How to Create Profitable Businesses Quickly

| June 12, 2015 | By


Some entrepreneurs seem to have the Midas touch where everything turns to gold.  Why is that? What are they doing that makes them so much more profitable and successful than others.  At the same time, some entrepreneurs destroy every business that they come in contact with.  Let's look at 3 things successful entrepreneurs do to make their finances work right.

#1:  They Understand the Cost of Scaling

It costs money to grow your business.  The concept of creating a scalable business means that you can increase revenues without proportionally increasing your costs.  This is a lot easier to do for some businesses than others, but I would argue that it is possible to some extent for every company.  Every successful entrepreneur knows how much additional costs they're going to incur in order to grow their company by another unit.  That unit might be $10,000 in new revenue or it might be the sale of 100 products.  However you measure your growth, you need to understand the additional costs that will be incurred to get the company there.  As you uncover these costs, you might discover that there's a point in your business where the costs exceed the profit and it doesn't make sense to grow until you realign some business objectives. 

#2:   They Know How to Minimize the Cost of Scaling

Profitable businesses are made because someone is monitoring the cost of scaling and minimizing its impact.  Lets say that your company incurs an additional $2,000 in costs for every $5,000 in additional revenue it generates. Your goal as a business owner is to figure out how to reduce that ratio overtime so that the cost of growth isn't linear.  In other words, you want to set up your company so that it costs less and less to generate each new $5,000 increment in sales.  This can be accomplished through bulk buying, negotiating with vendors, exclusive contracts, more efficient business processes, and more - you get the idea.  As the company grows, you need to set up your systems so that it costs less and less to do so. 

#3:  They See Cash as a Tool

Every great entrepreneur that I've ever met treats their cash like a tool.  They're not emotionally connected to their bank account and they don't have a heart attack when the bank balance is low.  Instead, they look at cash as a leverage point in their company.  They use their cash to generate more cash.  Instead of spending it on fancy cars, a nice wardrobe, and a lavish lifestyle, they invest their cash into other cash generating systems.  It's a mentality, and it's one that works. 

If you want to be cash rich, you need to follow in the footsteps of other entrepreneurs that have figured it out.  It's not wonder that so many businesses close their doors.  To many business owners use the company bank account as their own personal playground for fancy living.  They literally bleed the company dry.  The few that keep the cash in the company and leverage it for more cash turn into the multi-millionaires. 

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17 Minutes to a Profitable Business

7 Habits of Highly Profitable Businesses

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