How to Achieve a Profit Mindset (And role model for your team)Nov 02, 2022
Profitability is the foundation of any business.
As a leader, you must learn early on and keep in mind throughout your career that, ultimately, the function of leadership in business is to produce a profit.
Now there are different ways to lead in life. Of course, you could be a leader in your church, or you could be a leader in a nonprofit, or you could be a leader in your community, or you could be a leader in politics. You could be a leader in your family, but I'm talking specifically about business leadership.
If you are in business for profit, that is what you're leading for. And all too often, I find with leaders at every level that people either forget or have a misconception about why they're there to lead and are paid to lead. Let's think about this from that perspective. Why do we do anything in business? Why do we organize the teams? Why do we attract customers? Why do we create new marketing campaigns? Why do we do employee incentive programs? Why do we engage in operational excellence? Why do we continually innovate products? Why do we introduce new products to the market?
Ultimately you could say it's twofold; number one, it's to serve a need in the market or introduce a market that maybe people don't know yet. Number two is to generate a profit from that activity.
A leader's profit mindset means you're not just thinking about sales building. You're not just thinking about revenue building. You're not just thinking about marketing dollars, or you're not just thinking about customer service, or you're not just thinking about innovation, or you're not just thinking about your functionality in the organization. You're not just thinking about human resources, accounting, operations, or procurement. Or finance or technology, or your individual silo.
You're thinking about the profitability of this enterprise. An enterprise is defined as an undertaking. It's an undertaking together where people are organized to produce specific results. The enterprise is organized for a specific purpose and outcome to produce a specific service or product. And for that business to succeed over time, there must be profit.
Demonstrating a profitability mindset, as a leader, I am a significant asset. I'm an asset as a leader to my organization. There are very few leaders in the organization that the CEO or the founder can rely on to think the way that they think about the business as if it was their own.
This is where you hear much in some business cultures about meritocracy and entrepreneurship thinking. Profit mindset cultures ask you to think as the owner of the business. This can be a very powerful value in your culture. One of the organizations I started with as an executive in my career had a philosophy called IYB which stood for “It's Your Business”.
No matter who you were in the organization, one of our cultural practices was viewing your department or work area as an individual business within the business. Your job was to make business decisions. Your job was to think as an owner, your job was to keep your eye on profitability.
That kind of culture breeds a certain mindset. People begin to care about the small stuff, too - from ordering extra pencils that may not be needed on the corporate budget to how you book travel to how you procure contracts to how you even think about your own salary and contribution to the organization.
If you have a profit mindset as a leader, you're always thinking, “Am I a cost to this organization, or I'm an asset to it?”. Does my asset side outweigh the cost side on the balance sheet? In other words, what is the value I am producing for my organization? Can I measure that? Am I contributing directly to the bottom line so that people can look in my direction and say, I am a well-oiled machine? This makes you as a leader irreplaceable because you have a profit mindset.
When starting my career in the restaurant business as a young leader, I was very committed to this because I learned early that I would be sat down at least monthly, and somebody would question the business's financials. They would go through the cost items I was paid to control or improve. And I was paid to promote sales and marketing through customer service, delivering our product exceptionally well and all that good stuff. So that's a basic model of any business. Simply put, the difference between your sales and your cost is your profit.
One of the costs to the restaurant business is losing silverware - forks, knives, etc. - and how we lose silverware is that when the servers come into the kitchen area to drop off their plates and get them cleaned, often forks and knives end up falling into the garbage chute.
A magnet was supposed to catch most silverware, but it didn't always work. I would watch people clear the plates and “lose” forks down the chute. There were a select few who if a fork went in the garbage, would roll up their sleeves, dive into that garbage, and pull out that darn fork!
And I tell you what, those were my best employees. That is a profit mindset person who is a significant asset to my business. A team member is willing to reach down a garbage shoot to pull out a 50-cent fork because they knew that was important to the business.
And that's true of any business. I'm sharing that story with you as a leader because I valued those employees very much. That was the mindset I had. I would go into that dumpster for the fork, too. And at the same time, that kind of culture is one that will be bred by your example as the leader. People watch what you value.
Now, do you want to balance that with a sales mindset? Of course. But I'd much rather have a team member on my team who is looking out for the business as if it was their money. You as a young leader, or you as a seasoned leader, the more that you can demonstrate that you care about the profitability of the business and that you're thinking beyond your own silo or your own accountability, then you have a profit mindset.
You're thinking from the ownership level and making yourself an invaluable team member. You could say you make yourself an irreplaceable team member because, in my experience, outstanding leadership in organizations values that mindset above all else. You stand out and are a great mentor and example for others.
That's what it looks like to optimize for profit. It starts with your mindset as a leader, with you showing the example and sharing with others why it is essential to think about business profitability.
Where is the fork going down the garbage chute in your business? You lose those dollars and cents every day throughout the organization. Go after it and celebrate a profit mindset in your organization!
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