As a young entrepreneur, what’s on your mind? Is it revenues? Is it market-share? Is it clients? Is it how to close a deal? Is it profits? Is it satisfying the needs of the market by providing a valuable service?
Well if your number one objective is “profits” and everything else falls behind that, then you’re on the road to failure my friends. So many entrepreneurs have it backwards nowadays. And I must admit, many young entrepreneurs are the ones who fall victim to this way of looking at entrepreneurship.
Let’s cut to the chase: entrepreneurship isn’t about making profits then satisfying the needs of the masses through offering helpful services and priceless solutions. It’s the complete opposite.
Entrepreneurship is about helping people, satisfying peoples’ needs, solving problems, motivating others to succeed, and changing the world. Then – and only then – can you being to think about profiting.
Thinking about profits first is like looking into the distance and squinting your eyes trying to read what it says on the sign. You can see the sign – you know it’s there – but you just can’t make out the words. But when you’re thinking about providing value and your sequence of objectives are clear, then you’re looking at the world through a finely calibrated lens that sees things more clearly. There’s no haze of profiting off of nothing in between your vision.
Okay so that wasn’t the best analogy but you get the idea, right?
I have no doubt in my mind that the entrepreneurs that are focusing on adding value and solving real problems before thinking about profiting are going to be the entrepreneurs who ultimately succeed in the end.
It’s all about how you go about building your foundation. A home with a weak foundation will last for many years, yes, but it’s bound to crumble at some point. A home a rock solid foundation will always outlast the weaker home.
That’s how you have to think about your business. If you build your business on a positive foundation of really wanting to help and really wanting to bring about change, then you are building a foundation for your venture that simply can’t be compromised.
But if you are building something solely based on profiteering and making cash from basically nothing that adds value, then good luck. Sure, I have no doubt that you’ll be able to make money in the short-term, but time will eventually catch up with you and your business will fall by the wayside if it lacks true value and substance.
You have no idea of how many young entrepreneurs (if I can even call them entrepreneurs) who are making a few dollars but simply have no concepts of giving back, trying to bring about change, or providing a real value to their market.
They are profiting off the ignorance of their clients and have no desire to educate them on how they can be getting more out of their money. It’s disgusting to watch this sort of business.
I think that we all need to find the social entrepreneur within. The type of entrepreneurship that not only thinks about profiting, but also thinks about adding real value. Only you can decide which one is more important and which one to concentrate on first. Add value, and everything you want (money, luxury, fame, power, yaddah…yaddah…yaddah…) will be sure to follow. I promise.
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I respectfully beg to differ. My goal is to help people but to do that I need profit above all. I have to have money in order to continue to help others.
My ultimate goal is profit and that is why I sincerely try to improve the value of my services and to improve the experience of my customers.
I think that the true entrepreneur blends the Profit and Value together and because they are truly synonymous.
Because if your product has very little value, perceived or real, you will make very little profit.
For example if my product retails at $10 and is selling by the thousands but only has a profit margin of $2 I’m still not going to make very much money.
Total Sold: 15,000 x $2 = $30,000
That’s probably not very much considering your up front expenses and efforts to bring the product to market.
However what if your product sold for $15 and your profit margin was $7. Less people purchase your product but you make a lot more per purchase.
Total Sold: 9,000 x $7 = $63,000
Still not great money but a huge difference in the amount of money you would actually take home. The money you take home the more LONG TERM value you are able to provide. Because now you earned a good profit you are able to reinvest into the product improve it and come out with another one. Thus providing your customers with more value and continued support on their existing purchases.
This time you make $100,000 grand and you do the same thing.
I think you always have to be realistic and acknowledge that you have to make strong profits. WHY you are making profits from what you do is what’s important. You have to be passionate and sincere about the WHY.
Hi David,
For me its profit, closing a deal and creating a valuable service that seem to take center stage in my mind with the emphasis on “Value Building” and Problem Solving. Personally i’ve operated the other way in the past (focused on profit) and i’ve found it to be very destructive to good business. This is a lesson that has come with some time. Sure most people want long term wealth but how many succeed at this?
It’s kind of like “what came first? the chicken or the egg?”… That’s what i think
Luc
Aaron: Excellent point, indeed. I, too, believe that profits are very important. And I also agree that — to a degree — you can be focusing on profits and value simultaneously. However, a problem arises when you are “solely” focusing on profits and not on value whatsoever. That was the underlying point of my article. Speaking to the “entrepreneurs” who are forgetting about value and only concerned with turning a dollar (furthermore, not using that money to add value.) Thanks for the comment.
Luc: Great points. Indeed, I too have fallen victim to focusing only on profits in the past and have noticed horrible results with that type of backwards strategy. Personally, I don’t think this is a chicken or egg type of matter. I think that value “must” come first in order to be truly sustainable in the future.