Revenue or Profit?

I was meeting with an energetic entrepreneur this morning. As part of our conversation, he mentioned that sales should not be focused on revenue. Instead, they should be focused on profits and customers. I think he is right.

One of the mistakes I made as a business owner in the early years of my business was focusing on top-line revenue. My senior leadership team did the same thing. We confused revenue with profit. Our sales staff were measured on gross revenue, not profit. Our company bonuses were measured on gross revenue, not profit.

If I had it to do over again, I would focus nearly exclusively on numbers of customers (new, retained, lost, fired (yes, some customers should be fired)) and the profit. Would I rather have $500K of profit on $3M of sales or $15M? The answer is obvious – $3M. Why? Because it takes a lot less effort and cycles in the $3M scenario than the $15M scenario to run the business.

If you’re a Christian Business Owner, you need to remember that profits are what provide sustainability for the other three purposes God has for business. Focus on profits, not top-line revenue, and you’ll always be in business to keep fulfilling God’s purposes for business.

Bill English