Too many people invest in scaling up a business before they construct a model that maximizes profitability. Why? Because they believe that the goal in business is to build Revenue when, in fact, the real objective should be to build Profit. Why?
Because: Revenue feeds your Ego. Profits feed your Family !
Don’t get me wrong. Revenue growth is important, too, but for a completely different reason: Market Share! Investors and Buyers love to see this. But you know what they like to see even more? Profits. Cash Flow. And you know what? So do business owners! Or, at least, they should.
And that’s the dirty little secret all these business coaching “experts” don’t want you to know (or don’t know themselves). When you spend your money on marketing programs to generate leads for a business with a lousy profit margin, you know what happens? Well, if you’re “lucky”, you get to work 24/7 servicing a large pool of never-satisfied customers that don’t make you any money. That’s if you’re “lucky”. If you’re “unlucky”, you go broke. And, in either case, you fall victim to that stereotype of the entrepreneurial business owner who sacrifices his/her life (sometimes literally) and family, scratching to pay their bills, believing that’s the price they have to pay for “independence”. And when 24/7 isn’t enough to give to their “business” (and I use the term jocularly), that’s the end of the line. Their “trade time for money” model hits a wall and they are trapped. Because that “business” has become their life. And they can’t get out because, unlike a job, they can’t quit. Their entire livelihood and most – if not all – of their net worth, is tied up in the business. Sound like anyone you know?
Why does this happen over and over and over again? Because no one ever taught these entrepreneurs and business owners what they’re supposed to know to be successful in business. And, sadly, many of these so-called business “coaches” or “advisors” don’t know either. Because building profitability in a business is a multi-faceted challenge. Six facets, to be exact. 6 CYLINDERS: