Why Focusing on Profit Can Ruin a Great Business
Tell me, what do you think is the most effective business model for generating profit and cash in the restaurant industry?
I doubt anyone would disagree with you if your answer to that question was McDonalds.
If you set out to make as much money as possible serving food to people, there is simply no better way to do so than building hamburger restaurants the way Ray Kroc built the “Golden Arches” all those years ago.
The genius who was Ray Kroc showed us the way, and Michael Gerber and many other business gurus since have analysed the model and explained how to apply it to every other Small Business out there.
There is no doubt that the fanatical and obsessive focus on standardisation and systemisation inherent in McDonalds restaurants can lead to the same outcomes in most other businesses from funeral services to supermarkets, to medical practices and everything in between.
Making money from death
If you own a funeral parlour and you want to absolutely make more money than anyone has ever made from burying people, read “The E-Myth” and apply every word Michael Gerber wrote about the lessons from McDonalds to your business with single minded focus and you’ll never look back … guaranteed.
But just like I would be sad (and we would all be very unhealthy) to live in a world where the only restaurants we can eat at are McDonalds, likewise I’d hate to live in a world where all the funeral parlours were run by 18 yr olds who were trained to ask me: “Do you want roses with that?”
The disconnect lies in the misunderstanding most business owners have about the Purpose of Business. Most business owners, business analysts, gurus and advisers will repeat the manta that the purpose of business is to “Maximise Shareholder Value”, to make lots of money in other words.
But if, like me, you believe that making money is a sad and short sighted reason to be in business, all kinds of things become possible instead of McDonalds.
Breaking the law
Don’t get me wrong, a business must make money. There are many things a business must do in order to survive however. It must operate within the law for example, but we would never maintain that the Mission of our business is to not break the law.
Similarly the notion of making money, the business must make money so that it’s able to do what it is meant to do. In other words, a business that delivers on it’s promise has a reason for existing far beyond “Maximising Shareholder Value”.
In the restaurant industry it may be that the reason for the existence of your business is that you are passionate about unexpected cuisine combinations, French with an Australian twist, for example, or maybe you’re passionate about the sustainability of food, or maybe your passion is about educating disadvantaged youth in the hospitality industry.
There can be many reasons you have started your restaurant. As long as the business makes enough money to be sustainable in the long run, it doesn’t mean you have to turn it into a McDonalds for it to be a great business. Your business is a great business, when it delivers you what you want from it, month in month out, year in year out.
Anchovies and chocolate
So please do yourself (and my stomach) a favour: don’t listen to others’ judgements about your business, and ignore the little voice on your shoulder that tells you to build a McDonalds, because I’d much rather come and eat your pig trotter rolls with anchovy and chocolate sauce than be forced to eat another Big Mac.
Here is the Big question (with a capital “B”) I’d like you to think about: Why does your business exist, what’s it on this earth for, and why would anybody care about that?
Answer that question, decisively, in one bold sentence, and your business and your life will never be the same… I promise you.
“The opinions expressed by Smallville Contributors are their own, not those of www.smallville.com.au"
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