It’s not lack of access to land, access to capital or education. It’s not because of mother nature, and it’s not because the farmer is too tired.

It’s because they couldn’t make a profit.

That six letter word can be so elusive sometimes but if you don’t pay attention to something it’s simply not going to happen.

Paying attention to making a profit does not include focusing solely on spending less and it does not include fundraising. In both situations, you can still be losing money and not know how or making money and not know how. They are equally disappointing and equally dangerous. 

I had a client tell me they needed to raise money so they could grow. They hadn’t considered raising their profits because that meant they had to wait longer. That is, until I pointed out that if they raised their profits, instead of fundraising, they would be in control of the money and could stay in control of their money. There would be no one telling them what to do once the money was available and they could use their own profits to fund their own endeavors.

This business lost money all through 2017. In February, we started working on the tasks that allow a business to understand how they’re making a profit. The client came to understand the importance of precise bookkeeping, Cost of Goods Sold tracking, monthly report analysis, tracking actuals to the budget, an accurate Chart of Accounts, and a second set of eyes. Come May, June, July, they were making money. But not just making money. They were making money on fewer sales than they had in January, February, and March.

The sooner an entrepreneur understands how they make a profit — and acts accordingly to actually make it — the sooner they will control their own destiny and avoid failure.