Tag: business

Thoughts on revenue versus profit

If you are building a business, or if you are self-employed, are you trying to grow to eventually become profitable? Instead of focusing on rapid growth and ever increasing revenue, why not focus on growing sustainably and profitably from day one?

The saying is “revenue is for vanity, but profit is for sanity.” Who cares if you had millions of dollars in revenue when your business is not profitable (or is barely profitable)? Why would you want to work so hard and not make any money? It might sound good when you tell others how much you sold, but it’s not the top number that matters. It’s not how much you make, but how much you keep. What is your net profit?

Keep your ego in check. Focus on being profitable, on doing things the right way, on helping as many people as possible, and forget about the vanity metrics. Over time, they will eventually come. But just like a lack of sales can kill your company, so can growing too fast. Grow sustainably and do it right from the beginning otherwise it is going to be much harder to try to put the systems in place after the fact.

Being busy is not a sign of achievement

The busier I am, the more I have failed. If I’m to busy or overworked, that means I don’t have systems or processes in place to ease the workload. Or I haven’t hired enough people (or the right people). Or, if I have the people on my team, I haven’t delegated enough.

Instead of doing everything yourself, ask who, not how. Figure out who can do this for me. If you want to become the best, you need to scale, or else you’ll reach your limitations so quickly that you’ll never become the best. Figure out who the best person is to hire for the job. Figure out how can I outsource this, not how can I do this.

What are we teaching people and why it’s good to be different

When there is no consequence for poor work ethic, and no reward for good work ethic, there is no motivation.

If your home, your work, or your government does not have consequences (natural or imposed) for bad behavior, what is that teaching the individual with the bad behavior? Likewise, if there are no rewards to encourage the good behaviors, will people continue to do those good behaviors?

If you want more of something, give them encouragement. If you want people to stop doing something, you have to discourage it. This is a pretty simple idea that everyone understands.

So why is it different with the government? Whether they bail out banks for profiting off the sub-prime mortgage loans before it imploded, the car industry, or individual people (adding an extra $300 for unemployment)…it’s all the same. If there are no negative repercussions to mishandling your money, why should you stop? Be risky with your money to make a huge profit when things are going well and you get rewarded with huge paydays. Don’t worry about when things go sideways because the government will bail you out.

Most people don’t think of themselves as a business, but they should. You need to operate your finances in a way where you can survive (on your own) in good times and in bad.

It’s simple, but not easy for most people. They know they should set a budget, they should stick to them budget, they should try to work hard to increase their income (through pay raises or side hustles), they should decrease their frivolous spending habits, they should be in the black every month, they should invest towards their retirement, they should…they should…they should…

But how many people do what they should?

…

Not that many.

Be different than most people. If it means that you’re weird for having your finances together, then be weird. Who cares what other people think – about the house you live in, the car you drive, or the clothes you wear. Usually, they’re too busy thinking about their own situation to really notice yours anyways.

Requirements for success

“The three things you need in life to be successful are: hard work, stick to-it-ivness, and common sense.” – Thomas Edison.

My modified version: The three keys to success are diligence (working hard, smart, and with an end goal in mind), persistence (not giving up, OR knowing when it is right to let go), and pertinent intelligence (not just book smarts or common sense, but intelligence in the field of study that you are pursuing).

What are you doing today to lead to your success tomorrow and beyond? What quick wins can you get to build momentum? And what are big action steps you can take that may take a while to see the result, but are still incredibly important?

The dream killer

Comfort is the killer of dreams.

Most of the things we greatly desire, yet still do not have, are difficult to obtain. With that, you get to make the choice. Do you want to consistently face the difficult? Or would you rather be comfortable and not get what you desire most?

Do you want to look like a fitness model and have big legs, defined arms, and six pack abs? You’ll have to hit the gym with purpose everyday and clean up your diet. You’ll need to stop going out for drinks and eating dessert.

Do you want financial freedom? Then you’ll have to spend your money on assets and live below your means. You’ll need to increase your income and decrease your expenses.

Do you want to become more knowledgeable? You’ll have to reduce your hours in front of the tv and start reading more, networking with people who are already doing what you want to do, and start taking action. Things won’t go according to how you read about them in books and you’ll have to be ok with problem solving and failing from time to time.

If you want “the best,” you usually have to pay for it in some way (sacrificing focused time, energy, money, etc). If you want to live out your dreams, you’ll have to be comfortable being uncomfortable. Because only seeking comfort is a recipe for dream killing.