The 4th pillar of the GrowthGen work-life framework is revenue, and that’s what I’m looking at today.
The first three pillars are clarity, habits and communication – which I’ve also written about.
Now, our pillars go straight from communication to revenue. There’s no pillar about ‘sales’. There are enough people who talk about sales already, including our excellent GrowthGen coaches. Sales is one kind of communication, and the result of sales is revenue.
My story is probably the same as many entrepreneurs. When I started out, I had a craft I wanted to share with the world. I wanted to help solve a problem. That was why I started my own business.
Very few people start a business and work their butts off just to be rich. They start because they’re good at something and they want to do it. Or they see an opportunity and want to be the first at delivering a great solution to their industry or the world. There’s a payoff there which is about more than money.
But as a creative entrepreneur, I really did not understand revenue, money and what makes a strong business. It was a whole different ball game for me.
I knew – theoretically - that money was important. But I didn’t know what it meant for the day-to-day. All the ins and outs of
understanding your taxes
how to pay your employees
All these things are pretty tedious and take up a lot of your time. But they’re essential. And they all help with the one thing you need in your business and for your life, so that you can go on getting your non-financial payoff. Which is revenue coming into your business. More importantly, profitable revenue.
You need a focus on the business side of things
So many small business people start out just believing their skill is going to make them money. They don’t necessarily have a solid business plan.
I might say, ‘If I create this awesome event, people will flock to it and it will sell out.’
A café owner might say ‘If I make great food, everyone's going to flock in to eat. I don't have to worry about the finances.
A retailer might start with the mentality that ‘if I make beautiful clothes, everyone's going to buy them’.
But the reality isn’t that simple. It’s not just the time you spend on financial tasks. More basically, entrepreneurs start business without thinking about the costs of stock, the costs of marketing, the time until they’ll earn income.
And that’s why 70 percent of new businesses fail in their first year. Why another 50 percent of the survivors fail in the next five years.
Revenue vs profitable revenue
It’s also very easy when you first start off in a business to see the money coming in, but not the money going out.
Even the English language doesn’t help. You might say, ‘I made $5,000 today.’ But actually, you didn't. You billed 5,000, that’s true – but you had $4,000 of costs! So really you only made $1,000.
It’s really important to understand what your revenue and how money flows through your business. At a minimum, you need to know where money comes in and where it goes out.
And make sure when you look at your bank account, that you know what’s still got to come out. Because what you have in your bank account isn’t always available for you to use!