Do Sales Really Equal Success?

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It is often thought by society that the only measure of a successful business is its turnover rate. But that is a dangerous misconception. It leaves us celebrating businesses who, sure, have a high turnover rate, but we ignore weighting their body of work, sustainability, or what the return for the owners and shareholders is.  

 

This misconception leads to many starting businesses looking solely at what their services were charged while working for someone else. They simply try to undercut and take a larger piece of the pie. It sounds nice in theory but is fundamentally flawed. Yes, if you see an opportunity in the market you should take it, but it is important that you create your new business without a pure sales = success mindset.   

 

There is more to success than making sales 

It is entirely possible for a business with consistent sales to fail. In fact, 65% of businesses that are insolvent are profitable. Why? Because they did not manage their cashflow properly. When the bills were due, they simply couldn’t pay for them despite showing profits on paper. What they needed was a good bookkeeper so they could avoid the cashflow woes they faced. 

 

Some businesses may have high sales but when you dig a little deeper are simply not sustainable. If after all the costs and overheads are taken into account, there are some businesses with high sales figures that simply cannot turn a profit. A consistently profitable business will have far more options open towards it. It can reduce debts and liabilities, invest in further income generating streams, or reward the owners.  

 

There simply is a better measure of success than the one-dimensional view currently held by society. If you only measure success by sales, you miss the big picture entirely.  

 

What factors should be looked at? 

A big factor that should mark a business’ success is its impact on the economy and its longevity. If a business is making a positive contribution to the world while maintaining stability and solid growth how is that not a sign of success? To accurately gauge a business’ success, we need to begin looking at a scale that takes in more of a business’ achievements, impacts and vision. If we look at how many people a business employs, what its long-term vision and mission is, what its culture is and the strength of its balance sheet, we can see more sides of a business that will determine its success in the real world.  

 

Sales still has its place  

Of course, sales is still an important measure but it is not the be all and end all in determining success. Sales is useful in demonstrating the demand for products and services. It can determine if the business has a strong value in the market. It is a useful measure at showing whether a business is growing or declining, or whether its products are still valued in the market. This is a perfect indicator to show if a business is on the right track, but not whether the business is healthy or sustainable.  

 

If we begin to look beyond the one-dimensional view of sales is success, we begin to see a bigger picture of a business’ place in the market and whether it will be successful in the long-term or not. Long-term success has a stronger impact on the economy and the world, employing more people, making an increasingly positive contribution to the world. It is about time that we begin to alter our measurement of success and celebrate those who make the best impact on the world.  

 

If you want to see your business succeed you need a fantastic bookkeeper. Link Strategies has an entire team of experienced bookkeepers ready to help your business into the future. Contact Link Strategies today.  

General advice disclaimer
The information provided on this website is a brief overview and is general in nature. It does not constitute any type of advice. We endeavour to ensure that the information provided is accurate however information may become outdated as legislation, policies, regulations and other considerations constantly change. Individuals must not rely on this information to make a financial, investment or legal decision. Please consult with an appropriate professional before making any decision.

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