Opinions expressed by Entrepreneur contributors are their own.
I work with many business owners across many different industries, from making pizza to making houses. And all of them have very different views on the same subject: making money.
I opened my first business, because the guy I was working for was a complete (fill in the blank). I knew how to run the business, provide better customer service and produce a better product, so I did. And wow, that was a great idea! Not only did he go under, but my business did so well that I was getting national recognition for my results, and other business owners in my industry were calling me for business advice. (Man, I was so cool.) But I also found that there were a lot of different mentalities to contend with as I worked my way up to a higher level of success.
The industry was Martial Arts, and there were many people who felt that earning money for services provided was near criminal behavior — as though it was breaking some kind of code of honor by actually making a living from running a business. But I have found I wasn’t alone with facing that mentality. Many industries, like Yoga studios, fitness/health clubs, handyman, auto repair, restaurants and on and on, have that same mentality.
Why? Why is there something wrong with earning a good living from owning and operating your business? Isn’t that the American dream? Many people will simply choose their pride over making a profit — a profit that helps to feed their family, pay their bills and save for retirement.
Related: 3 Signs You’re Letting Pride Get in the Way of Being Successful
While pride has been labeled as a negative by the Seven Deadly Sins, it can actually go either way. When you were a kid, you were told to take pride in your work, to work hard, to provide top quality service, to take pride in how you dress, etc. These are all great examples of the good use of pride, but when you refuse to charge appropriately for your services at a competitive rate, because you feel that you’re doing something wrong by collecting money, and then your business and/or family suffers from that choice? THAT is a prime example of the negative use of pride.
This is the same mentality of business owners who say things like “I can’t believe they (whoever “they” is) allow Jeff Bezos and Mark Zuckerberg to make that much money!” I’m not kidding, I’ve heard this several times. Jealousy? Maybe, but I think it also reflects why these same owners struggle year over year. They feel like making money is wrong somehow, and they use the excuse that they “feel” better about themselves, because they aren’t making much money. They feel that they are “not like those evil businessmen and women who make so much money.”
I just don’t get it. Why make your family, your employees, your ability to take a vacation and your retirement account suffer so that you “feel good” about NOT being like a business that generates a profit? There is no logic to that thinking, and there is nothing wrong with making a good living.
Here are some ways to avoid the pride pitfall:
Charge just above your industry/area average for your services.
Feel good that each customer is getting the best service in town.
Learn to deal with any guilt you feel about collecting money.
Focus on good things you can do with the money you make.
Get a realistic number on how much you’ll need for retirement.
Plan out your vacations, and have a cost attached so you can work towards that.
Make a plan now to sell your company, and get an idea of how much it’s worth.
Set a goal for monthly profit uses. Here are a few ideas:
Employee night out
Family night out
Special gift for your significant other
Larger or more locations
Retail location improvement
Hire new employees
Related: Understanding Profit In Your Business
Now that you have a better understanding of how pride can stand in the way of making a profit, let’s talk about some simple steps to take so that you see a profit as quickly as possible.
Some of the suggestions might be easy, and others may be difficult. Please don’t just skip something because it’s difficult. For instance, depending upon where your business is as far needing more funds, you might need to consider letting go of a few employees and performing the duties yourself. It might suck for a year or so, but you’ll see improvements right away in cashflow. This is a harsh reality for many business owners, but it does your family no good to keep on employees you can’t afford when the business might go under.
Keep in mind that there are only two ways to increase profits: Decrease expenses and increase revenue (sales). Try doing both at the same time.
Let go of any employees who are not critical, and take on that work yourself.
Let go of any underperforming employees.
Shop for EVERY service you use: internet, phone, insurance, rent, etc.
Refinance your home, cars, etc.
Renegotiate your rent with your landlord.
Relocate to a smaller/cheaper location.
Sell off equipment you don’t need/use.
Increase your rates by at least 10% (to start with).
Create a campaign to get back former customers.
Create a campaign to increase new customers.
Create referral programs.
Take sales courses.
Have your employees take sales courses.
Create COIs — Centers of Influence.
Improve your web presence: web site, Google reviews, etc.
PRO TIP: A helpful idea is to know what the end game for your business is. Are you going to pass it down to your kids? Do they even want the business? Will you sell the business? Will you just close the doors? By knowing the end goal, you can properly plan out what steps are most critical to take now, like letting go of non-essential/low-performing employees, to reach that end. If you’re going to sell it, then you have to generate profits each year to increase the value of the business. No one will buy your business if there is no profit. So, don’t shoot yourself in the foot by allowing pride to control your business income. Make as much of a profit as possible AND feel damn good about it too.
Credit: Source link