Grow Your Business by Sticking to Your Guns

Every small business owner wants to make money. In fact, revenue is the very definition of being in business. But is there such a thing as an overreliance on revenue to drive your business?

Definitely – and it could be damaging your company.

Focus on profits

Successful entrepreneurs need a deeper meaning attached to the growth of their business. Are you trying to save the world? Are you trying to provide the best service or product in your industry? If you’ve already found this deeper mission, then you can afford to focus on revenue. But if your goal is simply to make as much money as possible, you may be out of business sooner than you think.

Successful Businesses Are Driven by Values – Not Revenue

At my former company, a very large client had us questioning our relationship. The client generated over $1 million in annual revenue but treated our account managers poorly – so much so that two account managers quit their jobs from the stress.

We were in a bad position, but we still had a choice: fire the client, or suck it up and do the work. Since this client was contributing so much to both the top and bottom line, I brought the issue to a vote of 70 leaders across our organization. The group decided 69-to-1 to fire the client, and I wrote a letter to the client opting out of the relationship.

In this situation, we weren’t able to get out of our contract, but what mattered was that we got the client’s attention. We listened to our team. We made a decision as a company, and the relationship with the client improved.

This was a good lesson for our company, which taught us that our success wasn’t just dependent on the revenue we were bringing in; the longevity of the company was tied to the people we did business with and how we treated our employees. In this situation, showing our employees that we valued them more than a $1 million client brought us unbounded loyalty and engagement.

The difference between businesses that survive and businesses that succeed lies in the values they use to solve their problems. Do they side with their employees, or do they always side with revenue-generating clients? To build a truly successful business, employees and stakeholders alike need to be driven by the company’s shared values – not revenue.

5 Reasons Revenue-Obsessed Businesses Fail

While money may keep you in business today, focusing entirely on revenue won’t give you a future. Here’s why revenue-obsessed businesses are destined to fail:

1. You might say yes when you should say no. When you’re focused on revenue alone, you might agree to do business with a client that you shouldn’t do business with. Jumping in with the highest-paying prospect – regardless of fit – will pull you away from your company’s mission and have you chasing clients, rather than being sought after yourself.

2. Unfocused employees spell ruin. All employees should have a clear understanding of the mission and values of the company. Better still? They should see those values reflected in the decisions your senior management team makes. Without a clear focus on the company’s goals, employees lose focus, motivation, and productivity.

3. Profitability goes down. When you’re solely revenue-focused, you tend to price your services lower, reducing your profit and risking becoming a commodity business. Doing more work for less money? That’s just bad business.

4. The future fades. Your decisions should be based on what is best for the future of the company – not what will get your bills paid the fastest this quarter. Investing in the long-term health of your business by partnering with the right people for the right reasons is what will keep you in business in the long run.

5. Quality suffers. When senior management starts caring more about revenue than the quality of your product or service, the quality will start to decline. Early on, you may be anxious to take on new business that stretches you beyond your abilities, but letting your values and mission slip in the beginning can degrade the quality of your product or service and make it difficult to carve out a place in the market later.

It may seem counterintuitive, but the more focused you are on your revenue, the more likely your business is to fail. By contrast, the more mission-focused and engaged you are, the higher the quality of work you produce will be and the more profit you’ll generate. You can’t choose between money and a mission to run a successful business – you have to tap both.

About the Author: Paul Spiegelman is the chief culture officer at Stericycle and founder and former CEO of BerylHealth. He also co-founded the Small Giants Community with Inc. editor-at-large Bo Burlingham. He is an Entrepreneur-in-Residence for Office Depot’s SmallBizClub.com. You can read more at PaulSpiegelman.com.

Photo credit: Unhindered by Talent

1 Comment Grow Your Business by Sticking to Your Guns

  1. Kelly Boros

    Doing more work for less money? That’s just bad business.

    Another reason why companies should regularly run job costing reports. These reports help to identify if your pricing strategy is aligned with industry standards, and can also help point out your not so profitable clients. Letting go of unprofitable clients allows you to focus on those who are bringing in income (and can help you look for more clients in the process).

    Reply

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