Biggest Entrepreneur Mistake #3
Focused on Profit
Being focused on profit doesn’t seem like a mistake. After all, isn’t that the whole purpose of running a business? No, actually it’s not.
If you accept the principle that the fundamental objective of any business is to build sustainable business value through loyal and profitable customer relationships, then focusing on short-term profitability can be a distraction and detrimental to that objective.
Many short-term profit-oriented decisions can hurt long-term value. Cutting expenses in staffing, marketing, and maintenance might have an obvious and immediate impact on improving profits and cash flow, but they may also have irreversible negative effects on corporate culture, branding, operational effectiveness, and the continued support of key employees and customers.
Most entrepreneurs are dedicated to managing the bottom line by monitoring sales, gross profit margins, and operating expenses. They always know those numbers. But they too often neglect asset management and the performance variables affecting cash flow and the ability of the enterprise’s infrastructure to generate sustainable and profitable long-term growth.
Managers need to monitor all the key performance variables and react quickly to avoid big mistakes that might be fatal. Focusing on short-term profitability may be a dangerous distraction.
Don’t make the Biggest Entrepreneur Mistake #3 – Focused on profit
Be better. Do Better. Be an Enlightened Entrepreneur.
Del Chatterson, your Uncle Ralph
Learn more about Enlightened Entrepreneurship at: LearningEntrepreneurship.com Read more of Uncle Ralph's advice for Entrepreneurs in Don't Do It the Hard Way & The Complete Do-It-Yourself Guide to Business Plans - 2020 Editions.
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