There’s a new building being built not far from our home.  Over the course of several weeks, a construction company poured the foundation, laid the floor, and began to set the walls into place.  This particular building had concrete walls that were poured on the ground in molds, then stood upright.

They used temporary supports to get the walls up and hold them into place.  But as the building continued to take shape, the supports were removed – they were never supposed to be permanent.  The building is nearly finished now, almost open for its intended use.  The supports are gone, and the building stands on its own now.

When Nancy started her business, we had to support it.  We had to give it a temporary support to get it going and help it stand on its own.  There are some fair startup costs with pro equipment and a decent processing computer, so we invested into the business to make it happen.

After that, the business had to pay it’s own way.  The business had to support itself.  Otherwise, it’s not a business.

A business that costs you money is an expensive hobby.

The first step to real profitability is ensuring the business can stand on its own, without the support of continued investment or debt – a line of credit or other instrument.

This is why I shook my head every time politicians or news anchors said during the Great Recession, “Banks aren’t lending, so businesses are having a hard time making payroll.”  If your business had to go into debt to cover your regular  expenses (including payroll obligations), you have bigger problems than available credit.

So how do you make the business stand on it’s own?  Here are 3 quick ways to get headed the right direction:

1) Start small
Don’t despise small beginnings!  When Nancy began, we got her a basic suite of equipment and asked for money for a computer for Christmas so we could get started.  She started getting small photography jobs here and there, and we turned that money back into the business to upgrade and purchase new equipment.

If you have a micro-business right now, don’t go for all the nicest equipment and start swinging for huge deals.  Let’s get your feet wet in the game, and then you can grow as you start to make money.

2) Don’t go into debt
Billionaire Mark Cuban wrote, “The greatest obstacle to destiny is debt, both personal and financial.”

Debt is a cash flow killer.  Debt is a dream killer.  Debt ties you to people and stuff that you won’t want to be tied to in a few months.  Plus, borrowed money doesn’t feel as real as money you earned by the sweat of your brow.  You spend it less carefully.  Furthermore, using debt early in business conditions us to be okay with taking out debt later on in business to cover other expenses.  Don’t do it.

3) Have a plan to get where you want to go
Ok, so you want to be making enough money to quit your day job.  How do you get there?  A basic business plan (don’t freak out) simply contains a projection of how many units/hours/bookings you need to sell, and at what cost, to reach certain revenue goals.

Simplified Example: Let’s say you do graphic design.  Your basic collateral package sells for $500.  After getting your basic equipment, your cost per package you sell is around $50.  So you have a gross profit per package sold of $450.  How many graphic design packages do you need to sell to go full-time?  I’d say at least 100, which would give you gross profit of $45,000.  Just having a goal like that will help you move toward profitability.

You can’t continue to feed a business.  If all it does is consume and not produce, it’s not a business; it’s a monster, and we have to find a way to turn it around, or it will end up consuming you.

Question: What else can you do to make a business stand on its own?