We’ve all heard this catchy title phrase – Work on your business, not in your business – but what does it really mean? When you work on your business, you set the course and navigate the waters, and let your team do the rowing. On the other hand, if you are working in your business, you are rowing the boat so hard you are not able to pay attention to the direction you are headed.
As the leader of your business, your responsibility is to make sure you are maximizing profits: Selling the right product or service in the right market to the right customers at the right price for the right reason. You need to study and know your market, poll your customers, measure the likelihood that they will return and recommend you to others.
To work on your business, you need to know how you are doing at all times. Take a minute to answer these questions and test how you are doing right now.
1. When was the last time you analyzed your financial performance against your industry averages?
2. Are you performing better or worse?
3. How much is your business worth? If you don’t know now, how will you know if all your hard work has created any value at the end of the year?
4. Now think about the future. How much will you need when you exit your business? If you don’t know what your business is worth today, you won’t know how far you have to go to get to your exit target.
If you struggle to answer these questions, it’s time to dig into the numbers and come out with a clear picture of your business financials. Without this, you are doing a disservice to yourself, your employees, and your customers.
When you know the value of what you have, you can protect what you have, and work on improving your marketability to be ready for anything – expected or unexpected – that comes along. If you do not know what makes a business marketable, ask for help.
Guest blogger: Michael Pfeffer
Michael Pfeffer, MBA is the owner at Murphy Business & Financial Services of Southwest Florida, a full-service business brokerage firm with 175 offices throughout North America. Mr. Pfeffer is a Certified Exit Planning Advisor, Board Certified Intermediary, Certified Business Appraiser and Certified Machinery & Equipment Appraiser.
His office is at 27499 Riverview Center Blvd., Bonita Springs, FL. Call 239.793.0431.