“We are losing money on every transaction, but we’re going to make it up in volume.”
There are a lot of ways to rationalize taking business that isn’t profitable.
- Maybe you take unprofitable business in a new vertical where you believe you need a client to develop your offering as well as a reference.
- Perhaps you believe that taking one really bad order where you can’t make money will unlock the better, more profitable business.
- Maybe you believe that all business is good business; that it’s revenue, and any revenue is better than nothing.
These are all rationalizations. No matter how good it feels to capture revenue, there isn’t a single reason to take business at break even, or worse, at a loss.
Revenue without profit is “junk food” business. You’re consuming calories, but there is no nutritional value. Profit is what allows you to invest in your business.
You need profit to grow and expand. You need profit to hire more people. Profit is what allows you to innovate, to create, to develop new offerings that allow you to create even greater value.
And it is profit that allows you to differentiate. It is that money that you invest into doing things differently be it better products, better service, or greater caring. It’s profit that fuels these things.
Selling Isn’t Supposed to Be Easy
The reason some sales organizations take business at a loss is because selling isn’t easy. They try to make selling easier by removing price from the equation–even when they create value worth paying for.
Unprofitable business makes everything more difficult. Without profit, business is a cold, transactional, desperate endeavor, a grind in the older, negative sense of the word. Profit allows you to do purposeful, meaningful work that makes a difference. It also allows you to hire people to help you do the same.