When Did Making a Profit Become Bad?
Joshua Davidson wrote this article
For those of you who listened to our second episode of the Pawdcast with Jeff Slobotski, you may have noticed an important conversation that Jeff and I went back and forth on. This was in regards to entrepreneurs having the wrong focus on what exactly success is. If you haven’t listened to this episode yet, click here.
Nonetheless, success is very subjective. Success can be closing a new client, bringing in a new lead, finishing a project, selling a thousand products, or raising a Series A. It can be so many different things. In this particular article, I am talking about one thing and one thing only – profit.
I can’t tell you how many entrepreneurs reach out to us at Chop Dawg saying they want to change the world. That is great. We love that. However, when we ask them how they will monetize their world-changing idea, they are stumped and don’t have an answer. Instead, they explain to me how after we help them launch, they will raise money, and figure it out as they go along. Seriously everyone, entrepreneurship is about building a business, not a charity. Figure out on day one how to charge for your product. It will not get easier five hundred days later, I promise you.
Perhaps most alarming, is how many entrepreneurs use fundraising as the definition of startup success. When in the world did this happen? In fact, raising money should only be a sign to a company that it is time to buckle down, and get even more serious, because now you are playing with money that isn’t even yours. You need to be ready to make your investors a return on their investment, and more importantly, keep your doors open for the long term, figuratively and potentially literally, depending on your business.
I think this warped perspective has happened due to several different elements. First being, the media celebrates raising money the same as if you were acquired and/or IPOed. Not the failures. Second, raising money is, to be frank, difficult. Most people under-estimate how long it takes, and over-estimate how much they can raise. Worse, most people will never raise money despite their fundraising efforts. Third, most companies, unless public, do not share their fundraising successes and/or failures, therefore it is hard to gauge that level of success to a growing startup such as yours.
Here is the thing. Business is about making money. It is perfectly okay to have goals and ambitions outside of that. We at Chop Dawg have a goal to help every entrepreneur we can to turn their idea into a reality, motivate existing entrepreneurs to succeed, and inspire potential entrepreneurs into the entrepreneurial journey. Simultaneously though, we are a company. We have employees to pay, expenses to cover, and growth to look after and manage. There are goals to be accomplished. Profit is the key to all of this.
Profit is what will drive future growth, too. It is what lets you re-invest in your team. It is what lets you pour more funding into marketing. It is what lets you scale. It is what lets you have a livelihood, and to keep pursuing your passion. Profit is good. Profit is necessary. Profit is a key part of a healthy business.
It’s time to change the perception on entrepreneurship and get it back to its roots. Every entrepreneur needs to focus on what is important. Revenue. Profit. Expenses. Scaling. Growth. You can collect every metric in the world – but keeping score of who raises the money, such as Series B funding, who has the most media attention, or who has the biggest Twitter following, isn’t what matters. Making money and making an impact on your customers, that is all that truly means anything in the entrepreneurial game. Don’t lose sight of that, ever.