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Saturday, September 20, 2014

Success Soup - P is for Profits (of course)

This one was so obvious an ingredient to success soup that I should have done this blog before I started on the letter A.   But here we are, more than halfway through the alphabet and we have reached the one that matters most.

Yes I am a capitalist, but for me, money is a means to an end.  And that end is leaving a legacy.  In my lexicon, being rich means having enough to give without constraint.

So profitability is key to giving.  This is why I refer to myself as a philanthropreneur.  Because while I do believe in supporting non-profits, the support actually comes from organizations that have profits to share with the less fortunate.

There is nothing magical and mystical or even elusive about profitability.  Your revenue has to exceed your costs.  That is it.

If it takes investment to build your product or service up to the point where it can be profitable, that needs to happen in a reasonable period of time.  Reasonableness is defined by the one putting in the money.

If you borrow from a traditional lender, then your first payment is likely due next month.  So you had better be able to take that investment and quickly turn it into revenues, in order to meet the cost of servicing the loan.

If you take in funding from an investor (whether friends and family, an angel, a VC or a private equity company), you need to understand their time horizon for getting a return and what multiple they expect.

If you have been in a business for 2 or more years post funding and you are not yet profitable, call for some outside help.  There is something wrong.  It may just take minor tweaks, but please do not keep going down that path without getting some objective advice.

I am happy to do a free 15 minute call with you.  Simply go to my website and click on the CONTACT tab on the lower right hand side of the site and we can schedule a time.

Stay tuned.  Q is up next in our Success Soup recipe.

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