In last week’s blog post, we discussed the perspective shift that online entrepreneurs experience once they realize they aren’t treating their online income like an actual business. We shared our observation that many online entrepreneurs spend so much time focusing on generating revenue that they neglect other aspects of their business that are essential for future growth and stability. When online entrepreneurs begin to truly see themselves as business owners, they inevitably start to think about their business differently as well.
They develop a long-term strategy.
In the beginning, generating any sort of revenue seems like such a difficult task that many entrepreneurs don’t envision what their business might look like years down the road. Whether you’re currently making money or getting ready to launch a new business, there are some key question that you should be asking yourself:
- How will your operations change as the business grows?
- Where will new revenue streams come from when you’ve exhausted your current channels?
- What is your role and how will it evolve? How large can the business grow before you reach your maximum capacity for managing clients and/or projects?
- What areas will require investments to help the business grow?
They track and organize their financials.
Bookkeeping and taxes are a big part of managing your business, and we’ve seen online entrepreneurs really stunt their potential by either avoiding this aspect of their business completely or handing it off to someone who isn’t capable of managing it properly. It’s difficult for an online entrepreneur to envision a bright future when their finances are a mess and tax problems are constantly looming.
They utilize financial data to monitor the health of the business.
Many online businesses wait until the end of the year to have their accountant sift through their bank statements and homemade spreadsheets for tax purposes. Although we commend these owners for taking their tax liabilities seriously, not maintaining the books on a monthly basis means they miss out on the opportunity to analyze financial data when it’s actually useful. It’s far more difficult to spot issues and opportunities if you have no grasp of the state of the business from month to month. For more on this, check out our earlier post about why every online business needs a bookkeeper.
They understand the importance of leadership.
Just because you’re running an online business from your home doesn’t mean your leadership skills are any less important. Your ability to make smart decisions, strategize effectively, manage contractors or employees, and develop a clear vision for the business are all important leadership qualities to cultivate. The business starts and stops with you, so your limitations and weaknesses will decide how far the business can go.
They get smarter about using their profits.
New online entrepreneurs (and even some seasoned veterans) focus so intently on how to make money that they don’t always know how to manage it effectively once it starts coming in. If you’re not sure what to do with your newly earned profits, we recommend the following:
- Save for taxes each month.
- Pay off your business debt (loans, credit cards, etc.).
- Create a savings account with enough money to cover 3-6 months of expenses.
- Establish a retirement plan for yourself.
They bring on professionals.
As much as some wish they could, it is virtually impossible for online entrepreneurs to effectively manage all aspects of their business themselves. There are three key people you’ll want to bring on once you can afford them.
- A bookkeeper to track your finances and provide valuable financial reporting
- An accountant to file your taxes and help you develop a tax strategy
- A lawyer to advise you regarding the creation and maintenance of your business entity and the protection of your assets in case of a lawsuit
Learning how to generate revenue is important. Knowing how to connect with your audience is important. Developing products and services that add value to your customers and clients is important. There is no question that mastering these things will be vital for your success, but as your income grows, it will only become more important to learn how to manage every aspect of your online business, not just the parts that generate your revenue.