Money, it’s one of those personal topics that many people are uncomfortable discussing. Why that is, varies from person to person.

Even inside a business that uncomfortableness exist, but that needs to change. Generally speaking, the only time the subject of money seems to ever comes up is in the heat of the moment in comments such as “Do you know how much that costs?”. Even then the word money is not used.

When I ask owners what business they are in, I usually get the expected answer such as “I’m in retail or I own a restaurant or I’m in a service business of some sorts.” These are all technically correct answers and serve to explain your enterprise to your external customers and strangers alike.

However, I would like you to consider an alternative definition that should be used internally within the organization and be at the forefront of your decision making process. What is that internal definition? Simply, “We are in the money business!”

dollars, pounds, yen

And it matters not one bit what industry you are in. At the end of the day, you are in the money getting business. Pure and simple. You exchange your services in return for money.

The service you offer is nothing more than the vehicle you use to get that money.

This may sound a little crass to some because they don’t want to think of their business in such impersonal terms. Others are so emotionally committed to their desire to be an entrepreneur that they have fallen in love with their idea and not the business of the business itself.

Let’s be honest, the reason 99% of us went into business in the first place, is the allure of potentially making more money. To be sure, we had other reasons such as being our own boss, validating our idea or just finding a better way to do something. But at the end of the day, the majority of us were seeking higher incomes.

Focusing on money is not to say that you have to become Scrooge like. Nor does it mean caring less about your customers or how you do things. To the contrary, having higher profitability and more money gives you the ability to actually increase your service levels. The alternative means that you’re on the proverbial treadmill generating additional low margin business just to keep the doors open, which results in customer service taking a back seat to everything else.

No, it means being selective in where you commit this precious resource. It also means getting your staff to understand that their actions can impact, good or bad, the profitability and financial health of the company. But you need to reinforce that position with them. You need to make them understand that their actions have a cost associated with it.

Loving what you do is one thing, but it’s got to be profitable and the more money or profit you make allows you to build a safety net under your company. Consider for a moment, how unprepared so many small businesses were in the face of the Covid-19 lockdowns. Sadly, many have locked their doors forever.

Changing the mindset


There’s really only two things you need to know about money, where you get it and where you spend it. So, the logical place to start is to understand where you get your money.

It’s been my experience that just about every business has revenue categories. Unfortunately, many entrepreneurs don’t bother to segregate their services into any formal groupings. As a result, they have no idea what percentage each product or service groupings contribute to their revenue.


But revenue grouping is only half the equation. We often hear that we should be focusing most of our time on revenue generating activities. I absolutely agree that this should be every entrepreneurs priority, with one added caveat. These revenue generating activities need to be profitable and we should be focusing on the most profitable of these activities.

Therefore, in order to determine which revenue generating activities are the most profitable, we need to be able to attribute what it costs to generate those revenue. You do so by allocating all the expenses incurred to each of the revenue groups. In doing so, you can now determine the most profitable areas of your business. In other words, what’s making you money, where you’re losing money and everything in between.

By having the ability to analyse your revenue categories, you can begin to make educated decisions. When you consider how much labour, overheads, and other expenses go into generating revenue and then to find out you lost money or only break even, it’s heartbreaking. Granted getting a nice big cheque for a project you just completed is a wonderful feeling. However, if it has a low profit margin, you are effectively just trading dollars.

So first and foremost, you need to prioritize your activities on the most profitable products or services you offer. Then you need to determine how you can increase your activity on these most profitable items.

At the end of the day your objective is to narrow your focus to those items or activities that are the most profitable and quit wasting time on marginal ones. There are only so many hours in a day available to you and your staff. If you subscribe even just a little bit to the 80/20 rule you’ll quickly determine that a lot of your energy and your staffs is wasted on low value products and activities.

I know many will say that they have to keep their prices low in order to compete. This is where you need to get your head around the fact that you are in the money business. If that’s truly the case, get the heck out of that line of business or quit offering that product. If you need to stay in that line of business, then find a way to increase the value of your offer without increasing your costs. That way you’ll you can demand a higher price, thereby increasing your profits. These decisions are well within your control.

A True Story

Many years ago, I undertook this exercise to determine where we were making our money. Although it was a tedious process, it was an eye opener. The net result of that undertaking was that I cut over $300,000 of revenue from the company by identifying low margin activities and clients in industries where, due to competition, we were unable to manage any form of price increase to make them more profitable.

This was at a time when my company had just achieved breakeven and this decision was going to be a major setback. However, as expected or maybe I should say hoped, our profitability grew significantly, and we were profitable in less than a year.

In hindsight, it made perfect sense and the risk was more imagined than real. When you consider that we focused on fewer but more profitable services and clients or labour and other expense inputs dropped dramatically, which resulted in more profits for the company.

In addition, this exercise helped us to identify and target those clients and industries where there was very little competition. Doing so allowed us to regain the lost revenue within 18 months and our profitability continued to grow. 

Just to reinforce this point, Covid-19 forced many global foods companies to reduce their product offerings in order to focus on their core products. Lays, Procter & Gamble, Kraft and the Campbell Soup Company, stop producing, not just cut back many of their slower moving products because demand on their core products exceed their ability to supply. Some of these companies reduced their offering by upwards of 18%. Many of these cut products may never return to our grocery shelves because the companies realized that their profits came from their core products.

Spending money is easy, making money is hard

Another thing to keep in mind is, that spending money is easy, making money it is hard. Because of how hard it is to make money, every spending decision, whether that be on equipment or staff needs to be paid for somehow. For example, if you’re netting 10% profit on the bottom line, a $10,000 expense requires you to generate extra revenue by a factor of 10. In other words, you need to generate $100,000 in additional revenue just to cover the cost of that expense.

So before you or your staff clicks the “Add to Cart” button or slap down your credit card on supplies or that new piece of equipment, you better make sure it’s necessary. Because at the end of the day, that’s less money you’ll be able to take out of the company personally.

Money is such a precious commodity in any business. Some of the benefits of having money in the bank, is that it’s a great stress reliever knowing we have the capabilities to meet our obligations. Taking that stress off the table, then allows us to concentrate our time on more productive duties.

It’s in times of crisis that the importance of money is reaffirmed. Crisis come in all shapes and sizes. From key customers that quit buying to pandemics, each can seriously mess with your business. So by adopting the attitude that you’re in the money business, will go a long way significantly increasing your profitability and your income.

I’d like to know your thoughts if you were faced with a similar situation. So, leave your comments below.

You may also enjoy Clustering for Profits

If you found this of value, please pass this along to any business owner that you fell could benefit by understanding that they’re in The Money Business

Get More LIFE Out of Your Business

You shouldn’t be the hardest working person in your company.

Many small business owners find that even after the struggling start-up years, they’re working too many hours and still managing every aspect of their businesses.

Greg Weatherdon has been there, done that. As an entrepreneur, he learned not only how to get a business to the point of running smoothly, but also how to reduce the number of hours he worked, delegate more responsibility to his employees, and take longer vacations while his business chugged along like a well-oiled machine. And now he is providing the secret to success.

Do you suffer from any of the following?

1. Business ownership isn’t living up to the dream.
2. Endless workdays.
3. You can’t find good people.
4. Profits are less than expected.
5. You can never take a vacation.

You’re not alone. But there is a solution. As Greg demonstrates, with some time and effort, you really can Get More Life Out Of Your Business.

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4 comments on “SBM #91 The Money Business

  1. joseph Lawrence Sep 29, 2020

    Excellent article Greg.Truly at the end of the day we are all in the money business.

  2. Well written Greg! Changing our mindset is the success in all aspects of our lives! Great reminder!

    • gregw Oct 1, 2020

      Thanks Dora, I appreciate you taking the time to comment