Good is not enough
What use is a pen with no ink? (DeGolyer Library, Southern Methodist University)
Oh, what I wish I knew when I started my first business!
It was (and still is) a music school.
I put great care into the user experience, not only for the students and their parents, but for my teaching and admin team.
I built processes and procedures that minimized errors and ensured that no client request would fall through the cracks.
I made an effort to stand for something great and build a respected brand.
Can you see what I forgot?
Aha! Profit.
I did all of this work essentially without being paid. For most of the twenty years Eclectic Music has been in business, we’ve either broken even or lost money.
I was so focused on whether what I was doing was good — morally righteous, aesthetically pleasing, professionally satisfying, and broadly admirable — that I gave little attention to making the business stable and sustainable.
I often see my fellow entrepreneurs making this mistake. I know how it happens: They get swept along by their dedication to their mission and the demands of the day-to-day that they don’t think about what’s in it for them. This may be noble, but it’s also naive and can be truly disastrous.
A business can appear to be successful on the surface while having deep problems that might take years to correct. A million dollars in revenue and $0 in profit, and nobody knows but the owner because talking about how much money you make is one of the last conversational taboos of our society.
The owner of the business might not even realize there is an issue because money is flowing freely. They might even be taking home a few thousand dollars a month, in effect paying (or underpaying) themselves for one or more jobs within the business. This disguises the broken model if they aren’t paying close attention to the numbers.
That’s how the owner of the business can go years without being aware that they are missing out on the benefits of owning a business. And that’s how they can become trapped working long hours with little to show for it. Meanwhile, their peers and even advisors don’t know anything is amiss, so no one can address the issue.
I was in that situation for years, in not one business but two. Over the past few years, I’ve worked very hard to correct the issues in the first business. With the help of an excellent team, the music school has become strong, stable, and, if not truly profitable, well on its way.
The other business, though — it probably shouldn’t have been a for-profit company in the first place. I made the tough decision to close The Little Middle School after ten years of operation because it became obvious that it would need lots of resources to recover from the challenges of the pandemic — resources that I didn’t have.
Though it represents, by definition, a failure as a business owner, I consider closing this business to be a major win for me as an entrepreneur. I looked at the facts and made the tough call instead of hiding from the truth or thinking that I could fix things by working harder. This was a new move.
The Little Middle School was making a difference. It improved people’s lives. But that wasn’t enough to justify its existence.
Maybe someday, I will intentionally create an organization whose sole purpose is to make things better for others. Ironically, it will be a lot easier to build such an organization if I get really good at making a profit while also making things better for others. The resources to fund an organization like that come, whether directly or indirectly, from the profits of commercial initiatives.
For now, in business, creating something good is not enough for me. Doing good in the world is not enough. If I am going to go to the trouble of starting and running a company, I want it to be a profitable one. And I want to enjoy what I’m doing and not have to work five jobs within the business in order to make ends meet.
We can measure things any way we want to, but we might as well choose the metric that will steer us toward the results we’re looking for. I believe a business ought to be profitable and fun. If you have that, good for you! If you have one that isn’t, maybe seeing this truth will help you turn it around. You deserve to benefit from your hard work.
