I have been writing at least two articles per week on leadership since September of 2012. And in all that time, I’ve never really written about finances. We normally don’t categorize financial health under the broad topic of leadership; rather it typically falls under business. And this is not a business blog per se. But the more I lead, the more I realize that if great leaders do not have a real understanding of financial health, we significantly limit our ability to?accomplish goals and impact lives.
So please allow me to share with you some thoughts on the topic:?Without profit, you will be limited. We will explore?how to keep the need for profit from trampling your values and a few ideas on how to maximize your profit. This is not an article on accounting, finance, or an entrepreneur’s tricks to making hefty profits. It is a leader’s thoughts on money.
If you want to lead people, you cannot ignore the value of making a profit.
Today’s article is the fourth and final leg of my series of the four foundations of thriving organizations. The first three topics in this series are:
- Without Systems, You Will Be Small
- Without Metrics, You Will Be Blind
- Without Training, You Will Be Mediocre
Without profit, you will be limited?in a major way. Yet many times, leaders (especially those whose training, motivation, or life goals do not include making large sums of money) ignore this important area. And because of that everyone is limited.?Do you want to be limited on who you can hire? How fast you can progress? How many dreams you can achieve? How you can grow? Or how you can give back? Of course not. We must profit.
Without profit, we cannot pay our people well. We cannot afford to provide health insurance, or give our staff Christmas bonuses. We cannot give to charitable causes or serve our communities. Our organization?s finances must be healthy in order for us to deal generously with those we serve. ?This is true for practically any organization or institution?from restaurants to churches; from non-profit charities to medical clinics.
We must make money!
As leaders we must remove the stigma of greed associated with making a profit. We can do this when we handle money nobly?and serve people with integrity.?Let’s explore how this is done.
Identify the line between profit and greed.
What is more important: Profit or people? Money or the people we serve? And at what point does the need to make more money cross a line into the insatiable, destructive force we call greed??Here is how I see it…
Profit is not mutually exclusive with high values. It should never be a decision of profit OR people; profit OR integrity; or profit OR values. We must use AND instead. At work I want our teams to succeed in every area: caring for our patients, our purpose, our processes, and our profit. As we tend to one area, it should not mean that we neglect another. And this includes making a profit.
So my question above was a trick question. What is more important: profit or people??It shouldn’t be a choice.?But you may say, “Wes, sometimes you have to choose. There are situations that arise when a choice must be made.” If we are intentional about living in the AND as I shared above, these situations should be very rare. But when they happen, this is how to think about them:
If it absolutely comes down to a choice, people come first. If you are faced with a situation where you must choose?between people or financial gain, between making a difference or making a profit: choose people. Every?time. Without question. Choose doing the right thing over earning a greater profit.?Choose integrity.
Greed grows when we choose financial gain?over people.?It happens when, in the pursuit of profit we ignore the important values in our lives. In other words, we let go of our integrity; we ignore our families; we trample on people?s dignities; we forego high character for the sake of getting material possessions or money.
That’s when you’ve crossed a line.
So my message to you today as a leader is: Refuse to let yourself fall into the trap of greed. Neither, allow yourself to?neglect maximizing your profits. It takes money to grow your business and bless people.
Maximize your profit.
The first step to maximizing your profit is to remove the guilt from earning it. ?Money is neither bad nor good. It is a means. As a doctor, I make a comfortable living. I am by no means, mega-rich. But at almost 40, the most joy I get from the money I make is the little that I am able to help others with what I have.
And so my friend, if you able, make money. Lots of it. And then use it for good.?Here are what I consider the top five keys to making a profit.
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- Have a successful business model. Many times, the profit-making strategy our organization implements, does not actually produce well. So what do we do? We just work harder. Instead, we should keep ourselves open to alternative models of earning a profit. Sometimes, we can become so narrowly focused on increasing our net profits, that we never even consider changing our business model.
- Increase your revenue. This is straightforward. You have to consistently find new and better ways to bring money into your organization. Begin by making a list of ideas that can generate revenue, and review it weekly. Try to execute one idea at a time to begin building your income.
- Decrease your cost. We must have an obsession for decreasing the cost of doing business. Make a list of the areas you think you can improve, including those areas that may take a little work. Again, focus on one at a time.
- Monitor your metrics. How often do you look at the key parameters that drive the profit centers of your organization? We must be disciplined to put metrics in place, monitor them regularly, and interpret them into action items.
- Try something new. As with anything we do as leaders, many times learning how to increase our profits requires thinking outside the box, trying new things. Go for it! Don?t be afraid to make mistakes.
Great leaders know it is imperative to maximize their organization’s financial health and wealth so we can operate with excellence, be generous to the people who are coming along with us, and do our best?to make a difference in our world.
Actionable step: ?Take time each week to look at your finances?not only the status?but also to devise actions to take in order to improve the bottom line.
About me: As the weather has warmed, I?ve started taking my road bike out cycling. And I haven’t fallen…yet!
For Further Reading: