Being Profit Centric

What is the most important aspect of your business: Marketing, Sales, Customer Service, Management, Leadership, Teamwork Development, Technology, Quality Assurance of Product or Service or Your Customer’s Satisfaction?

WRONG! None of these.

What is most important is your profitability. As small business entrepreneurs we get very caught up in the marketing of the business or selling, selling, selling or making sure that we have delivered an incredible customer experience. This is all great, but it doesn’t mean your business is going to survive. All three of these aspects, which we call the Strategic Revenue Cycle, are extremely important but will be meaningless if you are not showing the correct amount of profitability. They are integral partners to each other. This means your net profit margins must be significant enough to cover all your expenses and then give you the profit you need to thrive.

No Margin, No Mission

This is an old saying, but quite applicable. If you do not set realistic margins you will not be able to fulfill your mission, whatever that might be. Many small business entrepreneurs feel awkward charging for their services or charging more than the other guy for their services. If you do not respect your own profit margins then you do not respect the work that you are doing. Doesn’t your work add value to people’s lives? Of course it does. You must understand that you are a problem solver. What you do is solve problems for people with your area of expertise. Plumber, Clothing Retailer, Dentist, Accountant, Massage Therapist, Sign Maker and a Heart Surgeon, are all the same. They are professions that help people solve specific problems. How well would a Heart Surgeon be able to help me purchase a blouse for my wife? Not very. He/she has neither the product nor the expertise.

Problem Solving is Value Building

Let’s say you have a broken ankle. The Brain Surgeon wants to fix your ankle and he will only charge you $300, interested? However, you also have the foot surgeon who specializes in fixing broken ankles and wants to fix it but it costs $3000. Who wins? Really? You will pay 10 times as much to an ankle guy versus a Brain guy? Why? Because his specialty is fixing ankle problems, therefore his expertise is worth more to you. Let’s make it even more obvious, you have a brain tumor who do you want operating in your head… ankle guy or brain guy? Point made.

You are a brain surgeon. At what you do, assuming you are very good at it, you are a brain surgeon in your area of expertise. I can’t do what you do. You can’t do what I do. This is how we exist in our society. We are interdependent. We respect ourselves and each other by developing ourselves to the best of our ability. We can then rely on each other and in a capitalist society we are willing to pay each other for that area of expertise. It is each of our responsibilities to continually develop ourselves. This knowledge an experience is worth money to you and value to your customer.

Handyman Gene Missing

Somewhere I lost the Handyman Gene. I can hardly put a nail in the wall. My friend Andre can tear a car down to nuts and bolts and rebuild it again. He can build a house from scratch and do all the plumbing, electrical and heating work; unbelievable. To me he is a mechanical genius. He is my brain surgeon when it comes to my house. He can solve any problem I have and that is worth a lot to me. He has a level of expertise I can only hope for. So do you. You have a depth of knowledge, a level of expertise that makes you who you are and your business what it is. People are willing to pay for that and pay well. Do you remember the movie, The Color of Money with Paul Newman and Tom Cruise? Paul Newman’s character partners up with Tom Cruise’s character to make money from hustling at pool. When Newman is first enticing Cruise to partner up he says something along the lines of, “When you’re the best, money is easy. People who are the best make lots of money, because they are the best.” That is what we are talking about here. If you develop yourself to be the best that you can be, and then if you can have others recognize that you are as good or better than anyone else in the area, they will not only do business with you but they will pay you well….more than the other guy to fix the same problem.

If you stay Profit Centric you know where your margins need to be and you will charge accordingly. By being profit centric you can focus on effective marketing, successful sales and delivering an incredible customer experience. You see, a Profit Centric organization is not about you the owner making lots of money. It is about assuring that you can stay focused on doing what is right by the customer because you are making the money you need to have a thriving business and the lifestyle you desire.

So, go put up your prices by 15% and increase your value by 60%. You will find that you will sell more at the higher price and have higher customer satisfaction and loyalty. Or, you could not believe me and keep doing what you are doing. To quote Dr. Phil: “Based on results, how’s that working for ya?”