If the aim is to build a lifestyle business, there are three major phases to conquering the financial corner of business...
PHASE 1: PRIME
Like any great project, the preparation phase is crucial. It's where you lay the foundation for all the progress to come. The key decisions you make in the preparation phase will determine the trajectory of everything else, and finances are no different.
The main goal in this phase is to get a proper accounting system up and running. The purpose of the accounting system is to capture, organize, and present your financial data, so it’s hugely important that whichever system you use, it can do those three activities as effortlessly as possible.
PHASE 2: LAUNCH
Once you’ve laid the foundation of an accounting system, now you’re ready to move to second phase of running your business finances. The Launch phase is all about executing the mundane but necessary activities to keep your business moving forward.
The core activity of the Launch phase is bookkeeping, which is the day-to-day recording of your business’ transactions. Along side bookkeeping, you’ll also need to consider managing payroll, sales tax compliance, and income tax filing.
Unfortunately, phase 2 is where the majority of companies stop. These are all the things you HAVE to do, but if you stop and think about it, are any of these activities REALLY going to help you reach new heights in your business?
That’s why you need phase 3.
PHASE 3: ASCEND
It’s a shame that most businesses never get to phase 3, because this last phase is the most exciting… the Ascend phase is where you set your sights on an ultimate lifestyle target and begin using the financial data from phase 2 to guide you there.
To ascend, you will need to unlock insights from your financial data and make strategic decisions that will help your business scale to the summit of your lifestyle dreams.
The core activities here are strategic planning, strategic management of cash flow, and financial performance tracking.
If you're ready to go down down this path... you have two options ahead of you: