Old Man Winter is a newsletter that shares valuable insights and actionable ideas to help entrepreneurs and small businesses survive the elements and grow their businesses.

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In last week's issue, we discussed the U.S.'s fragile position in the commodities war triggered by Russia's invasion of Ukraine and what it means for our global, local, and personal economies. 

Today, we share 3 ways to keep your business flying high despite the unpredictable challenges that lie ahead.

Your business works like a plane

If you're familiar with Business Made Simple's metaphor - "a business works like a plane" - you know no two businesses are exactly the same...but all businesses share a few key components that, when understood by leaders and team members, helps businesses increase revenue and profits no matter the economic climate.

Here are three ways you can keep your business flying high despite the unpredictable challenges that lie ahead.

1. Offer a Profitable Product or Service

I know, Captain Obvious here. But it's easy to get confused about what products or services we should focus on and allocate valuable capital and human resources to.

These decisions often become emotional. We tend to chase a decision with further resources despite poor sales because we don't want to look like we made a bad decision. Ego is the enemy.

When choosing what product or service to focus on, choose products and services that have these two critical characteristics:

1. They are light. This means your product or service can be sold for a considerable profit or a smaller profit but at volume. Profit margins must be high enough for the product to cover the cost of itself and your overhead, as well as provide job security for your entire team.
   
   
2. They are strong. This means there is strong demand for your product or service in the marketplace.

You may sell many different products or services. Profitability and demand are the most important considerations for determining which ones you should focus on. That's it.

Loss leaders get a pass. Sort of, maybe. A better idea is to create a product that leads to upsells AND is profitable and in demand. 😊

2. Invest in Marketing and Sales

Your marketing and sales efforts have to be strong and consistent enough to sell your product or service. Few, if any, products or services "sell themselves".

This means every professional (that's you) needs to know enough about marketing that they can get the word out about their ideas, products, and initiatives.

One of the simplest, most inexpensive, and effective marketing and sales strategies any business can implement is a sales funnel.

A sales funnel earns trust and familiarity with customers. It allows you to pique their curiosity and enlighten them before asking for a commitment.

Selling is about clearly explaining to a person how your product or service can solve their problem and then guiding them through a journey that leads them to buy your product or service. 

Talking someone into buying something means you'll likely sell that person once and never sell them anything again.

The best marketers and salespeople:

• work within a framework that invites their customer into a story where they solve the customer's problem and feel good about themselves in the process.
  
  
• make the customer the hero of the story and help others win the day.
  
  
• serve as guides, never the hero in the story. 

3. Take Profit First

Positive cash flow is the most important factor leading to a company's long-term success.  Let's say it again...positive cash flow is the most important factor leading to a company's long-term success.

Without enough money, a business can't take its message, products, or services to the world. 

When we can't take our message, products, or services to the world, our businesses crash and burn. 

This is why profit must be baked into your business's DNA from Day One.

Profit is not an event. It is a habit.

If you want healthy, sustainable growth, you need to reverse engineer the profit. You need to TAKE PROFIT FIRST.

"Treating profit like an afterthought, secondary to growth, usually has the effect of running your business to the ground," says Mike Michalowicz, author of Profit First: Transform Your Business from a Cash-Eating Monster to a Money-Making Machine.

Turns out you can't grow your way into being profitable. Growing revenue does not automatically equal growing profits. 

In his seminal book, Michalowicz boldly states all businesses have the power to guarantee profitability and explains why the traditional accounting formula of

Sales - Expenses = Profit is "a myth that locks businesses into a never-ending cycle of selling more yet profiting less".

Instead of relying on this mythical formula, Michalowicz flips the formula to SALES - PROFIT = EXPENSES. This simple mind shift allows businesses to take profit first and spend only what remains on expenses. It forces us to be disciplined. It forces us to be creative. It forces us to think.

Isn't that what we signed up for?

Start taking profit first today. Take your very next deposit and allocate 1% of the total amount to a separate bank account nicknamed PROFIT. Do that with every deposit.

Over time, this habit will have you finding creative ways to increase your allocation to 3, 5, even 10%. You decide how profitable you want your business to be. Take the challenge.

In Closing

It takes more than just these three things to sustain a profitable business.

However, offering a profitable product or service, investing in marketing and sales, and taking profit first provide the proper foundation for building a business that outlasts fear, uncertainty, and doubt.

Stay aware. Stay educated. And stay cool.

Talk soon,
Old Man Winter

Sources:

Business Made Simple

Profit First: Transform Your Business From a Cash-Eating Monster to a Money-Making Machine

MEME OF THE WEEK

Don't let Monday do you like Will did Chris.

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