Every Business Owner Needs To Hear This

Entrepreneurs are the backbone of any economy. They provide jobs and generate revenue for the country. But what does it take for an entrepreneur to be successful in today’s competitive environment?

In today’s blog post, we will discuss 3 numbers that every entrepreneur must know to have an edge in their business, and these include knowing your number one reason for starting your business, what your credit score is and how much you need to make in order to make a profit. 

Ready to learn more? Let’s dig in!

What is your number one reason for starting your business?

More and more people are setting sail into the world of entrepreneurship. According to statistics, in the last decade, the number of new business applications in the United States rose from 2.50 million in 2010 to 4.38 million in 2020. 

That’s a 75 percent rise in the number of new businesses starting up.

If you were to interview entrepreneurs, asking them why they decided to start their online business, each would give you a different reason. Knowing your purpose and reminding yourself of it everyday will help motivate you to push towards your goals.

However, here are some reasons people start a business:

• They want to make a difference in the world
• They want to make more money
• They want to be their own boss
• They want to be able to express their creativity and solve a problem, etc.

Among the many reasons entrepreneurs give, it is interesting to note that being their own boss was the most popular reason.

Nevertheless, whatever your reason, as an entrepreneur, it is essential to know the main reason for starting your business. 

Times will get tough, funds will fall short, debt will rise, and things may not follow through as planned. But when it does get tough, your number one reason for starting a business will enable you to stay true to the process. 

Many may think that people venture into business just to make more money. And yes, money is necessary, therefore, many business owners start their business just for the money.

However, as a true entrepreneur, it is crucial to have a purpose higher than just making money. 

Businesses that eventually become great businesses and last beyond their founders are often businesses that have a higher purpose.

Find that purpose and make that your number one reason.

What is your credit score?

A credit score is a number that indicates how likely you are to repay a debt. Lenders can use it to make decisions about whether or not they want to lend money to you.

Your credit score is decided by the information in your credit report, which includes missed payments, the number and types of accounts you have, the percentage of the money owed compared to how much credit you have, etc.

As an entrepreneur, knowing your credit score is vital to your entrepreneurial journey. A poor or nonexistent credit score can mean you a high-risk borrower, making you unattractive to lenders.

A good credit score makes it easier to start a new business. 

As a startup, companies will focus not solely on your business but on you, the entrepreneur running the business. They would want to know what your creditworthiness is, and that number is wrapped up into a credit score.

We all know overseeing a business can be tough without access to funds for day-to-day business operations. And running into debt with no access to funds will kill your business.

Hence, it is essential to ensure that your credit score is healthy. A good number to aim for is a credit score above 670 – 690 to attract the funds you need to start or grow your business.

How much do you need to make in order to make a profit?

Let’s face it; a business exists to make profits. If it does not make money, it will soon stop being operational. 

As an entrepreneur, unless you are running a social enterprise, the third number you need to know is how much money your business makes in order to make a profit.

For example, if it costs you more than $5k per month (excluding labor) to run your business, then it’s likely that it won’t be profitable unless you make more than $200k per year.

The higher your company’s profit margin, the better, as it indicates that your company is making more money for every dollar it earns.

A high-profit margin allows you to take care of your day-to-day needs. It also gives you enough cash reserve to ensure your business does not run into debt.

Therefore it is vital to know, depending on your margin, how much you need to make a sustainable profit.

If you want to know your profit, the first step is to calculate your gross profit. 

Gross profit = Total revenue – any costs associated with producing the product or service. 

The next step is figuring out what your net profit is. 

Net profit = Gross profit – any overhead costs, operating expenses, and other costs related to running a business. 

Your net profit is your actual profit. This is the amount of money you have left after subtracting all expenses from your gross profit.

Key Takeaways

Please take to heart what we discussed in today’s post, especially if you are a startup.

As an entrepreneur, you need to note the following:

• What is your number one reason for starting your business? – Knowing your top reason for starting your business will help you stay through the process during the challenging periods in the early stages of your entrepreneurial journey.
• What is your credit score? – It is vital to know your credit score and aim for a good number higher than 670 and above. An excellent credit score makes it easier for you to access the capital you need to grow your business.
• How much do you need to make in order to make a profit? – And finally, let’s be honest, all businesses exist to make a profit, so determine how much you need to make in order to make a profit in your business. 

Conclusion

Now that you know the 3 numbers every entrepreneur must know, it’s time you implement the lessons learned in this article. 

Discover your number one reason for starting your business, look within and find out your why. 

Be deliberate about improving your credit score, especially if you are yet to start your business. It opens doors to funds that you need to grow your business.

Finally, do you want to be a million-dollar or billion-dollar business? Whichever it is, the earlier you can determine how much you need to make to become profitable, the greater the chances are that you will hit your target.

Thank you for reading through till the end. Stay tuned for another helpful post next week. Bookmark has all the solutions and tools to build a solid online presence for any business. Reach out via Live Chat if you have questions.