Passion and Profit

Having completed about 15 interviews (I know they aren’t all published), I have to say, some themes are immerging that I have always believed. When you start a business, there are two things that you need to be successful: Passion and Profit.

As you know, being a business owner requires a lot of stamina. Not like the stamina we need in a soccer game, but mental stamina that keeps us going when we have a horrible day. You know the kind of day I mean. You arrive late to the office on a Monday morning because you forgot your phone and you have to drive all the way back home. Then, you finally get to the office to find out that over the weekend, it rained, and water leaked into the warehouse getting several boxes (or whatever) wet, and you need to see if you can save it. Then, an employee calls to say that he won’t be coming in today because he just decided to go back to school, and needs to register for classes today. Then, a customer calls to complain that your guys have not arrived at her house yet, and they were scheduled to be there an hour ago. Does any of this sound familiar. Well, I’ve been there.

Needless to say, it’s days like this that requires Passion to keep you moving forward. There are still estimates to get out. Materials to order. Vendors to contact. And payroll is due. Passion drives us to keep going in the good times and the bad. Passion helps us make one more sales call on Friday afternoon at 6:00. Passion keeps us on the computer on Saturday and Sunday when our friends are watching the game. Passion keeps us moving because we just love to do it all. It is exciting and fun. Do you have Passion for what you do? Would you do what you do if you didn’t make much or any money? Which leads me to my next point…

You need to make a Profit. Did you hear me? You need to make a Profit. As soon and as fast as you can. Otherwise, you have a hobby. An EXPENSIVE hobby. This one was a hard lesson for me and a lot of other business owners to learn. We think if I just sell more. If I just pay for this new ad campaign. If I just can make it to next month…things will turn around. We get into this predicament by buying too many things and not focusing on making a profit. To some of you, this will sound preposterous, and others will know exactly what I am talking about. Let me assure you, tons of entrepreneurs live here, and for a long time.

Profit = Gross Sales – Direct cost – Overhead

Most small business owners forget the Overhead part of this equation. They forget that they need to put gas in the car, pay for their cell phone, pay the accountant, or pay for a new computer. And, I have news for you: if you take a paycheck, that is NOT profit. That is overhead. Cash in the bank is not necessarily a profit. You should be making a profit. Otherwise, you just own a job.

I believe that if you focus on these two things, then you have a really good chance at staying around a while. When you have these two things working, you will be able to handle all of the other things that cause us problems: Payroll, hiring employees, marketing, customer service, etc. If you don’t have passion, you are reduced to just trying to make money. If you don’t have profits, you have nothing to invest into the company to expand, and you don’t get rewarded for all the hard work of owning the business.

Until we meet again:  plan, plant, and grow, but don’t forget to harvest.

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