When I hear people say that, it reminds me of bees. Their only reason of existence is to collect honey (ok, pollen).
Of course I can’t hold still and have to talk about my truth: that there is more to business than making money. That it is a vehicle to increase the wellbeing of everyone connected to the business (the employees, the clients, the suppliers, our planet).
The argument comes back: “Maybe. But without money none of these other things can be done. So it all comes back to money. Therefore the only reason to be in business is to make money.”
It took a while until I realised that the opposite is just as true: “Without committed employees, delighted clients, dependable suppliers; and in fact a healthy planet, money cannot be earned. Money would have no meaning at all.”
Does that mean the only reason to be in business is to fix the world? No. Making money is vitally important. The better any business does that, the better it can serve its employees, clients and the planet.
What it does mean is that we have a choice as business owners about where we put our focus. Just chasing the Dollars without any concern for the wellbeing of others cannot work long-term. At the same time, running a business without focus on the bottom line is doomed for failure.
The solution: a truly sustainable business. It keeps the different elements in balance: people, planet and profits. None is more important than the other, none is less important. They have to be kept in harmony and balance.
So for anyone with strong environmental or social passion, I recommend getting someone on your team who comes from the mindset: The only reason to be in business is to make money. As long as there is mutual respect for each other’s position, it significantly enhances your chances of building a great business.
For those that are not convinced, I just want to go back to the bees. Imagine bees deciding to collect pollen just for themselves without sharing it. The colony would die within a few days. They are in fact performing a social role beyond their immediate mission. And environmentally? Without bees, no flowers would be pollinated, no seeds would develop, and no flowers would be there. The bees would die.
So even with a single minded goal of collecting pollen, bees are perfectly sustainable, looking out for people, planet and pollen. The only difference is that we can think about what we are doing and can make conscious choices.
I would say the only reason to be in business is to balance the wellbeing of people, planet and profits. Any imbalance might work short-term, but it will always result in failure, either as an individual, a business or a race.
If you're new here, you may want to subscribe to my RSS feed or receive updates via email.
I would also appreciate any comment you wish to leave.
Our first order for a solar hot water system came through today at SolarPay.com.au. Yipee.
However, it fell within the 5% of cases that cannot be quoted through our website. Worse, we had not covered that instance. So our very first client got a quote that is not quite correct.
So why am I welcoming that? Because it makes our application all the better.
We can take it as feedback, learn from it and improve what we are delivering.
Producing events always meant that we had a clear deadline. The date for the event was clear at the start of the preparations. It was great, it took out one of the variables in what the event could be like.
In business, it is a lot more flowing. It is very easy to fall into the trap of improving, rather than getting something out there. It is probably one of the inventor diseases.
To overcome that, I set a date: 31 May 2008, the date of our launch. And to make it even more serious, we committed to being part of World Environment Day.
It was actually a whole month before the original plan. It was a crazy date, but it helped us to focus on the essential things.
And we made it. The SolarPay website was ready. The other marketing materials were ready. The partners were lined up. The team had given everything to make it.
Most importantly though, we had cut out all “nice-to-have’s”. Absolute focus on the core of the business model.
A fantastic way to get things done.
Set a date
Link it to something outside of your control
Collect a list of nice-to-have’s for future improvements
Refocus on the core of your business model
Due to bad weather the actual launch did not go ahead, because the event we wanted to held it at was postponed. But we had achieved our goals.
After working as a consultant for the past 4 years, I have finally taken the jump into starting my own business. I mean, real business, not just consulting.
Once the idea was clear, I looked for a partner. That was the best decision, because it brought clarity and focus to my idea. He kept pestering me about proving the business model before committing too much time and money to it.
On one hand I think with more money, we’ll have much bigger impact. On the other hand, I can see the wisdom of starting with a bare bones business model, until it is clear that the market accepts (and craves for) our services.
So I am listening to my own advice in Market Driven Inventions. I’ll continue sharing as we progress.
When I start working with entrepreneurs, I always ask them about their personal vision.
In the beginning I was impressed if someone was honest enough to tell me that they just want to grow the business, sell it and then do … and their eyes would light up while they told me about the plans they had for their life after the sale.
As I said, in the beginning I was impressed by that. Not any more. Now I put a lot more emphasis on focus. Outstanding entrepreneurs seem to be doing exactly what they are passionate about. They build a company around their passion and use it as a vehicle to push their personal agenda.
Surely, they need the smarts as well to make it profitable. But I do not think that earning money as an ultimate goal carries enough power to make someone successful long-term.
I have reviewed a range of business proposals for funding recently. What struck me (again) was the narrow view inventors and entrepreneurs have of their products.
“My product is the best, because of these features…” and then they go into a list of features.
Benefits not Features
Every marketer knows that saying: You have to show the benefits, not the features to find a buyer.
The same is true for finding investors. What are the benefits they are looking for?
A great return
Low risk
Sustainability
How can you show that?
A Great Return
There is no guarantee in company returns, especially in early stage ventures. However, there are some things that make a great return more likely.
My first focus is to find out whether there is a need? Not just by one single person, but by lots of people.
This is a complete shift in mindset for many inventors. You need to think like a marketer and understand your market (or find people who can complement your lack of skill in that area).
The second question I ask is whether the new product fulfills the need or solves the identified problem in an economical way?
That does not necessarily mean cheap, but the figures have to stack up on a per unit basis with quantities that look feasible.
Low Risk
I only know of one way to lower risk in early stage investing: having written orders. This is not to say that other risk reducing measures do not play an important role as well. But if I see that orders have been placed already or that future clients have made other substantial commitments, I am more at ease with the investment.
If on the other hand anyone tells me about a billion Dollar market, the risk is higher, because it means they have not identified specific clients and realistic quantities. I have seen forecasts that did not even include any marketing expenses.
No matter how good the product, clients will not beat a path to your door. Great marketing on the other hand can push a mediocre product to success.
Sustainability
I have written before about why I think that business plays the most important role in bringing sustainability forward. In addition the pragmatic reality is that businesses which are not sustainable will not survive much longer.
Ideally the invented product or service is a large step forward (and here the inventor might be tempted to talk about the features), but the running of the company itself needs to be sustainable as well.
If you are a tempted inventor who want to talk about the sustainable benefits in terms of savings in greenhouse gases, water or waste, focus on how that relates to monetary savings for your clients.
Stephen points out that for a new idea just being new is nothing worth bragging about. In fact if there are no competing products, there might be a reason for that.
I go one step further. If any inventor tells me that there is nothing like it out there, I know that they have not done their homework. There might be nothing that has the features of their products, but there is always something that results in the same benefits to the user.
It might me less convenient or more expensive, but it will always exist in some form.
Competition is Good
What I have found is that it is actually much easier to sell a product that has close existing competition. Why? You do not have to explain a new concept to someone. Instead you can compare it to what they know and show your products superiority.
Marketing or Manufacturing?
Stephen’s article then takes a different tangent and talks about the problems of manufacturing the product and how to overcome that.
Even though that is important, I think the marketing side of inventions are often misunderstood and pose a much bigger risk and problem.
Marketing starts with understanding what people want - lots of people if you want to have a thriving business.
I was working with one inventor who kept developing his product because potential clients kept telling him: “If it only had this one additional feature, I would buy.” In the end is was so versatile and complicated that its basic benefits were lost and very few actually bought.
The lesson: Marketing has to come first, without understanding the clients’ needs, there is no need for the manufacturing. With the manufacturing there are enough smart brains around to figure out a way to do it. (There is still the issue of speed, but I’ll leave that for another day.)
If you want to raise profits, becoming more sustainable is a great way to achieve that.
This was probably the biggest message I got from the Sustainable Living Festival in Melbourne last weekend. And I also got a better insight into the most important step for becoming sustainable.
Build Your Community
At the very core of all companies that presented was the realisation that it is all about people. Rather than seeing staff as numbers who contribute to the bottom line, an appreciation of the individual and their contribution is needed.
Tim Cotter, a psychologist showed that human values are pretty aligned. The problem is that many people do not live their values.
So to raise profits, a company can raise awareness and support a re-connection between values and action. A fear many traditional business people (especially accountants) seem to have is that this process will reduce the company’s profitability and focus on more intangible things.
Reality paints a different picture. In various studies the return of companies that follow sustainable (or ethical) principals have outperformed their “traditional” counterparts.
The first day of the Sustainable Living Festival is drawing to a close. I’ll be writing in more detail, here just a quick summary of what my impressions are so far.
Even though the Festival is in its 6th year right in CBD Melbourne, it is still mainly converted that visit it. That might change on the weekend, though.
Small companies are run by people that believe in the importance of sustainability. They cannot answer any questions with regards to the financial bottom line: What do consumers save?
Larger companies are really onto the savings that can be achieved with sustainability. One excellent example is MECU, a credit union. Their costs are 54 cents in the Dollar, compared to other credit unions where the costs are 78 centa in the Dollar. I could not find out yet, how these savings were achieved, but I have been promised to get that information.
One huge factor in the corporate talks was staff engagement. They all marvelled at how much productivity improved, because staff was involved in something worthwhile.
The biggest thing that stands out is the volunteers who make this festival possible. It is so wonderful to see so many committed, happy, joyous people (young and old) to bring sustainability to the masses.
I have just come back from a mentoring session. One business presents itself, outlining a major issue they have. 12 mentors ask questions of fact, then give their viewpoint.
It is so amazing to see how blind some entrepreneurs can become from being stuck in the day to day operations. Every suggestion from the mentors was answered by the entrepreneur with an explanation of why that was not possible or that they are doing that already.
And I guess we probably all have a bit of that. I certainly have blinders on where my own business is concerned. It is so easy to see new opportunities for someone else and point to the weaknesses. But learning to do that for yourself (or asking for that external viewpoint and being able to listen to it) seems to be key to move forward.
If you want to raise profits, becoming more sustainable is a great way to achieve that.
