In this video I discuss why focusing on sales is a huge mistake and why the business owner must focus instead on profits.
The myth most business owners believe: The most important thing is to get the sale!
Why this myth causes a problem: It focuses on the wrong thing! The only thing that counts in a business is to make a profit. You didn’t start a business to make a sale and turn around and send all the cash out to vendors and employees. Most business owners started their business in order to be reasonably prosperous (some may even have wanted to be unreasonably prosperous).
Most business owners who have rapid increases in sales for the first time almost always run into cash flow problems. They have spent so much time focusing on increasing sales that they failed to get the financing and systems in place to support the increased costs in inventory and employees to deliver the product to the customer. The result is usually serious financial trouble and sometimes even bankruptcy.
The truth successful business owners learn the hard way! Successful business owners have learned that in business, the only thing that matters is profits! A profitable business provides the means to support the business owner and their employees while also paying all vendors, bank loans, tax liabilities, and investors.
Profits allow the company to have the strength to survive the tough times and to take advantage of good business opportunities when they appear.
The successful business owner starts every year by creating a profit plan. A sales and marketing plan that focuses on profitable sales is obviously a large part of that profit plan.
Lesson learned: Start each year by making a profit plan that maps out exactly how the business will hit the profit goal that the business owner has set. By focusing on what is really important in running a business, you will greatly increase your odds of truly becoming successful.