Making a million dollars in revenue is hard. Making a million dollars in profit is even harder.
Every entrepreneur dreams of reaching his or her first million dollars in profit. I was no different when I started my first business with only a few dollars to my name. You often hear people talk about how high their revenue is. To me, that’s just a vanity metric. There is no point starting a business if it is not sustainably profitable.
Here is a list of nine factors that helped me reach my first million in profit -- I hope they can help you reach this milestone as well.
1. Bootstrapping is important in the first few years.
I started my business without any outside capital and without any business loans. I used every penny that I generated to grow the business. Bootstrapping allowed me to concentrate 100 percent on building my company without worrying about loans and debt. I worked hard and rolled all of the profit back into the business. It required personal sacrifices but in the end I was able to build a successful debt-free business.
2. Your first idea will not be how you make your first million.
It is very rare that an entrepreneur will hit a home run with his or her very first venture. I was not any different -- I made my first million running a business brokerage with FE International, but this was not the first thing I tried. I failed and got knocked down a couple of times but that didn’t stop me. If I gave up after the first couple of failures I would never have succeeded. Don’t get discouraged if your first idea doesn’t go according to plan.
3. Working within your own means will set good habits for the future.
When you set limits and work within those limits it lays a solid foundation to build from. I didn’t have limitless capital when I started and I had to account for every dollar that I spent. This turned me into a very disciplined business owner and I still have the same approach to this day. I analyze every opportunity and weigh the positives and negatives.
Even though I continue to increase overheads in line with ever-increasing revenue, I am still conservative with spending as I’ve become disciplined from years of bootstrapping.
4. Do not surround yourself with naysayers.
Nothing will set you off course quicker than surrounding yourself with negative people. You will learn quickly that you can never please everyone and there will always be doubters and people that will always have something negative to say. Surround yourself with like-minded individuals and push the negative energy out of your life. You will become much more productive, focused and ultimately, successful.
5. Hire people that are smart and have different skills.
You can’t wear every single hat within your business. You also can’t learn to do everything perfectly -- there just isn’t enough time in each day. Hire experts in every department. Build your organization with the very best talent available. Will some of your team members be smarter than you in some areas? Of course, but as Malcolm Forbes said, “Never hire someone who knows less than you do about what he's hired to do.”
6. Do not fixate on the competition.If you spend your time worrying about what the competition is doing, at best you are going to become only a slightly better version of them. Yes, you need to be aware of what they are doing and you can analyze their strategy, but putting too much time and energy into following their every move will take precious time away from growing and improving your business.Do you want to always be looking over your shoulder and in the rear-view mirror or do you want to focus on innovating and changing the game? Do you think Apple is worrying about the competition? Sure, the company is keeping track of them, but the majority of its focus is on innovation.
7. Your time is valuable, so don’t cut corners.
Every entrepreneur eventually realizes that time is his or her most valuable asset. We all want more of it and it will always be finite. The last thing you want to do is have to backtrack to fix mistakes that could have easily been avoided by doing it properly the first time. Don’t cut corners and avoid careless mistakes and it will save your time fixing preventable issues.
8. Rome was not built in a day.
You need to set attainable goals and then work hard to reach and exceed them. As an entrepreneur you will come in contact with numerous other opportunities and you will think of other ideas along the way. Don’t lose focus -- you can’t chase every single opportunity or dollar.
Those that do lose focus, instead of reaching their goal, they make it halfway to several goals. Work hard and crush your goals so you can continue to grow sustainably, setting (and beating) aggressive goals along the way rather than being distracted by side projects.
9. Back yourself.
Running a business is hard. There is no room to be self-conscious and not believe in yourself. People will tell you that you are wrong. People will laugh at your ideas. People will leave. People will not pay you.
Regardless of who you choose to work with, no one will care as much about your (and your business's) success as you do. You must have faith in yourself and back yourself to succeed, even when your back is up against the wall and when others may doubt you.