I have a business coaching client who is going through a sort of a doom loop in his business. The situation that he finds himself in is that while he is growing every year, because his business model has very low profitability, as he grows his revenue, his expenses also increase simultaneously. While he is excited about bringing in new business, he is also very discouraged because, from his perspective, there is no way to get out of this doom loop and create a profitable business model. I find this to be a pattern in a lot of my clients. The good news is that there is hope.
When it comes to your business, you must take on the mindset that no one can be happy but you.
I always find it so fascinating when a client will allow either their employees or their ideal and likely buyers to dictate the profitability of the company. If you cannot have a company that becomes profitable, then you should not waste your time and resources in that business. The reality is that every employee will always want to be paid more, and every customer will always want to pay less. When it comes to your business, you must take on the mindset that no one can be happy but you. You must embrace the fact that in order to build a profitable organization, you are going to have conflict, both when it comes to what you are paying your employees, and what you charge your customers.
In our organization, if an employee does not like what they are being paid, then they can leave. Because we have instituted the business coaching group interview and are very intentional in the culture that we create and do not drift from, anyone who does not fit within that culture is quickly weeded out. The standard for pay is what it is. Also, it is what it is because the business has to be profitable. If a business is truly intended to serve the owner and help to create time and financial freedom, then running a business that is not profitable is counterintuitive and a waste of time and energy. Now, the caveat to that is when you are starting a business you should definitely expect to not be profitable for at least three years, but eventually, as you are diligent and do the right things each and every day, your business should become a profitable organization.
On the other end of that, customers always want to pay less. It doesn’t matter what you are charging them. Even if you are selling something to them at cost, they will still complain. They still want to pay less. It is in the DNA and the nature of every person to want to pay less than they are being charged. Because of that, you must put your prices at a level that allows you to hit your financial goals. If the level that you must put your prices at means that you will have no business and will not be able to actually sell something, then there is no point to that business. When it comes to my business coaching client who is struggling through this scenario, I find that he knows that he needs to incorporate a set standard for paying his employees, and a higher price for his customers, however, he does not want to go through the gauntlet of dealing with the conflict that will arise from doing these things.
I will say it again, the business is created it to serve the owner. As the owner, I am sure that you are likely to want time and financial freedom. If your business is not structured in a way that will help to create time and financial freedom, then you need to embrace conflict and make some changes today. Set a standard for what your employees will be paid, utilize a carrot and a stick in that process, and do not deviate from it. Do the same thing with your business coaching customers. As you are diligent to walk down the proven path that is clearly outlined in Clay Clark’s book, “The Boom Book”, you will see that sticking to these two standards will be essential to building a successful business.