Busy Fool Mistake #3: The Vanity (Sales)

Focusing on Turnover and Not Profit

Let’s have a real talk about a common pitfall in the entrepreneurial world: obsessing over sales as the ultimate success metric. It’s an easy trap to fall into, but it’s not just a slippery slope—it’s a misconception that can lead to some real headaches down the road.

Sales as Personal Income? A Reality Check

So, you’ve made a sale, and it feels like a personal victory, right? It’s tempting to see every pound in sales as a pound in your pocket. But here’s the reality: equating sales with personal income is like celebrating a touchdown when you’re only at the halfway line. Your business’s cash flow is more than just your personal ATM. There are expenses, reinvestments, employee salaries, and a host of other costs that your revenue needs to cover before you can call it profit.

The Bigger Picture Beyond Sales

Sure, sales are critical—no one’s arguing that. But they’re not the whole story. If you’re laser-focused on just making sales, you might be neglecting other vital parts of your business. How satisfied are your customers with your service? Are your employees motivated and engaged? Are you innovating and staying ahead of the curve? Your business’s success should be a beautiful tapestry, not just a single thread of sales figures.

Choosing Your Customers Wisely

Now, here’s the tricky part: not every sale is a step forward. Some sales can actually be two steps back. Chasing after every possible sale without considering the fit can lead to all sorts of issues. It’s about finding customers who align with your business values and goals. Have you ever heard the saying, ‘All money isn’t good money’? Well, it’s especially true here. Targeting the right customers ensures your sales efforts contribute positively to your business’s trajectory.

Service: The Heart of Your Business

In the race to rack up sales, it’s easy to let service quality slip through the cracks. But compromising on service is like shooting yourself in the foot. Your existing customers are your bread and butter—they’re your brand ambassadors. Keeping them happy should be as important as bringing in new business.

The Irony of Sales-Induced Cash Problems

And here’s the thing about chasing sales without a plan: it can lead to cash flow nightmares. It’s a bit like eating too much sugar—a quick rush followed by a crash. Sales, especially those that are high-maintenance or low-margin, can drain your resources and leave you in a tight spot financially.

This is where the genius of the Profit First approach really shines. It’s a method that encourages you to look beyond the surface glitter of sales and focus on what really matters—profitability. By prioritising profit, you ensure that your business isn’t just busy, but also financially healthy and sustainable.

Gem

TURNOVER IS VANITY, PROFIT IS SANITY!

Thinking Time

You’ll gain far more value from what you’ve just read if you take 10–20 minutes with a pen and paper to brainstorm some ideas and reflect on how this relates to your circumstances.

If you had to focus on profitability and not revenue, what services and/or customers could you start prioritising to drive this forward in the next 12 months? McDonald’s could easily sell you a spaghetti bolognese, but imagine how much hassle it would be for them. They make far more money with simple burgers and fries.

What is your equivalent to burgers and fries, and which customers are the right ones to help you grow profitably in the future?

Summary

As we wrap up the chapter, remember that sales are just one piece of the puzzle. A healthy business isn’t just about making sales; it’s about making smart sales that contribute to your overall goals. And don’t worry, we’ll dive deep into the Profit First methodology later in the book. It’s a game-changer for any business owner looking to move beyond the vanity of sales and build a truly successful business.

Key Takeaways

Comprehensive Business Health: Understand that a successful enterprise requires more than just high sales numbers. It involves a balance of various elements such as customer satisfaction, employee engagement, innovation, and financial health.

Beyond Sales Figures: Sales are important, but they’re not the only indicator of a healthy business. It’s essential to make strategic sales that align with and contribute to broader business goals.

Smart Sales Over Sheer Volume: The focus should be on the quality and strategic fit of sales rather than just quantity. Prioritise sales that genuinely enhance your business’s growth and sustainability.

Profit First Methodology: This chapter introduces the Profit First methodology, which will be explored in depth later in the book. This approach is pivotal for businesses aiming to prioritise profitability over just revenue generation.