I’ll never forget the first time I understood the importance of money in business. That, in fact, it’s all about money. Oh, of course, I’d vaguely understood the notion before then — after all, I’d been running my own successful business for many years — but I hadn’t really thought it about in any depth until this particular day.
I was sitting talking with a retired bank manager when he suddenly mused aloud,
You know, Julie, without money and profitability, isn’t a business just a glorified hobby?
That evening I thought more about what he’d said. About the wider meaning of what he’d said. I started to understand why many businesses falter, or even fail, in the early stages.
So many people start their businesses because they have an idea for a product or a service. Then they build out the business from that point. They feel passionate about their product or service and believe that because they really want it to work, then it will work. In effect, by trying to create a market, instead of responding to one.
Mind the gap
The true entrepreneur, on the other hand, starts by seeing a gap in the market for a product or service, a gap that could be filled profitably, and works back from there. He/she designs the product or service to fit the gap perfectly, rarely investing emotionally in that product or service. The product’s only job is to make money for the business. And if it doesn’t, it will be honed and worked on until it does, or scrapped, with a view to finding another product or service which will deliver that all-important profit.
How many sleepless nights, broken relationships and potential bankruptcies could be avoided if every new startup business truly understood that business is about cash? About making money. About building and honing the processes, the product, the distribution, the customer service, the market, so as to increase the profit. How many startups really understand that fact before they start out on the difficult and potentially rocky road of small business?
Finding your style
There’s no doubt that the business of money-making can be done with great style and creative flair. It can be done with integrity and dogged persistence. With humility and with vision. But it has to be done.
The resulting money can be re-invested in the company. It can be spent, or saved, or squandered. It’s really up to the business owner. But the business has to make money. If it doesn’t, then there’s no business. Just debt and worry and struggle.
Without the money, isn’t it all just a hobby? (And, potentially, a very expensive hobby, in terms of your relationship, sanity, finances and general wellbeing!)