There are some ideas about building and growing a business that are glorified by media. It seems so ultimately desirable to have an idea, create a business around that idea, grow the business with outside funds and then sell that business.
In my opinion we have to challenge those ideas.
Team size, offices and revenue vs Profit
Most business owners focus on vanity metrics.
Whenever I speak with other business owners, they would brag about how many people they have in their team, how many offices they have and so on. It happens a lot to me.
Often, they refer to how much the make, but what they don’t say is that what they refer to is revenue and therefore a gross number. I much prefer to focus on profit.
Offices do not matter.
Team sizes do not matter.
Revenue doesn’t matter.
As they say: revenue is vanity, profit is sanity, cash is reality.
Profit First vs Delayed Profit
When you are in the red, you have to make rush decisions. Your stress level goes up.
When you delay profit, but still get funding, you are stressing even more because now you have to answer to VCs and investors.
On the opposite, profitability gives you the gift of time. When you are profitable, you have all the time in the world to figure out what to do next or how to solve a problem.
Existing vs exiting
I first heard about this concept from an online interview I listened to with Basecamp’s founder.
The traditional path of building a business is get funding, work hard and then exit the business.
This model is like dating someone with the prior conviction of leaving him/her as soon as possible.
What if we did the opposite? We bootstrap, we maintain a product with the necessary features and we stay in it for the long term.
This mindset will help us founders focus on building a good, solid business.
Also, companies get bought not sold. It’s easier to find a buyer if we just focus on building a solid business and not on exiting.
Thank you for reading,