I previously put together a team that built Australasia’s largest paintball company. Being the largest was a source of pride and something the entire team unified behind.
We were:
? the biggest;
? had the most locations;
? entertained the most amount of players;
? provided the best quality experience;
? purchased more paintballs than Walmart; and
? the celebrity’s / professional sports teams’ choice.
For many years, these vanity metrics were what dominated our narrative and although they had their benefits such as uniting the team, instilling a sense of pride, and helping with purchasing power, they also were a large distraction from the metrics that really mattered. Profitability was suffering in places as we focused on more locations and more players, without considering if that added positively to the bottom line.
Who wanted another dot on the map without considering if that would make us more money than without it?
WE DID! – as we were measuring the wrong primary metrics. ??
How often have you done the same?
? Been excited by the amount of website visitors you tracked?
? Celebrated that viral video that got tens of thousands of views on social media?
? Got your vehicles sign-written even though you only work with other businesses and don’t really use it for advertising?
? Chased an arbitrary sales target without any consideration for the bottom line?
These activities can all contribute to the success of your business however if they are viewed as your primary metrics, you are on a shaky road. It feels great to share your successes however are you defining success in a meaningful way?
Looking back on those times now, I do not think we were oblivious to the profitability, we just chose to look at the shiny metrics more. We were very profitable but we could have been much more so if we had focused less on the shiny metrics, and more on the primary metric of profitability. Profitability in all activities needs to be in the forefront of your mind. Customer satisfaction, staff engagement and fulfilling a purpose are in close second but we should not be ashamed of the fact that we are in business to be profitable.
Focus on your profitability, find your baseline requirements, and strengthen these. Your team will unite behind this better metric, and it will ensure you can remain in business and keep them employed.
✅ Know your profit margins and profitability.
✅ Be diligent in understanding your profit.
“Profitability is the sovereign criterion of the enterprise”
Peter Druker
As Peter Drucker said, “Profitability is the sovereign criterion of the enterprise,” and without it, you do not have a business, you have a hobby.
