5 Finance Milestones Every Successful Business Should Reach

Instead of a typical 9 to 5 job, many individuals opt to run their own business. From an ecommerce store to the standard brick-and-mortar, similar requirements exist for all types.

There will always be material costs, no business is immune to experiencing some crisis, and there should always be a list of goals the business works to reach. While a business may have its own list of goals to meet, there are 5 financial-based goals that each business should have on their list.

Be profitable.

While this milestone may seem like a “no-brainer,” there are businesses that continue to end each year in the red, with their owners keeping afloat with personal funds. A truly successful business is one that pays for itself and then some.

It should bring in enough revenue to cover costs of raw materials, utilities, and payroll with enough leftover to put into an emergency fund and the business. Determining where profits go and how they are spent can significantly affect a business’ profitability. Not putting money away for emergencies can put a business in debt if something goes awry, and not investing in the business can keep profits at a standstill.

Eradicate debt.

When first starting a business, individuals may take out a loan, re-mortgage their houses, or borrow from family and friends. Having an overshadowing debt cannot only put pressure on the business to succeed but will keep a business from being truly profitable.

Any profit that a new business makes must go into covering business costs and utilities as well as payments on debt. After a business pays off all outstanding loans and debt, they can see true profits, which can then be put into an emergency fund or invested into the business.

It is crucial to eradicate debt as soon as possible: A business should not have outstanding debt for more than three or four years. Not only is this a bad financial practice because interest must be paid, but it prevents the business from being able to grow.

Invest in budgeting software.

While a business may get away with a simple Excel spreadsheet or book budgeting in the beginning, a growing business introduces a more complex budget. Some business owners are unable to handle a more complex budget because they don’t have a financial background.

It may be time to hire a bookkeeper or accountant to take over. But if there is a desire to keep costs at a minimum, investing in budgeting software can be just as good—if not better—than hiring someone to help.

One budgeting software is True Sky, a budgeting, planning, and forecasting software that integrates with Excel and is extremely user-friendly. The benefit of budgeting software is that it provides detailed, real-time information necessary in making decisions. Ultimately, it can help the company grow.

Establish an emergency fund.

As in personal finance, businesses must have an emergency fund on hand. Human error, customer accidents, natural disasters, and crimes can all impact a business at any given point.

If a business is not prepared for a crisis to strike, it may need to take out a loan to pay for fire damage, settlements, or rebuilding. An emergency fund means that the money is already there and can immediately be put to use. The turnaround time from an emergency will be much smoother and quicker, meaning that the business can reopen sooner.

Remember that the emergency fund should not be used for expansion purposes; those funds should be delegated to a different account.

Grow the business.

There are a variety of ways to grow a business, and which way it grows is dependent on the owner’s desires. The typical thought that comes to mind is a physical growth, either by expanding the current location through construction or a move, or by opening a second location.

Another way of growing the business is through an ecommerce store; a local coffee shop can still have its brick-and-mortar location while also offering a way to shop for some of its herbal teas or merchandise online.

A business may consider expanding the services it offers. For instance, a home-cleaning company may look into cleaning after floods or natural disasters, thereby keeping their service consistent but offering another type. While there are various types of growth options to suit individual business needs, all can help increase profits.

When starting out, typical goals are growing a customer base and establishing a name in the market. As a business reaches its goals, more goals need to be set to continue the momentum of growth. These five milestones are meant to develop the business into the most successful version, one that pays for its operational costs and has enough money leftover after the fact.

Hannah Nava loves writing about any topic, and writing about businesses is no exception. She currently writes on behalf of the budgeting, planning, and forecasting experts at True Sky. When not marrying words, Hannah enjoys reading science fiction, fantasy, and dystopian works; sipping margaritas (always frozen); and trying to make the world a happier place. Tweet her @hannahmnava or connect with her on LinkedIn. 

Tags: Budget, business software, Business-to-business, successful business

Category: Business