As I was growing up and even when I was getting my first advanced degree, I was taught that the most important thing for a business was growing the business. What I’ve found is that the most important thing a business can do is make a profit. You would think that this is common sense, but it is not common sense in the business world.
This post is primarily for our partners who repair fitness equipment but it is an important lesson for all business people to learn. When you start chasing growth for the sake of growing the business, you sacrifice other areas of the business. It is all a matter of focus. The smart people who study these things tell us that whatever you focus upon, that is what you get. If you focus on growth, you get growth. If you focus on sales, you get sales. If you focus on profit, you get profit.
We found this out the hard way. In 2008, we had our best profit year in our existence. Beginning in that year and the following few years, we ended up on the INC 5000 fastest growing businesses in America list 3 separate times. Over the next 7 years, we doubled the business again but our profit margin decreased by over half. That will wake you up when you realize that even though you have drastically increased your activity, you are actually making less money at the end of the day.
Some of that could be attributed to a more competitive marketplace but also, it was due to us entering less profitable businesses in the effort to chase growth. As a result, we have discovered that the most important thing for us to focus upon is profit and then growth will take care of itself. We have jettisoned unprofitable lines of business and then taken a look at what makes money for the business and then have researched how we can do more of what makes profit.
It has also made us focus on finding out who our best customers are and how to make them happier because if you take the best care of the most profitable customers, they will give you as much business as they can, especially if you do a better job than anyone else. This has made us focus on making sure every order is correct, making sure that our testing procedures are good to make sure quality standards are maintained, and making sure orders are shipped as quickly as possible.
Has this resulted in us being perfect? Far from it, but we are getting better and better and have streamlined our organization and everyone has boarded the bus and we are headed in the right direction. You might ask, how do I do this in my own business? The answer is to focus on your best customers. These are the ones that provide you with the most profit. Then search for more of these customers by asking your existing customers what they like, what they don’t like, and how you can serve them better and then giving them what they want.
Then, watch every cost and don’t spend money on anything that doesn’t make your customers happy or helps your employees make your customers happy. It sounds too simple to be true but when you focus on the most important thing, you will find out that making money in a business is not as hard as some people make it out to be.