Wednesday, July 29, 2009

In Business, It's All About The Bottom Line: Your Profit

In baseball, batting averages and ERAs earn players' big contracts and All-Star appearances, but wins get them and their teammates championships.
In business, it's all about the bottom line: Your profits. Profitable companies win the championships at the end of the day.
It's not about the number of employees, what you'll be in the future or even revenues.
Sometimes entrepreneurs forget this as they motor through each day, always looking for the next great conquest. Civic organizations and our political leaders also overlook this small fact. In fact, I notice that many of the smaller (old-fashioned) businesses often get overlooked like they don't exist. I'm talking about the dry cleaners, the restaurants, small retail shops, etc. Although in many cases, those businesses are actually making a profit.
For example, if you had to pick between Frank's Dry Cleaning on the corner and Facebook, which would you think is making a profit? Well, it's not Facebook.
Surprised. Even though the company takes in between $300 and $500 million a year in advertising and has great marketing leverage, it has never made a dime of profit. In the game of business, Facebook is striking out.
YouTube is also losing. The video site owned by Google sells ads but has always run at a loss. ALWAYS.
What about Twitter? That sensation of a website with 40 million members. It must be profitable, right? Think again. It doesn't even try to generate revenue, let along profits.
The ironic thing is that when I meet folks out networking, some will approach me with helpful online ideas for our company. I dig that. However, the conversation usually ends like this, "...and you can turn it into the next Twitter."
Thanks, but no thanks. I would rather run a small operation with a profit.
--Ron Ameln, SBM