Why a Focus on Financials leads to Failure…
I’d like to hear what people think about this proposition – I’m aware it flies in the face of everything we’re told, but experience of running my businesses and advising others suggests that fixating on profitability will kill the lifeblood of any business.
Now, I’m not saying that profits are bad – profits are great. I’m not saying that we should ignore financials – they are key to running a healthy business.
I’m saying that the primary focus of any business needs to be Delivering Value, not making money. Delivering value needs to be the overriding objective of the enterprise.
When you pump out value, you attract customers that are looking for value. They appreciate that value and will pay you for it. You, as the business owner are more likely to find yourself doing something you love and doing it well. The emphasis becomes one of giving, not taking. It might sound like a subtle difference but it results in a radically different culture that transforms the customer relationship.
When you are focussed on the income you can generate, you attract customers that are focused on what they are paying rather than what they are receiving. Those customers are more likely to want discounts, pay late, or not pay at all. You’ll find yourself operating in a very different market sector.
When things are working well, Delivering Value is the objective, money is the outcome.
So an entrepreneur that’s thinking: “What can I do to pay the bills?” can try asking herself: “What can I do to deliver value?” The two are worlds apart.
And interestingly, when you speak to owners that are fully immersed in delivering the value of what they love doing, they’re often not so aware of the financials because they tend to be abundant enough to look after themselves.
So that’s my experience, what’s yours?