The industry average for net profit is said to be 5-6%, That is very low! Why have a business whose returns are no better than the stock market?
Oddly, our industry seems more focused on the top line sales numbers than on making a good return.
Even the major magazines have annual rankings (e.g. “Top 100”) made up of the largest companies by revenue, not profit.
Unfortunately, chasing larger revenues doesn’t equate to larger profit. In fact, it can make you “top heavy” like a tree with a large canopy and a weak trunk. One big storm or recession can knock your tree down.
The savvy entrepreneur realizes that in order to achieve high profit, you must start by overcoming this obstacle: your mind set.
If you don’t believe it is achievable, you won’t even try!
A High Profit Mindset is like a puzzle with the following three pieces:
- A HEALTHY EGO, that doesn’t need to “show” success… with more trucks, more employees, more revenues and more clients. A healthy ego knows not to get caught up in the trappings of success or competing to own the bigger fleet.
- A STRONG SELF IMAGE: You must believe that you deserve to earn more and be the best! Deep down you must believe that you can achieve whatever you set your mind to, with the knowledge that someone is going to win big (and crush the industry averages), so why not you!?
Here is a perfect example: Last week I was speaking with Brian DuMont owner of the $20M+ Yardnique in North Carolina. He told me he stopped trying to get on the Top 100 ranking because he changed his focus from size to profitability. In his words, “if you think you can (hit 20%) or you think you can’t, then you are probably right.” Therefore he makes decisions now that bolster their bottom line, instead of always chasing the next new client.
- OPTIMISM. You must believe in your people, your standards and your clients. An optimistc leader will naturally motivate her or his people to achieve higher standards, without getting sidetracked by the low ball competition and bad-fit clients.
Don’t get me wrong, I enjoy growth, but let’s be clear: profit drives growth, not the other way around.
Your Challenge. Not all of your employees will embody the High Profit Mindset. They may have had too many hardships in life, or previous mentors with low self esteem that misguided them. You must teach and educate your staff about your larger world view. And hire and promote staff that support this outlook and help you build irresistible momentum.
We are working in the strongest economy in the history of the world. Are you taking advantage of it?
P.S. To learn more about achieving 20% net profit, join me here in August.