One thing a lot of entrepreneurs do, especially those just starting their first companies, is that they try and start driving profit and profit margins very early on. The reason I focus on top line revenue vs profit (which is what I did for my dad’s wine business as well as with VaynerMedia) is that you can always drive your profits eventually.
When I run a business, I tend to innovate and be ahead of the market and respect the importance of selling in the year we live. Once the market starts to catch up with me, that’s when things get interesting and exciting. That’s when people are all-in and start believing in what I’m doing, be it wines, ecommerce, or social media.
I prefer to operate at a threshold where I have to run fast and grab as many customers as I can, while I’m still ahead. When the time comes, 3,4,5,6 years down the line, then I can start to drive profit and maximize profit margins. You can always start cutting costs or raising prices at any time, but land-grabbing more customers for top line revenue growth gives you the leverage and the scale you need to ultimately convert.
So, I think people go in for that proverbial “right hook” way too early — sometimes to appease investors, and sometimes to buy boats and Rolexes.
Me? I’m just working on pushing and building leverage for the long term.
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