As a business owner, are you focused on how much money everyone is spending in your business? Or do you focus instead on how much profit you‘re going to make? Unfortunately too many small business owners focus too much time and effort on how much money is being spent and not nearly enough time figuring out how to make more money (i.e. Profit). It‘s more of a poverty vs. abundance mindset. Why not be a little different and focus on abundance vs. poverty as a small business owner?
There is a dirty word that surfaces for small business owners from time-to-time, which typically causes them to feel ill and break into cold sweats. BUDGETS. Nobody really wants one or frankly ever asks for one. It has a punitive, I‘ve just got called down to the Principal‘s office, feel to it. Budgets are constraining and inhibiting to growth and sustainability. A more energizing and productive path to take is developing a Profit Plan. This way you‘ll be able to focus on achieving profits vs. not spending yourself out of business.
Focus on Your Profit Plan, Not Your Budget
I used to be a pretty decent golfer with a low single digit handicap. There are lots of great analogies between golf and business. One of the main ones we focus on as business coaches is that both business and golf can get unnecessarily complicated. Anyone who has taken a few golf lessons can tell you that. You can get so focused on the proper mechanics of your swing that you forget how to hit the ball. And it stops being fun and starts feeling like work! I learned early on that the best thing to do with my golf swing was to keep things simple. Boil it down to one or two swing thoughts as I was addressing the ball and then forget everything else.
It helps to have the same kind of focus in business so things don‘t get overly complicated and it stops being fun. For small business owners, developing and executing a successful Profit Plan is essential to set the stage for making money on purpose. Start simple by asking yourself:
- What do I want my company’s sales to be for the coming year?
- How much do I want in profit/net income/the bottom line?
Those two numbers should be the key focus (i.e. swing thought) for you and your team. That way, everyone is focused on how you are going to make those sales and profit goals a reality. No confusion, no complexity.
Too many folks are directed to focus on a budget instead of a Profit Plan and what happens is they often lose sight of sales and profit goals and focus solely on the spending and expenses. Remember that the “score card“ in business is not how little you spend, but how much profit you‘re able to make. So be sure to focus on profit and not simply spending.