Why this Every Day Break-Even Habit Devastates Business Growth

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Why This Every Day Break-Even Habit Devastates Business Growth

Summary: Have you ever found yourself celebrating a "just made it" moment in your business, only to wonder why growth seems “just out of reach?” A similar thought is the all-too-common goal of merely breaking even at the end of the year to pay less taxes. Some business owners like to be here because it feels financially safe, but it might be the obstacle blocking the path to your business's true potential.

Today, we will uncover the subtle yet significant impacts of the break-even mindset, reveal how it stifles business growth, and introduce actionable strategies for steering toward profitability and sustained success.  

Rethinking the Break-Even Strategy

Trying to “just break even” every year might seem smart, especially when it's time to pay taxes. Many people think, "If I don't make too much money, I won't have to pay lots of taxes, right?" But this way of thinking misses something important about making your business successful.

Consider it this way: paying taxes because you've made a profit shows your business is doing well, not just getting by. It's a sign that you're making more money than you're spending, which is great!

Break-even: Taxes are a privilege of profit.

But if you're always aiming “just to break even” to save on taxes, you could be holding your business back. The money you make (your profits) isn't just a number; it's what you can use to improve your business—like buying new technology, hiring more people, or selling to new customers.

Sticking too closely to breaking even might save you money now, but it could stop your business from growing. While it seems safe to “just break even,” it's like staying at the starting line when you could be running the race and winning.

Why Aiming for Breaking Even Isn't Enough

1. Running on the Spot: Imagine spending all day on a treadmill. You exert effort but do not make progress. That's what aiming to just break even in business feels like. You're keeping the operations going, but there's no forward momentum.

More than covering our expenses is required for a business to excel and bring fresh ideas to life. We need to aim for a significant amount of profit. This money, which is available after paying our bills and expenses, is important for several reasons.

Breaking even in your business feels like running on an endless treadmill. You are exerting effort but not making progress.
  • Profit allows us to explore new opportunities. For instance, if there's a new type of product our customers might love, profit gives us the money to develop and launch it. If there's a new market or area we want to expand our business into, we need profit to set up shop there.
  • Profit lets us invest in better resources. This could mean buying more advanced equipment that makes our products better or faster. Or, it could mean hiring more skilled employees who can help our business grow. Investing in these resources can make our business stronger and more competitive.
  • Profit helps us reach more people. Whether it's spending on marketing to attract new customers or opening new locations in different areas, we need profit to make these moves. The more people know about our business, the more potential sales we can make.

If we only focus on breaking even because it “feels safe” and money isn’t spent on taxes, we miss out on these opportunities and keep ourselves on the treadmill for growth. We are moving but not going anywhere. Businesses need to move forward and push toward their full potential. Profit is the energy that powers that movement.

2. Living on the Edge: Operating at the break-even point means we're always one unforeseen expense or a dip in sales away from financial stress. It's akin to walking a tightrope without any safety net; a single misstep could lead to significant problems.

Operating at a break-even point is like living your life on edge. You are missing your safety net.

Unexpected costs or losing a key customer can quickly escalate from minor issues to major crises without a profit safety buffer. Aiming beyond break-even provides a financial cushion, making our business more resilient and adaptable to change.

3. The Risk of Playing It Too Safe: When our goal is to achieve break-even, we adopt an overly cautious approach to business decisions. This mindset might prevent us from investing in growth opportunities like new product development, marketing strategies, or expanding our team. We get so concerned with the immediate return on investment that we do not consider potential growth.

Taking smart risks is important if you want your business to do well. For instance, making a strategy and carefully considering buying new equipment to help you make more products faster. It's a risk because it costs money, but it could also lead to making more money in the long run.

Break Even: Carefully consider new strategies in your business because taking smart risks is important if you want your business to do well!

Sometimes, business owners might be scared to take these risks because they don't want to lose money or consider it a win if they make enough money to cover their bills (that's what we mean by breaking even). But if they're too scared to try new things, they might miss great opportunities to improve their business and be more successful.

Owning a business is about trying new things and being innovative, not just sticking with the same old stuff. The business world is constantly changing. If you don't keep up and take some chances, other businesses might get ahead of you.

Transitioning from Break-Even to Profit-Driven: Strategies for Growth

Switching your focus from “just breaking even” to actively making a profit is like changing gears from coasting to accelerating. It's a game-changer for your business. Here are some ways you can make this shift:

1. Look at Your Business Through a Money-Making Lens:

It's time to get really familiar with your money. Where is it going? Where is it coming from? Are there areas where you're spending too much? 

1. Look at Your Business Through a Money-Making Lens
  • You may be paying for things you don't use or need. Make a checklist of what services, software, or other miscellaneous costs you pay for, and see if they are still applicable, need to be downgraded, or dumped.
  • Make Your Product or Service Better: Think about how you can improve what you're selling. This could make more people want to buy it, which means more money for your business.
  • Spend Less Money Making It: Check for ways to make your product or offer your service without spending as much. This way, you save money, and your business keeps more of what it earns.
  • Find New Customers: Look for people who have yet to buy your product or service but might want to. This could mean selling to people in different places, different age groups, or changing your product to make it appealing to more people.
  • Get Creative with Advertising: Find fun and new ways to tell people about what you're selling. You don't need to spend a lot of money on ads; sometimes, creative ideas work better to get attention

The goal is to be smart with your money, investing it in places that will help your business grow and bring in even more cash.

2. Create Your Own Financial Safety Net:

When your business makes more profit, you can save some of it and create a safety net of cash. This extra money is helpful because it allows you to deal with unexpected problems without feeling stressed.

2. Create Your Own Financial Safety Net

For example, if you want to try out a new way to advertise or add something cool to what you already offer, having this extra money means you can afford to give it a shot. You can try new things to improve your business without worrying too much about the cost.

But remember, it's still important to be smart about what risks you take.

You don't want to spend all your saved money on something that might not work out. The goal is to make smart choices that could help your business grow but won't be a disaster if they don't work out perfectly.

Even though making more money could mean you have to pay more taxes, having this money saved up is a good thing. It keeps your business safe and lets you grab great opportunities that could make your business even more successful.

3. Draw Up a Plan for Growing Your Profits: 

A solid plan for your profits covers more than just saving for emergencies. It's about thinking ahead—how can you invest in your business to help it grow? How can you make sure your team is happy and motivated? 

What about giving back to your community or treating yourself for hitting big goals?

Planning for profit isn’t something that always comes easy. You have to try to be a few steps ahead.

 Planning for profit means you're always a few steps ahead, ready for tax season, and clear on how you will use your money to make your business even better. 

3. Draw Up a Plan for Growing Your Profits

4. Get Everyone Involved:

Getting your team on board with your vision for more profit is vital to making big things happen. Encourage every team member to think creatively about ways to cut costs without cutting corners and identify opportunities for new sales or improved services. 

Make it a regular part of team meetings to brainstorm and share ideas. When someone comes up with a great idea that helps save money or boost sales, celebrate it. 

4. Get Everyone Involved

Building a team culture that values smart financial decisions and growth while still keeping an eye on the numbers helps everyone. When everyone in the company sees how their actions contribute to the business's success, they're more likely to feel invested in the outcome. Plus, when the business thrives, there could be more opportunities for everyone, from bonuses and promotions to more exciting projects. 

Remember, sharing the goal of making more profit doesn’t mean putting pressure on your team for constant gains. It's about working together to find smart, sustainable ways to grow. When everyone understands the vision and their role in it, you create a strong, united team ready to take on any challenge and seize every opportunity.

Embracing the Profit Mindset: Beyond Just Breaking Even

Switching your focus from breaking even to always aiming for profit isn't a one-shot deal. It's a constant process of checking in on your business. You've got to keep asking: What's hitting the target? What's missing? The world constantly changes, with new opportunities and hurdles always popping up. Being ready to tweak your plans keeps your business moving forward and not just stuck at breaking even. It's like continuously adjusting your strategy to ensure you're always moving toward making more profit.

I've seen it myself: amazing things happen when businesses start focusing on making a profit. Let’s go past a sigh of relief during tax season and set ourselves up to allow for success that makes a real difference. 

Are you ready to make your business not just survive but thrive? Let's take this step together. Find time on my schedule to see how profits can be transformative for you.

About Leslie Hassler