Why Is Profit Viewed As a Bad Thing?

Marketing podcast with Mike Michalowicz It always amazes me when I see how little focus business owners have on this concept known as profit.

Profit

photo credit: Dave Dugdale via photopin cc

There seems to be a total infatuation with revenue and head count when the true health of a business investment is profit. Far too many business owners come to view profit as what they pay themselves and to me that sounds a lot like a job. My guest on this week’s episode of the Duct Tape Marketing Podcast is Mike Michalowicz, author of The Toilet Paper Entrepreneur, The Pumpkin Plan and Profit First: A Simple System to Transform Any Business from a Cash-Eating Monster to a Money-Making Machine. In this interview Michalowicz reveals several simple, yet powerful ways to change the profit mindset including, most importantly, taking profit from the business first. Michalowicz also talks about his own experience of going from newly minted millionaire entrepreneur to bankruptcy a few short years later. A couple of his tips, such as creating separate bank accounts for things like expenses, salary and profit, may seem like a shell game at first read, but I know first hand that it’s a powerful way to create some financial discipline where there often is none. Several years ago I had Greg Crabtree, a CPA and author of Simple Numbers, on this show and he implied that if a business was not showing at least a 10% profit after all expenses, including the expense of paying the owner a competitive salary, the business was in trouble. I think the key is to view a business as an asset with a pretty big investment on your part. That’s the way that any potential buyer of the business would view it – “could I invest in the business and see that investment pay dividends otherwise known as profit?” The making of profit gets a bad rap for a couple of other reasons too. Many people were raised on the notion that profit is a bad thing – that someone was losing if you were gaining. This mind set is pervasive and does a great deal of harm in the way business owners approach everything from pricing to service models. Another attack on the notion of profit actually comes from well intentioned accountants who view profit as the cause of short term tax burden rather than the cause of long-term health. I know people can get caught up in and consumed by the notion of profit, but the first step is to view profit as the important measure it is in business.

Why How the World Sees You Matters

Marketing Podcast with Sally Hogshead

Have you ever taken one of those personality tests? – Tests with names like DISC, Kolbe Index and Myers-Briggs. While interesting, the focus of the results is ultimately based on determining “how you see the world.”

How the World Sees YouMy friend Sally Hogshead has spent the last few years inventing a test that flips this notion around to help participants learn instead “how the world sees you.”

You can dive deeply into this idea in her latest book How the World Sees You – Discover Your Highest Value Through the Science of Fascination.

The building blocks of Hogshead’s approach are what she calls archetypes. These 49 elements make up your core “advantages” and give you insight into the best way for you to operate in the most authentic way.

How The World Sees You also introduces the concept of a personal anthem based on your personality advantage. This 2 or 3 word tagline can become your filter for how you make decisions that are right for you.

Listen to the interview linked above and hear Sally break down my personality type and anthem.

I believe this type of assessment and introspection is invaluable for business owners or anyone that interacts with other human beings. (How’s that for a broad statement!)

I also believe that this is an idea that could prove valuable to bring to your clients. Helping them understand their unique value could prove to be one of the best gifts you can give them.

 

 

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