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What Can I Do Differently To Grow My Business?

Your Money
What Can I Do Differently To Grow My Business?

Hello Miss Tolani
I read your column in the last edition of Drive Magazine. You talked about planning your money. That it is not how much you make that matters but how much you keep.
How does one achieve 'keeping' in a very tight situation? I am an entrepreneur and have been running my business for three years now. I am yet to see growth in my business. It isn't that I don't have enough clients to sustain my business and even grow it. The problem is that I have to support my family from my business and 'keeping money' that I know will assist my husband in our home doesn't sound right.
I love my business. I make enough money a month but my business cannot grow. What can I do differently?
Thank you.

Suzy .M. (Lagos)

Hi Suzy,
this is a problem most women entrepreneurs face. I hope you can follow the steps outlined below.

Analyse your inflows and outflows: The essential first step for your financial plan is to do an outline of your personal monthly inflows and outflows. In your case, you will need to analyse the inflows and outflows for your household and your business. As an entrepreneur, it is important to treat your business as a separate entity from you. Allow your business to have a life of its own, separate from you. Do not treat the income from the business as your own. Pay yourself a salary from the business which should be fixed and taken only when others (your staff) get paid. You can also take a small portion of the profit (profit sharing) yearly and cap it at a particular percentage e.g. 25%.
Inflows are your personal income you earn or receive monthly (income from your business) while outflows are personal expenses or gifts you make monthly. Sum up your inflows and outflows and deduct the sum of your outflows from the sum of your inflows. If the sum of your inflows exceed the sum of your outflows you are in a positive position and if otherwise you are in a negative position; something drastic needs to be done.

Let’s take a look at those Outflows (expenses): let’s drill down! Analyse each item of your outflows above. At this point separate your business expenses and your personal expenses. Your business expenses are the costs incurred for the day to day running of your business (e.g staff cost, rent, electricity bills, telephone bills etc.) while your personal expenses are those you incur on personal effects and day to day running of your household e.g school fees, feeding, house rent, transportation etc. Analyse each item of your outflows and check for excesses. Where you are making unnecessary expenses or spending too much, can you cut out the excesses or look for cheaper alternatives? Discretionary expenses like entertainment, recreation etc. can also be eliminated completely without a threat to your survival.

Set up a Budget: Budgeting is the process of creating a plan to spend your money. This spending plan is called a budget. The word “Budget” makes a lot of us cringe as it brings to mind images of self-deprivation but the truth is you can almost never go wrong with a budget, if you keep it. Your budget is one of the biggest tools that help you succeed financially. It allows you to create a spending plan so you can focus your money in a way that will help you reach your goals. It is easy to spend more than you earn but a budget enables you to see exactly how much you spend each month compared to the amount of income you earn and also enables you to plan in advance.
In your case, you would have to maintain a separate budget for your business and your household. You would also have to work together with your spouse to draw up this budget.  You can maintain the budget on excel format which can be quite cumbersome but luckily there are a lot of mobile applications you can make use of, all thanks to technology.

Increase your earning capacity: you mentioned that you have a steady client base and it seems from all indices that your business is doing fine but it sure can be better and you can earn more. Have you thought about expanding your business? You can create a new product line for your existing client base or review your existing products and create ways you can serve your clients better and also increase your client base. When your earning capacity increases, you will have more money to fund your budget and also increase your savings and investments. However, do not increase your expenses indiscriminately as your income increases.

Set up a savings plan: You have to set aside a percentage of your income monthly. This may not be easy considering your numerous costs and expenses as a married woman but it is the most important process in growing your money. You cannot grow what you do not have. You have to be deliberate about it. Let’s say your monthly income is N100,000, after paying your tithe you are left with N90,000, you can decide to set aside 6%  (N5400) for starters. Banks offer various savings products which you can explore. You can also invest in mutual funds monthly to gain some considerable interest on your savings. Replicate same for your business.