Jack, a young builder who lived with his widowed mother, was struggling financially. Someone told him that, if he built 50 homes and offered loads of incentives, he could make lots of money. So, he built a street of model homes and brought in salespeople to handle all the buyers they would attract. He sold ranch-style homes. He sold two stories. He sold split-levels. He built and sold so many homes that he climbed to the number-one position on the list of top ten builders in America.
He had prestige. He had an outstanding reputation. He had accolades from buyers who loved his homes. What he didn’t have, however, was money. His unpaid subcontractors were talking about getting liens against his homes. His salespeople did nothing but harp all day long about needing more incentives … more discounts … more advertising so they could attract more buyers. If only he could find some magical beans (or perhaps a carton of solid gold Egg-land’s Best), he could relieve the financial pressure.
Jack didn’t know what to do until he read a blog post that said, “It doesn’t do you any good to sell homes if you aren’t making a profit. Stop thinking like a salesperson and think like a business owner.”
“So that’s what I’m doing wrong,” Jack said thoughtfully. ”Well, I can’t go back and start a new beginning, but I can start today and change the ending.”
And that’s exactly what he did. Jack stopped thinking like a builder and began thinking like a businessman. He realized the bottom line had not been his top priority. After restructuring his pricing, evaluating his homes and refusing to allow his salespeople to discount, Jack saw his profits increase.
He became a successful builder with a healthy profit margin and a solid investment portfolio. He no longer had to live with his widowed mother. His accountant married her and they moved into a nice condo on the water that Jack built.
The Moral: It isn’t how much money you make, it’s how much you keep that counts. Business people think long-term. They don’t just plan for the next sale; they plan for how much profit they will make on the next sale.