There are many ways to define business success that don’t involve the amount of money your company makes. While profits are great, and cash on hand is necessary for any business to have, becoming absorbed in the amount of money your company is bringing in will ultimately lead you down a bad path.
This time of year inevitably conjures up memories of an old codger who cared a bit too much about making money: Scrooge. Whether you prefer to picture him as an old man or an old duck, the lesson to be learned is still present: profits define neither happiness nor success.
Allegory aside, there actually is hard data to prove that profit margins are not the best business strategy. Instead, business leaders who find the right balance between customer service, employee happiness and the community find even greater success. This is exactly why the 1-page Strategic Plan Template (available for free on the Freebies – Featured Resources page) emphasizes 4 major strategic areas: Profitability, Client Satisfaction / Engagement, Employee Satisfaction / Engagement and Social Responsibility.
Look to the Leaders
If you want to see the prime example of operating without profits in mind, you need only look to the largest online retailer in the world.
Amazon doesn’t operate on profits. The company hasn’t posted a substantial profit margin in the more than 20 years that they have been in business.
So what does Amazon focus on? The answer is cash flow.
Amazon keeps its cash flow in a closed loop, meaning it invests nearly every last bit of money that the company makes into new initiatives, technology and ultimately the company itself. This is part of the reason why the retail giant is able to keep its prices low. It is also the reason why it has been able to lure in some of the best talent from multiple industries.
What You Should Be Focusing On
To say it in a single word: growth.
To use a few more words: healthy, sustainable growth.
One of the best strategies that you can focus on is retaining customers, that is, retaining the right customers. The right customers for your business are usually those who will continue to invest in your product or services for years to come.
If you offer services that range in value from hundreds of dollars to multi-thousand dollar deals, consider that it is far more worth it to pursue accounts that are worth more money, rather than focusing your time and resources on several smaller accounts that don’t amount to more than a higher value account.
This is sustainable growth. It will allow you to grow as a company, both in profit and clientele, without stretching your resources beyond what you can afford. Just remember to keep clients coming back by treating them right.
How do you achieve that?
Treat Your Employees Right
There are two quotes from Richard Branson that sum this up quite well:
- “If you look after your staff, they’ll look after your customers. It’s that simple.”
- “Train people well enough so they can leave, treat them well enough so they don’t want to.”
It is important to build a talented team that can help your company grow. It is even more important to focus your efforts on treating your employees right. That way, they can focus on treating your customers the way they deserve.
All of which is far more important than your net profits.
Be a Great Business Leader
All of this stems from you being the best business leader that you can be. For more information on how to lead your company down the path of success, check out the free resource page on business leadership.
For even more information on how to run a successful business, check out the Business is ART book.