9 August 2018
If you ask any business owner what their goals for the next year are, 9 out of ten of them will say to make a business profitable. It’s how you grow a business, it enables you to reinvest and thrive. Yet, all too often, I see business owners making simple mistakes that make it even harder to become a profitable business.
How often do you see startups looking for investment? It seems to be the second step in building a business these days. Before you’ve even proven the concept of your business, before you’ve got proven custom and demand, before you’ve even given it a try on your own, you’re out there looking for funding. Unfortunately, this investment is all too often spent on creating a cool office space and huge marketing campaigns, and a Ferrari for the owner.
My number one piece of advice for anyone looking to grow a business is be incredibly careful about giving away any part of your business, especially in the early days. Is having a fancy car or funky office worth losing a significant portion of your business?
Just making sales does not make a profitable business
Not having that investment in the early days and instead tightening the purse strings has taught us an incredible lesson as I grow the business portfolio. I have always been frugal and saved the money that I have had. By not seeking investment in those early days, we’ve had to learn how to manage on a tight budget. As UKFast has grown, this behaviour has remained and we’ve continued to save.
This meant that when we were having a problem with a supplier, which began to affect the service we delivered to clients, we could take action. We used the money we’d saved and invested it into the build of our own data centre facility. This meant we could take complete control of that area of our supply chain. Now we have four wholly owned, UK-based data centres and a fifth in construction. We are in total control of that area of the business and have the freedom to grow in this area as and when we need.
It’s an old-fashioned way to behave in business, but it has worked for us. It is certainly not on-trend to knuckle down and save, rather than looking straight away for investment. However, in the long run, you reap the reward.
Ultimately, making a profit is far more than how many sales you can generate. It’s about managing your money. Once you have spent £100, you can never get that back. Of course, you can make more but imagine if you saved all of the money you spent frivolously. If you were making a further £100 on top of that existing £100, how far you could then grow.
I go into more detail about this in my podcast on iTunes. Let me know what you think.