When it comes to growing and scaling your business, there’s a ton of information out there. Today, we’re going to talk about five definitive strategies to scale your business and to make it grow going forward.
When it comes to scaling your business, there’s a delicate balance between that growth and making sure you have enough cash flow to sustain the operations of the business along the way. There’s no guarantee your business is going to be around 5, 10, 15, 20 years from today, but if you have a long-term mindset, that puts you in a position to weather the storms, if you will, that are going to come your way as a business owner.
So a lot of times, business owners are thinking day to day, which they have to. They have to be quick on their feet, making sure they’re putting out all the fires so that their business can persevere through those storms. But it’s important to also step back and look at things on a larger scale. How could I move my business forward this year, in five years, in 10 years? What steps need to be taken, and what steps can I take today to make sure that’s going to happen?
We get sort of caught up in putting out the fires, and that becomes our job almost. But as a business owner, we also have to think when we’re putting out fires, we’re working in the business. But we also have to work on the business doing the long-range planning, making sure that our business is set up for the long term. Especially as a business owner, you need to think about how you’re going to monetize the business at the end of the road, right? What planning could be put in place today to put you in a position where you’re able to monetize this business to fund your retirement, for example?
So that you know, again, thinking long-term, you have to think of all the plans that need to be in place: your exit plan, your succession plan, maybe a key person retention plan. These are all the long-term things that need to occur to make sure that your business is going to be around for the long term. Because if we don’t have the key people in place, the business isn’t going to be worth as much. If we don’t have the exit or succession planning in place, we’re not going to be able to get as much out of the business as you put into it to sustain your lifestyle throughout your retirement.
How could we use other people’s money to help our business grow?
As a business owner, we don’t necessarily have piles of cash set aside to grow the business. And if we do, it may not make the most sense to invest that money back into the business immediately, because then you’re giving up access to that money immediately. Making sure that you have access to capital to run your business and grow your business is paramount. But then, how do we leverage other people’s money so that we don’t have all of our skin in the game? We need to have skin in the game, obviously. But the key is, how do we limit that so that we can leverage other people’s money?
There have been books and movies and videos done on leveraging other people’s money. But the key is doing it in a controlled fashion and this kind of ties in with our third point our third strategy of having that access to money. We need to leverage other people’s money, but we also need to have access to our own money, and they go really hand in hand, right? So the more access we have to our own money, the better terms we’re going to be able to get to leverage other people’s money. Because, at the end of the day, we’ll have the cash on the side to pay that back if necessary, at least from their perspective.
Access to capital is what is going to allow you to run your business. Access to capital is what is going to allow you to grow your business. Too often, we find businesses whose only access to capital is through banks or finance companies. And that may not necessarily be a bad thing, but sometimes it can get out of control because you’re not in control of the finance function. And we talk about it a lot on this blog, but when you’re in control of the finance function, it’s a better life. It’s a different life. And again, there’s no substitute for control.
By extending amortization schedules, that takes up less of our day-to-day or monthly cash flow, which allows us to have access to more of our own capital. And by doing it that way, we’re literally leveraging other people’s money in a way that’s positive for us because now we’re in control. We’re in control of more of our monthly cash flow. So you don’t just wake up one day and have a pile of cash sitting on the side saying, “Oh, now I have access to money.” It’s taking those small steps, maybe like extending your amortization schedule, so you’re able to build up that pool of cash quickly or slowly, depending on what your business cash flow looks like. And let’s take that to the next logical conclusion. So when you extend your amortization schedules, you free up more monthly cash flow that you could redirect to build your own pile of money.
Eventually, maybe your pile of money, as you’re paying down your bank loan, is growing. When you get to a point where you have a lot more money than you owe, now you can pay off the bank loan. And now you can determine what the cash flow is to pay off that loan. That’s where you could really get some significant results.
You know, all that energy is flowing back to you, and it just starts building upon itself. Everything begets more. And now, all of a sudden, you’re sitting on a pile of money. And, oh, by the way, that could be your long-term exit. So think about this as a business owner. Whether it’s a big business or a small business, how much of your money is going towards debt on a monthly basis? And what impact would that make to your financial position if all of that monthly cash flow was going to an entity where you had full liquidity, use, and control of that money, instead of all of that money going out the window?
That’d be huge. That’d be a huge pile of money.
So if I’m hearing you properly, what you’re saying is your amount of debt won’t change. But what will change is who that debt cash flow is being directed towards. It’s either going to be directed away from you or directed towards you.
If you’d like to learn more about how to put these strategies to work for your business and your family, be sure to visit our website at tier1capital.com to schedule your free strategy session today.
We’ll break down your specific finances, talk about how to put you back in control of that finance function so that you can sleep better at night knowing that you’re putting your business in the best possible position to succeed. And remember:It’s not how much money you make, it’s how much money you keep that really matters.
