In many ways, running your own business feels a lot like a rollercoaster ride.
Click, click, click. You’re chugging right along up that first huge hill—the one that will give you all of your momentum for the rest of the ride.
Sales are rolling in, your marketing efforts are landing, and there’s tons of great buzz around your product or service. You’re on the up and up—and you assume things will stay that way.
But suddenly, without warning, you feel a little uneasy. The floor beneath your feet feels like it’s shifting. Before you even realize what’s happening, you go charging down that first steep hill.
Your eyes are watering, your stomach is in your throat, and you’re wondering how you went from a steady climb to a steady plummet so damn fast.
The moment that you finally collect yourself and get your bearings? Hold on tight—because you’re about to do the same thing all over again.
It’s a phenomenon I’ve already covered in detail. The pendulum of business swings between those two extremes at a wickedly breakneck pace.
Here’s another thing I’ve already mentioned: The best, most successful businesses don’t just maximize that uphill climb, when things are running smoothly and everything is falling into place. They also do everything they can to prepare for that inevitable stomach-churning drop.
Now, here’s the million-dollar question that I know is on your mind: How?
How can you get your business adequately prepared so that you aren’t just white-knuckling that safety bar when you start plunging down that terrifying hill—and are instead confident that you’ll weather those ups and downs?
1. Figure Out What You Want for Net Income
When it comes to streamlining your business, it’s best to start at the bottom and work your way up. So, instead of just looking at where you currently are with your net income, ask yourself this question: Where do you want to be?
Sit down and compare that number with where you are right now. What exactly do you need to do to achieve that desired net profit you’ve set for yourself?
Many people come up with an answer based on just one side of the equation. “That’s simple,” they tell themselves, “I need to increase my sales. Duh.”
But, think about this: Is it any different to your bottom line if you earn an extra $5,000 or you save $5,000 in your expenses? Nope, it isn’t.
By reducing your cost of doing business, you can improve your operational efficiency and get your company prepped and ready for those inevitable rainy days—without having to hustle to get another single dollar through the door.
Takeaway: Defining the outcome you want is the first step to being able to engineer it.
2. Get a Grasp on Where Your Money is Going
Alright, so you know it’s smart to trim the fat and reduce your expenses where you can. But, how do you get that process started?
To keep things simple, you’re going to break this step down by department. Roll up to each of your team leaders and have a conversation about things like:
- What’s their current budget?
- How much of that budget are they actually spending?
- What are they spending those dollars on?
If you really want to dig in deep here, a few CFOs I’ve spoken with recommend assigning a credit card to each department for their expenses. Doing so allows you to get a really solid understanding of what money is heading out the door of your business each month.
Whether it’s a subscription that department is no longer actually using or another totally unnecessary expense that doesn’t actually generate any meaningful results, you’ll probably identify at least a few places within each department where you could tighten your belt—without having any impact on the actual work that they’re producing.
Takeaway: Non-essential expenses are a massive opportunity to cut costs without making an impact on your bottom line. It just takes asking the right questions to figure out what those expenses are.
3. Make the Most of What You Already Have
Dealing with the constant ups and downs of business ownership is tough enough. But, then you also have to figure out how to successfully manage your resources—particularly when it comes to hiring.
When sales pick up, you can easily fall into the trap of bringing in as many warm bodies as possible to help carry the load. And, when things slow down? You’re stuck making payroll for a bunch of employees you don’t need.
That’s why some of my very best advice for business owners is this: As tempting as it can be, don’t hire too soon.
We all want to step into that CEO role and start delegating tasks as soon as possible. However, particularly when you’re focused on keeping your expenses lean, there’s plenty that you can do yourself—without needing to pay someone else to do it for you.
If there is some extra work that needs to fall onto someone’s plate? Rather than hiring reactively, take a look at your existing employees and resources to see if there’s a way to get that work accomplished without bringing on a new employee immediately.
In the end, offering one of your current team members a bonus or promotion to take on some added work will be far cheaper than hiring, onboarding, and training an entirely new person.
Plus, what happens if you do expand your team too quickly and suddenly your sales take a nosedive? You’ll inevitably need to let some people go—and, nothing destroys morale quite like layoffs.
So, do your best to make the most of your existing people and resources before immediately jumping on the hiring bandwagon.
Takeaway: You have way more resources already at your disposal than you probably think. Identify ways to maximize those before adding additional expenses to your plate.
4. Explore Alternatives to Hiring
You did that—you took a look at everything you have in your current arsenal, and there’s no way around the fact that you still need some extra help.
Here’s something to think about: Rather than bringing on a new person, is there software that could help shoulder some of that burden? I’m willing to bet you can find something.
Even if the software you need to automate a process or handle a certain workflow is $2,000 per month, that’s still significantly cheaper than needing to pay an employee’s salary and benefits.
And, another perk? If you need to tighten your budget even further, it’s way easier (not to mention better for morale) to let go of software than it is to let go of people. Software doesn’t have feelings or a family to feed.
If software doesn’t fit the bill? An additional full-time employee isn’t your only option.
Consider hiring someone part-time who can take some responsibilities off of your team’s plate, but won’t require as huge of investment. Or, look to the numerous companies that exist to help you outsource some work. A few examples include:
- Fancy Hands: To help you with research and other administrative work.
- Upwork: To find all sorts of different freelancers.
- TopTal: To find freelance developers, designers, and finance experts.
Yes, eventually a growing business will require additional hires—I’m not saying that it’s something you should avoid at all costs. However, it also definitely shouldn’t be a knee jerk reaction as soon as the pace picks up a little bit.
Takeaway: Hiring full-time help isn’t your only option. From software to companies that can help you outsource some work, make sure you explore what’s out there before committing to hiring.
5. Keep an Eye on Your Software Spending
Do you have software that you’re paying for monthly? I bet you do. Well, when’s the last time you evaluated what it’s actually accomplishing for you?
The next time that billing cycle rolls around, take just a few minutes to analyze that software by asking yourself things like:
- Is there any way it could be consolidated with another piece of software you’re already using?
- What has that software accomplished for your team in the past month?
If you’re struggling to point to a single thing in response to that second question, that could be a red flag that you’re throwing money at something that isn’t actually generating results for your business.
I know better than anyone that it’s easy to continue footing the bill for software just because you’ve always had it. But, if it’s not actually doing anything for you, why continue to pay for it?
Takeaway: You might be footing the bill for solutions that you aren’t actively using. Keep a close eye on your monthly software spending so that you can trim the fat when needed.
There Are Drops Ahead: Get Your Business Ready
Running your own business comes with plenty of hands-in-the-air-worthy highs, as well as plenty of scream-worthy drops.
The most successful and efficient businesses out there know it’s important to get themselves and their teams prepped and ready to withstand those sudden dips that send your stomach plummeting straight toward your shoes.
How do they do that? By doing everything they can to prioritize the operational efficiency of their businesses, so that they can rest easy with the knowledge that they’re on solid footing no matter what.
Here’s the good news: You can do that very same thing for your own company.
Put these five strategies to work within your business (and repeat them when necessary!), and you’re that much more likely to keep things running smoothly—regardless of where you are on that roller coaster ride.