The Primary Focus in Business
Allow me to start by reiterating the title of this article, the primary focus in business, not the only focus in business. And I say that because I don’t want anyone to take this to the extreme of either side, but it’s important to realize that every consideration you have in business, stems from this singular focus: profits.
Without profit, you can’t employee people, you can’t give raises or benefits, you can’t invest in things like sustainability or employee empowerment, you can’t donate to your favorite causes, you can’t even pay taxes. Profits are literally the fuel for your business. You can have the most expensive and extravagant car ever built, but without fuel, whether that’s electricity or gas, all you have is an overpriced yard ornament because you can’t move forward without fuel.
Today, there is a college text book being used that says the idea that profits are the most important thing in business, is indoctrination. Are you kidding me? This is what we are teaching our next generation of business leaders? And we see it today as employers. The workforce is beginning to become more interested in what the employer can do for them, instead of what they can do for the employer. We hear buzz words like servant leadership, flat org charts, holacracy and self-organization. These things are being taught as the keys to running a successful business. Apparently today, this is the only way to get happy employees, engaged customers, and a world class culture.
Now, a quick side note: I’m not willing to say that these “business 2.0” ideas won’t work. In certain circumstances, I’m sure they could. However, I do feel very comfortable saying their success is, without question, the exception to the rule, not the rule. So be careful.
However, regardless of whether these specific ideas are good or bad for business, the problem is the idea that we should be focusing on what benefits our employees will receive or how they will be managed, prior to thinking about how the hell we are going to pay for the employees in the first place.
My fear is that so many people in business today, and those who are about to get into business, are being set up for failure. We hear the news about one or two CEO’s who got greedy, one or two companies that cheated for the sake of profits, and all of a sudden, profits are of the devil. That’s just silly. Those who believe profits are bad should join a non-profit organization, that’s what they’re for. However, for the rest of us, every single day our business is open, we should be laser focused on making a profit. Not for greed, but for survival.
I always get a laugh at those who point to Starbucks, Zappos, Google, and a list of a few other well-known brands that take a very humanistic approach to business organization. They always set these companies on a pedestal as the example of not making profits the main focus of business. However, they refuse to address how the company operated prior to making millions and even billions in profit. What was the focus in the early years? What was the employee structure or benefits package like then?
It’s easy to start and operate these initiatives when you have millions of dollars to throw at it. But what about when you first get started and you don’t even have the money to buy brand new desks for your office? I assure you; Howard Shultz did not start and grow Starbucks by giving all of his profits away.
Just last year, we heard about the founder of Patagonia giving away the $10 million in tax breaks the company received. And now he is being lifted up as an example of great business leadership. Yet, that founder is a billionaire today. Anybody seeing the pattern here? It’s easy to look down on the village and judge once you are on top of the mountain, but you weren’t judging when you were still climbing. Don’t give me advice on how to be successful, when you didn’t even follow that advice yourself.
And one last point. So many businesses get fixated on the idea of growing and expanding their business. But something I had to learn the hard way, is that growth without profits is actually just adding more work, not more value to your company. Growth is good, employee empowerment is good, building culture is good; but a business without profit is nothing but a hobby. Don’t fear or demonize profits. It will be to your business’s demise.
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