7 Steps to Set Financial Goals for Your Online Business
Copyright 2006 Peter Dobler
Every internet marketer wants to make as money as possible. But
how much money do you really need? What are the financial goals
you want to achieve with your online business? These are the
fundamental questions you have to answer when you start an
online business.
Like many others you probably stumbled into the demanding task
of managing an online business by accident. You bought some
ebooks, signed up for multiple affiliate programs, set up your
own website, subscribed to several membership sites and at the
end of the day you realized that this all costs a lot of money.
You are in desperate need of more income from your business.
Common sense tells you that you need to advertise for your
business. So you go out there and buy any kind of advertising.
This leaves you with even more expenses and like many others not
much to show for.
Now you are at the turning point. You have substantial expenses,
but not enough earnings to support these expenses. The foolish
continue what they are doing and hope for the best. There's a
better way to get your business finances under control. The
following 7 steps should give you an idea how to straighten out
your business finances and how you can prevent a financial
Waterloo for your business.
1. Create a business plan.
This sounds like a broken record, but without a clear business
plan you are setting yourself up for disaster. A business plan
can be as simple as a few pages describing what you want to do,
how you want to do it, how much profit you plan to make, how
much money you have to begin with and how long you can survive
before you run out of money or you break even with income and
expenses.
The idea of a business plan is not to predict the future, but to
create a roadmap for yourself, in case you get lost on your
journey and need directions to save your business.
2. Separate your finances
It doesn't matter if you operate your online business as a real
incorporated business or if you just want to test the waters.
Mixing your business finances with your personal finances is a
bad idea period. Create a separate checking account. Use it to
deposit the checks you will receive and as the linked account
for your business PayPal account. Yes, a separate PayPal account
is necessary to track your business finances and to provide a
more polished, professional image for your business.
If you don't have a separate credit card for your business, use
one of your personal credit cards and use it for your business
expenses only. This way you can easily track your expenses.
Knowing the exact financial situation of your business is vital
for your survival. If you're loosing money you need to know
right away to make necessary adjustments and if you're making
money you don't want to wait until tax time to get a rude
awakening.
3. Reinvest
A rule of thumb is to reinvest 75% of your earnings back into
advertising for your business. In the beginning it can be as
high as 100%, because you need to get the word out. Without
customers you are not making any money. You do know that an
online business is by definition a sales business? You are
selling either a product or a service. If you don't, you don't
have an online business.
Of course a startup online business has no income to be
reinvested. However the same rules apply to the startup capital
that every new business needs to get started. A new computer and
a fancy new car won't get you any new customers, but good
advertising will.
4. Keep track
You need to know where you spend your money at all times. In
order to do this, a simple spreadsheet will get you started.
Later you need a little bit more help from a professional
finance program. Either way this will keep you on track with
your spending and you will know how well you're doing at all
times.
Keep track of your advertising. You need to know if your
advertising is working or not. Like a real store you need to
know why a visitor entered your store and if they don't buy get
at least their contact information. Hardly anybody sells to
first time visitors. Repeat business from visitors and customers
are the bread and butter for any online business.
5. Organize
This is not only for tax purposes, but you need to organize
everything you're doing with your business. Nothing kills your
business faster than not knowing what pays your bills and to
whom you owe money. Imagine you forget to renew your domain name
registration. A few bucks could cost you a million dollar
business. So do yourself a big favor and get organized with your
business.
6. Repeat
Readjust non working advertising immediately. If it is not
working, dump it. On the other hand repeat a profitable
advertising campaign. Rule of thumb, if it brings in more money
than it costs to run, keep doing it. This seems to be a simple
rule, but many online business owners simply ignore this rule.
Instead they are chasing the white elephant and end up with
nothing to show for.
If you have a successful advertising campaign, keep it running
and build a new campaign next to it. Never drop a profitable
campaign, always expand. This is your safety net. In case the
new campaign fails. In marketing there's never a guarantee. Be
creative, track and repeat. That's the only way to get something
going.
7. Expand
If your business is not growing your business is dieing.
Unfortunately this is reality in today's business world. This
means that you need to adjust your financial goals for your
business to allow for expansion. Consult your business plan to
determine what went well and what went wrong. Whatever you do,
always aim higher.
There you have it, 7 steps to set the financial goals of your
online business. I know that it takes more than filling out a
membership application to run a successful online business, but
you can do it if you keep these steps in mind.