Without a Profit Model, do you have a Business Model? In the image above, we clearly see the significant difference between the volume of Google searches for "business model" ... compared to other likely and related terms. [ United States -- Past 12 mos. -- "model" ] When one thinks about it, such is reflective of how infrequent we hear conversations on the specific topic of profit or profitability (bottom-line). If the topic of profit does comes up, it is often short-lived as such conversations shift to related topics ... but rarely do they loop-back and sync all participants on how what was discussed impacts profits. When someone performs a search due to curiosity, interest or intent related to "business model", should we imply they, by default, are equally curious, interested or intend to better understand "business models" within the context of profit as well? But most are likely aware that such is more often not the case. If one's curiosity, interest or intent in "business" is of such proportionately more importance, you would think the topic of "profit" would be closer to the same. Even though the term "business" is more broad and could be assumed to include curiosity, interest or intent regarding pricing, revenue and sales ... and further, "of course we mean profitable pricing, profitable revenue and profitable sales" ... we all know based on experience that profit is rarely part of the conversation. Maybe, the search trends are more reflective of the number of people who are merely curious about "business models" than those interested in understanding that a successful and sustainable business is only possible through profits ... and perhaps even fewer search with intent to grow or sustain profits. What if we used "strategy" in our search terms instead of "model" ... let's see. In this next image above, I was pleased to see "pricing strategy" gain relative to "business strategy" ... but we also know that more time and attention is invested in "sales strategy" and "marketing strategy" than is invested in "pricing strategy" or "profit strategy" (more on why that is can be found here). [ United States -- Past 12 mos. -- "strategyl" ] Let's take a look at some more broad, but common, terms used in searches and everyday business conversations ... Overall, whether looking at the United States or Worldwide above .... there is a gradual downward-trend since 2004. Again, to be sure, these are very broad terms that are used in many different contexts. But also note that "profit" and "pricing" trail far behind. Below is a simple attempt to encourage you to shift your curiosity, interest and intent to the topics of "profit" and "pricing". What if, during your next leadership or board meeting, you flipped your P&L and started with the following to better validate your "business model" and "business strategy". 1. Return on Market Share Careful how you approach gaining market share. You can drastically dilute the profit potential of your market. 2. Return on Ideas Ideas that are not monetized (profitably) are called hobbies or charity. Some invest a lot of time and money into finding this out. 3. Evasive and Earned Profit is both fragile and slippery. Profit is not loyal and will not be taken for granted. 4. Profit Requirements You cannot calculate PROFIT without a PRICE. 5. The Metric of Metrics PROFITABILITY measures every business decision you make. 6. Source of Sustainable Success PROFITABLE companies (or profitable investors) are the only means for UNPROFITABLE companies to have a chance to be considered successful. 7. Profit Levers Only Four (4) Options to Improve Profits ... 1) Reduce Fixed Costs 2) Reduce Variable Costs 3) Increase Sales 4) Increase Prices 8. Exit Levers Unprofitable businesses, subsidized by investors, do not last unless they become profitable or acquirers believe you can contribute to their profitability. ** With many large corps not being able to generate profits on acquisitions that looked so promising, be careful if that is your exit strategy. 9. Source of All Profits ALL the revenue and profits created ... past, present or future ... by every business or person ... is the result of pricing decisions. Do not be merely curious or interested in profits ... growing and sustaining profits requires you be intentional. Follow-through ... you won't regret it. Comments are closed.
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