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How Long Does It Take For a Business to Be Profitable?

If you are in the early stages of starting your bath & body product business, you may wonder how long it will take to be profitable. Funny thing about this word, is that it can actually mean different things to different people. More on that in a sec.

When I first launched my business, I was a hobbyist and not overly focused on profit, however, once, I started to sell, this became a topic I was very interested in. I had heard somewhere that it took YEARS to be profitable when starting a business, which was discouraging. I was under the impression that 2-3 years minimum was the “industry standard”.

The next thing I wondered was “how will I know when I am profitable?”

“Would I wake up one day in 2 years and all of a sudden be PROFITABLE?”

I had a lot to learn back then.

For my first year or so in business, my profit calculations were pretty basic. I took the revenue from what I sold, and subtracted the money I spent on supplies. Whatever was left over was profit. This is in fact, the dictionary definition of profit, so I was not doing anything wrong. TECHNICALLY.

It was at least a year later when I discovered the book Profit First. This book changed everything about the financial side of my business, and I adore it so much that I send it as a gift to all the business owners that I coach & mentor.

The main idea in the book is that profit is a choice. That sounds a little new-agey, I realize that, but it actually is not. The idea is that you determine what you want your profit to be (it easiest to do this as a percentage of revenue), and then calculate your budget for other expenses based on that.

The second idea was HUGE awakening for me – the profit and my salary as the business owner are NOT THE SAME THING. I always assumed (incorrectly) that when I took the revenue and subtracted the expenses, whatever was left was profit which, by default, became my salary.

NOPE.

When I changed my thinking around profit, I learned that I had much more control at my fingertips that I realized.

AND I COULD GET PAID EVERY MONTH. STARTING THIS MONTH. AND NEXT MONTH. AND THE MONTH AFTER THAT.

In the beginning, it is unlikely that you will earn a massive salary, but as the business owner, you should NOT work for free.

Unless you are a charity or non-profit but most of you are not. Most of you have household expenses, rent, food, utilities, clothes & plenty of other things to buy.

The catch is that you can no longer consider all of the revenue you earn as your “supplies fund”. That is an option for a hobbyist who wants a hobby-that-is-paid-for, but if you want to become a business owner, this is the first thing that has to change.

Your salary comes out of revenue before you pay for supplies. Yup. Now, if you spend more on supplies than allocated, you have a problem. You are over budget and can’t pay your bills. This is a solvable problem though, but only if treated as such (spoiler alert – stop buying things you don’t need).

So, what about big investments that you made getting started? You can treat these in a few ways, but the way a large business would deal with it is to make it a line item in the monthly budget to contribute towards, and consistently eliminate pay off the debt over time.

A big business would NOT stop paying the staff or employees because they made an investment in equipment or marketing or real estate. Can you imagine?

A small business like yours will be best off adopting the practices that more established businesses use, as this will give you the framework to become a larger, more successful business.

Lesson: Even though your business may be tiny right now, act like a bigger, more successful business.

So, how long goes it take to be profitable? Not long. As soon as you determine your budgeting allocations, have profitable pricing (this is KEY) and set aside revenue each month as profit. But it will take effort to get this in place, and the knowledge of how to do it.

If you would like to learn how to do this for your business, I have a new course focused on this topic:

Check out course

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