good/better/best model. The good number is what you actually need to live; the better number is your upgrade from that; the best number is your dream life.
You identify the details of these good/better/best situations, and then get monthly and annual numbers for exactly what it will take to create those situations. Once you have numbers, you’re empowered to craft a plan for getting there.
Vision statements are fun, but they’re not specific enough for this phase. You have no idea how many people we talk with who say, “I want to make $5000 a week,” but when we actually sit down and work out the numbers in detail with them, $5000 per week was not nearly enough for the life they want or need to live.
All of us get into business to fund something greater—funding a kid’s college education, paying off a house, or being able to support a nonprofit. But to get there, your business has to be profitable. This is true even from a legal standpoint—after three years of losses, the IRS starts wondering whether you’re really running an actual business.
Step 3 is where you focus on your needs and make sure you build the business that supports that, not one that makes you put off your dream life.
Step 4 : The Plan
Once you know what you want and need from the business, and how it fits with the life you want to live, Step 4 comes in to help you determine the how. This is where you answer questions like:
What am I going to sell?
How much do I need to sell?
What am I going to tell my money to do, once it shows up?
You have to make your decisions about money before the money shows up. Get it down in writing, so you don’t end up trying to make big decisions when you’re drained, or emotional, or overly confident.
This step is possibly the hardest of them all, because it takes discipline. But it’s also the step that empowers you to get rid of debt, fuel your dreams, and have a little fun, even when it seems crazy.
Step 5 : The Profit
This final step is all about taking action. Profit happens when you put your plan into action by executing it and keeping it in step with your business in real time.
As Profit First Professionals, we believe that you should meet with your money at least twice a month to make sure it’s tracking with your plan. You should also review and adjust your plan every 90 days. These meetings go on your monthly schedule, and you treat them like real appointments.
During these meetings, you evaluate if your systems are in check, if you have all the facts you need, has anything about the prep changed, has anything about you or your life changed in a way that demands you change other parts of the other four phases.
(Tip: it really helps to have a third party in your meeting, someone who shows up with you to keep you accountable and help you make the important decisions. And it just so happens that we do exactly that for members of The Profit Path.)
If your systems are clunky and not updated, or if your facts are outdated, there’s no way to measure anything. You’re just running on opinion and guesswork, and that’s a bad idea. You probably know that from personal experience.
The Bottom Line
Systems, plans, and accountability are not things you do just to keep the IRS out of your hair. They’re for YOU. When you have the numbers, the facts, and the dreams for your online business down in writing, and organized into a system that scales with you, you are truly in charge of your money. You have the power to expand or maintain it, change it or hold steady. You can make decisions based on what you really want, not what all the business “gurus” and competitors say you need.
Remember, your business is like a baby. You can let it run you around with its constant demands, or you can train it to become the full-grown profit powerhouse you always dreamed of. And the Profit Path is designed expressly for putting you in the power seat.
Best of all, it works no matter where you start from. You can use it with any existing partner or system you already have, or you can start from scratch with The Bottom Line’s guidance and support.
If you don’t have a relationship with someone as your accountant and want someone to help you who knows this path inside and out, think about working with us. We’ve got email support, all systems included, training, all tailored to the ecommerce and online business scene. Our systems take care of you whether you’re making $1000 or a million per month in sales when you’re a one man show or have a team of ten or twenty people.
Who you are financially in life is who you are financially in the business. You need to create a plan so that you never forget it. You’re in this business to receive the financial rewards you need.
