Debunking 8 Ridiculously Popular Myths About Running a Profitable Business

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Debunking 8 Ridiculously Popular Myths About Running a Profitable Business

It’s entirely possible to buck convention, shirk the rules, and still succeed; in fact, doing so just may help you get there faster.

Debunking 8 Ridiculously Popular Myths About Running a Profitable Business
Photo by Kristin Wilson on Unsplash

I run a very unconventional business in a lot of ways. It’s not in a crazy industry or selling some evasive vaporware product; instead, it’s the way I run my business that’s pretty weird. It’s not weird to me; it’s weird as compared to the mythical rules society seems to have boxed profitable businesses into over the years, through famed best-selling business books and MBA curricula. However, I’m far from the only one.

I know entrepreneurs who make some very atypical decisions with their marketing, their products, their team, their time, and even their business’s cash reserves. Some of these people are the most straight-laced rule followers, and some are the most eccentric founders you’ll meet, but they all have one thing in common: They’ve decided that certain rules need not apply — and it’s worked to a massively lucrative (and enjoyable) degree.

I’m busting 8 ridiculously popular myths about running profitable businesses that just may entirely transform your own entrepreneurial choices. In fact, bucking these commonly accepted myths just may be the thing to fast-track your success.

When founders decide to start a business, they typically approach it with an “all-in” mindset, planning to give every last bit of blood, sweat, and tears to their new “baby” from now until eternity (or until they cash out). I know some wantrepreneurs who are plagued by the “grind 24–7” mentality so much that they fail to realize what grinding even is.

Is grinding clocking in and clocking out? Is it sending 10,000 cold emails manually when you could automate the process? Is it staying up until your brain barely works and you’re seemingly operating at negative efficiency? Or is it waking up at 3 am, pouring through all the books, podcasts, and educational content available simply to procrastinate your own actual doing?

The truth is that it’s entirely possible to build a profitable business that requires much less of your time than startup hustle porn blogs would have you believe. And no, it doesn’t make you a lazy or subpar entrepreneur.

Hours worked mean very little; output produced and progress made is the only way to really track your journey. I have a friend who believes “if you spend 10,000 hours on a task, it will surely make you a millionaire”? I disagree; I think it depends far more how you spend the hours than how many of them you spend. When I worked the most hours in one of my businesses, I made the least amount of sales and no profit at all; that same business today can churn out multiple 6-figures with only a couple hours of my weekly attention.

So ask yourself: What are you doing with all those “hours” you’re putting in?

Have you ever been recommended a book on “managing a team”? How about a podcast all about recruiting, hiring, and firing? While I’m not knocking the interest in optimizing a person’s managerial skills, there’s a big — and expensive — myth going around in the startup space. I’m watching this myth right now kill a $40M VC-funded pre-IPO company, and it’s likely going to be the demise of many of its fellow startups in the coming months.

The myth is that a mushrooming team is necessary to facilitate and accelerate growth — and I’ll admit, even I have fallen prey to this fallacy (and it’s cost me tens of thousands — maybe more). I’ve hired salespeople, ad agencies, social media management firms, and all the works who’ve produced a small fraction of the sales I have with a team of fewer than five and a nice mix of software automation.

In truth, while communication and team management skills are good, it isn’t necessary to monopolize your time expanding your labor costs in order to attain profitability. If you think more people are the magic bullet solution to attaining profitability, yet you haven’t figured out how to move in that direction yourself, you may be looking for solutions in the wrong place.

Okay, this one might sound stupid, but even coming from business school and Wall Street, I truly believed that once companies attain profitability, they continue to celebrate an unwavering up-and-to-the-right sales growth. In reality, you might be shocked how many profitable companies brave choppy financials or extreme seasonality that looks nothing like the textbook success stories we read about.

I know of a booming parasailing company that does 90% of their sales in the three months of summer. 90%! That means the remaining 10% is spread among the other nine months of the year, averaging just 1.1% of their total annual sales each of those months. Do you think that company is profitable during those 9 off-season months? Not even close; those trickling sales don’t even cover their insurance! But that business owner knows his market, budgets accordingly, and isn’t worried when he only gets 2 customers in an off-season month.

Sometimes it isn’t seasonality that muddles our financials, but rather strategic choices we make. I run a business where we strategically plan our lead generation efforts and spending in spurts. Since we only do so a few times a year, those campaigns can incur huge expenses that tank our profitability for the month — even if we’re having a good month. Why do we do that? Because we expect those efforts and expenses to pay off handsomely for months to come, and we understand there’s a lag between acquiring a lead and converting them into a paying customer. Is the temporary outsized expenditure scary? Honestly, yes. But with that risk and years of data has come a worthwhile reward.

If you think crossing into profitable territory for the first time has any bearing on ongoing growth or a sales floor, I’d proceed with caution. Profitability is just one small blip in the never-ending journey that is entrepreneurship, and just as we can fall into profitability, we can fall back out of it.

I have a startup-obsessed friend who’s adopted the mantra “start up, cash out, repeat” from some business guru he worships online. Since hearing it, he keeps drilling it into my — and all our common friends’ — ears. Sure, it makes sense and sounds nice, but this friend hasn’t considered the possibility that some people with successful, pleasant-to-run, cash-flowing businesses simply have no urge to cash out and start over.

Personally, I love having multiple irons in the fire, pursuing diverse ventures at once. It helps me vary my days, my thoughts, my expertise, and provides an ever-evolving career with a perpetually growing skill set under my belt.

I’m not necessarily averse to ever selling one of my companies, but I think there’s something to be said for building fairly passive, automated, and enjoyable businesses a person likes to have and run. Of course, I suppose there’s an offer price I couldn’t refuse, but the “start up, cash out, repeat” method definitely isn’t the main mantra on my radar.

For the 12+ years most of us spend in school, we’re taught that success comes down to competence, performance, and credentials. If we get straight A’s, then we’ll get on the honor roll; if we make honor roll and have a 4.0 GPA, we’ll get into that esteemed university; if we graduate with that university on our resume, then we’ll get the job, career, and success of our dreams.

That thinking can bleed into the entrepreneurial space, as well. People believe they simply aren’t knowledgeable or credible enough, so they take another course, get another masters, and toil away more years for credentials to pad their resumes or LinkedIn. Spoiler alert: Credentials alone don’t get sales.

The one class I missed in all my years of education (including business school) was one on charisma. I get why: It’s not politically correct (PC). Society wants us to believe there’s one barometer for success, and we’re all being judged by that same attainable yard stick. While there may be, that yard stick isn’t a perfect GPA or the letters behind your last name.

People buy things from people they like. People invest in people they like. People partner with people they like. Being a brain on a stick might get you a spot in a back-office team crunching numbers or running lab tests, but it’s less likely to secure your entrepreneurial success.

Many business-building gurus these days will tell you social media is a non-negotiable for marketing any product or service. If you get within ten feet of an ad agency, they’ll tell you you need that, too.

I hate to burst your bubble, but they lied. Sure, for some businesses organic social media or paid ads (or both) might be the proven winning strategy; but for others, they aren’t.

I know a million-dollar e-commerce business getting over 95% of their sales from SEO — and they have been for years. They still don’t spend a dime on ads. I know another high-growth startup that’s taken its city by storm with word-of-mouth alone. In my own first-hand experience, a blended strategy of SEO, partnerships, and email marketing can be far cheaper, less time-intensive, and many times more profitable than either ads or social media.

This leads to the next myth, and perhaps the reason my alternative strategy has worked so well:

If all your competitors are on social media or running digital ads, the obvious decision might be to emulate their allegedly brilliant plan and attempt to compete. Logical, right? Maybe, but what if you were to deliberately go where they aren’t?

Choosing to market exactly how and where your competitors do is a double-edged sword. The bright side is that they’ve conceivably identified a successful and profitable way and place to reach your target audience, thus paving your way. The dark side is that you’ve placed yourself last, second fiddle, and as the late-to-the-party underdog that’s made to compete with the big fish who’s already won the golden swimming medal. Wouldn’t it be easier to carve out your own alternate approach, setting yourself apart and electing not to compete with the same stale strategies or on the same, saturated platforms?

When I got off the platforms where my competitors were and shirked the marketing methods they preferred (which bankrupt most of them), I started to pioneer my own path. I got creative, consulted diverse strategists, and tested out some very underrated methods…that, to my own shock, actually worked. Dare to be different and you’ll be able to set your own rules; if you jump in your competitors’ lane and try to out-swim them, you’ll be playing by theirs.

Growing up, my dad used to tell me “if you do what you love, the money will follow”. Can I be honest with you? He was kind of wrong. I mean, he could be right — if you like building LBO models at 2 am or if you’re a world-class talent who’s able to monetize that skill to fund your passion. But, there’s no guarantee doing what you love will yield success or profits — at least not more than something you don’t.

I’m not suggesting people pursue paths, jobs, careers, or businesses they don’t like; I’m just asserting the rarely-addressed reality that loving what you’re selling is not a prerequisite for profitability or success.

I can’t tell you how many e-commerce entrepreneurs I know who make millions off products they couldn’t care less about. I know content creators and media CEOs who produce genres they hate because that’s what pays the big bucks.

In truth, you don’t actually have to love the product or service you’re selling in order to get sales. You simply have to get into a customer’s mind and position that offer in a way that makes it compelling enough for them to opt to purchase it. That said, if you’re selling something that’s out of integrity with your beliefs, values, or morals, that cognitive dissonance might come across as insincerity or shakiness that very well could undermine your sales pitch.

Go to Publisher:

Entrepreneur's Handbook – Medium


Author: Rachel Greenberg