Follow these tips to make sure your business reaches its biggest milestones.
Have you considered where your life is headed over the next 10, 20 years? How about the life of your business?
Many people create a "bucket list" – a roundup of all the things a person wants to do and achieve during their lifetime. Maybe you want to raise children and have a family, earn another college degree, travel the world, or buy the house of your dreams. Those goals would go on your bucket list.
As an entrepreneur, you may have a personal bucket list as well as another specifically for your business. A business bucket list would include milestones as well as the strategies needed to reach them. These milestones might include earning your first $1 million, $10 million, and so on. Perhaps you want to develop new products, establish a charity, or expand internationally. All of these should be on the list.
“One might consider focusing on the past, present, and future of the business when creating a business bucket list. This could include asking questions such as, 'What did we do well in the past and why did it work?,' 'How do we retain and expand our current competitive advantage?,' and 'What are the future strategic priorities for our business?'”
- Teona Chapman, a Business Banking Relationship Manager at First Horizon Bank.
Business owners should make this type of list and start planning for it financially from the very infancy of the business, Chapman advises. “The list will likely evolve and change with the business life cycle,” she says. “However, having a well-defined list of goals and achievements will allow the business owner to stay focused and determined.”
Chapman says entrepreneurs should do the following five things to help make sure their business is on track to accomplish its ambitious milestones ahead.
1. Prepare for the unexpected.
The Covid-19 health crisis made it clear that unexpected circumstances are to be expected. One important way to prepare for the unexpected is to ensure that your business has access to emergency cash or credit.
“When I was a newer lender, someone told me that it's easy to get credit when you don't need it and it's hard to get it when you do. Sometimes, business owners wait to apply for credit when they desperately need it and it's already too late,” Chapman says. “Business owners who prepare for the unexpected early on end up weathering challenging situations and often even thrive during difficult times.”
2. Protect the business from fraud.
If you think your business is too small to fall victim to fraud, think again. With more companies allowing employees to work remotely, their vulnerability to scams and other attacks has been increasing. “Fraudsters have become quite sophisticated and have learned to capitalize on this vulnerability,” Chapman says.
It's important to take precautionary measures to protect assets like your money, intellectual property, and sensitive customer data from cyber threats. In addition to training employees how to avoid scammer tactics, Chapman suggests that business owners discuss fraud protection solutions with their bankers.
“Every business is different, so this won't be a 'one size fits all' model, but rather a customized solution based on a specific business and its operations,” she says.
3. Keep an eye on business depository rates.
While the average annual percentage yield (APY) on savings accounts is just 0.33%, that's just the average. Interest rates have been on the rise with some high-yield business savings accounts allowing owners to earn as much as 3.5% APY on the money they have in the bank.
The more money your business can generate, the better off it will be when it comes to making big, bucket list-type changes. “Not all business accounts are automatically earning these newer, higher rates,” Chapman says. “As interest rates increase, a business owner should have periodic conversations with their banker to ensure that business depository accounts reflect current and competitive interest rates.”
4. Earn cash back on business purchases.
Another way to increase your business's access to cash is to take advantage of cash-back credit cards. Simply put, cardholders get a monthly or annual rebate up to a specific percentage of their spending. Sometimes cash-back cards will offer different rates depending on the types of purchases made.
Businesses can use the rebate money to pay expenses like employee benefits, travel, and more. "Owners should consider reviewing their annual vendor payments to see which ones might be able to accept a card payment instead of a check or ACH payment, and then speak to their banker about a potential solution," Chapman advises.
5. Develop an exit/succession plan.
Often, business owners are too busy working in the business and don't have the time to work on their business. This can be especially detrimental during emergencies, such as a sudden serious illness or even death impacting the business owner, Chapman says. This is where having an exit and/or succession plan is critical. How will your business continue if you unexpectedly need to step back? How about when you're ready to retire?
“Proper planning ensures that there are no interruptions in operations and that the business continues to run smoothly after an unexpected event happens,” Chapman explains. “Having challenging, yet necessary, conversations around a business exit strategy ensures that a business owner has a good understanding of what the business is currently worth and where it's headed, as well as what potential exit options are available to them.”
Ultimately, creating a business bucket list of goals can help entrepreneurs stay focused and on track for success. “There is an increased sense of accountability once these goals are written down and verbalized,” Chapman says. “This is why I recommend that business owners have a conversation with their business banker and other trusted advisors to plan together and achieve your biggest goals.”
Find out how we can help you reach your business's big milestones.
