When I started my business in 2013, people asked me why I had decided to leave my job and take on so much risk. At the time I gave the usual answers – to give a better service to my clients, to take advantage of the market opportunity that cloud accounting provided, to not have to be answerable to a boss!
Now I’ve been doing this for a while, I realise that the real reason I’m in business is simple – it’s because I love it! I love being able to dream, to be creative with what we can do with our brand and our service, I love building a team, I love the freedom of choosing my own working pattern, I love the fact that I have so much opportunity to build a hugely healthy life for my family. And most of all, I love being able to help our clients to do the same.
The truth is, me and my clients would have all of this excitement and ambition taken away from us if we didn’t deliver on the one thing our business needs most from us – profit.
Without profit a business is just a good idea that never survived. It’s the 50% of businesses that fail within 5 years. It’s the thing that kept us dreaming and hoping for a few years and then got ripped away from us when we had to go back to fulfilling someone else’s dreams.
If we’re going to last the journey, if we’re going to do more than just last and actually make a dent in this world and enjoy the journey, there is no way of getting away from the reality that we must make profit.
My hope though is that you don’t see profit as a necessary evil. If you view profit as something you wish you didn’t need and wished you could just build your business without worrying about making money, that mindset will cause real problems.
I hope that by reading this book you will see that having a focus on profit helps you to achieve clarity, focus and a fantastic sense of control.
Business is chaotic, complex and confusing. It throws challenges at us every day. Our team don’t seem to care as much as we do, our clients have complaints, our marketing isn’t working, and we’re really unsure which thing we should fix first. Having a constant focus on profit helps us to normalise our decision making. It takes away the confusion, the confrontation and the subjectiveness and keeps us grounded.
The large majority of business owners I meet are exhausted. They are also energetic, passionate and ambitious, but they are not sleeping enough, they have several worries at any one moment in time and they don’t know what they should be focused on next. They don’t have the information that they need to make the right decisions and they are running themselves into the ground trying to keep all the plates spinning.
We take on a lot of risk and responsibility when owning and running a business and that is why the rewards are so huge if we get it right. Just like if you invest your money in any other way, the highest potential rewards require investment in the highest risk opportunities.
Your business is where you’ve decided to hold your investment. The great thing is that you get to control your own investment entirely. So your business is really just a bank account that you want to build up over time to protect yourself from the economy. How much is your business worth today? That’s not the amount in use bank account, it’s the amount on your balance sheet (more on that later).
I don’t want to see your business bobbing along, doing just enough to survive. I want to see it thriving, making an impact on the world and delivering results that you previously could only dream of.
We’re living in an incredibly connected world right now. We can get our products and services to market faster, cheaper and more internationally than ever before. All of the technology and resources that we could ever wish for are all out there for us to benefit from. The people who benefit most will be those who think smartest and make the best decisions. It will be those who figure out what their clients need and how to give it to them at a price that gives significant value to the clients and earns a sizeable profit in return. It will be those who cut through the noise, don’t need perfection and take massive action to drive their business forward.
You are smart enough to have worked out how to start a business and get it to where it already is today. You will need to change some of your thinking, your personal behaviours and your actions if you are going to keep evolving your business though.
It is my belief that profitability is the most important aspect of any business.
You can have the best value proposition, marketing, sales, customer service, culture and team in the world, but if you don’t generate profit, it will all be swiped from under your feet. All of those things cost money so you need to make the money to afford them. You also need to make money to pay for your lifestyle. Otherwise, how ever much you might love your business, you won’t be able to keep running it if you are not paying your bills at home. If you’re regularly making no or little profit, you’d be better getting a job. A job that requires less stress, risk and hard work than you are carrying by running your own business.
It’s not just about survival either. Since taking on more staff, acquiring bigger office space and marketing in more expansive ways requires more cash, profit is also the fuel for growth. When you make regular and sizeable profits, you can organically grow our business with your own reserves, which avoids paying hefty interest rates, which ultimately requires even more profit! It also avoids you having to surrender full control of your business to an equity partner who starts to dictate where you take the business, asks you to report your performance to them and leaves you feel like you are back in a job again. Of course bringing an equity partner in can work and it might be a smart move for your agency. But you want to make that decision as a strategic move, not because you are desperate for cash.
Here are more reasons why your agency needs to make a regular and healthy profit:
- Your staff deserve to be paid more
- Your studio needs to give a wow experience to your clients and prospects
- You want to be able to afford the best team, freelancers and service providers
- You want to be able to invest the branding and marketing that will get your own business to attract the clients that you give the most value to and bring you the most enjoyment
Your business will most likely suffer from periods where sales decline or overheads rise. Again, in order to weather those spells, you’ll need to have cash reserves ready for you to fall back on. Otherwise, you’ll run into a host of problems, especially if you drop to the point where you are losing talented members of your team because you can no longer afford them.
This blog was created on the back of my Ebook ‘Don’t grow your agency’. Throughout the book I map out the strategies we use with our clients to stop leaking money and start maximising profits. Download your free copy now to learn how to take back the control of your business and take your agency to the levels it is capable of.