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When doing my MBA, I learned that one of business’ measures of success was profit maximization. Of course, this generalization has limitations such as: the opening of new markets, introducing new products, research and development, capital investment, training or increased labor force.  All are very positive actions for the company but may have short or medium-term negative effect on profitability. However, profit maximization is one way to determine success.

If I have learned anything in the past 25 years is that one of the important lines in financial statements is the profits line. Why? If your company's business model is based on commissions, the difference between gross and net sales can be significant. In addition, there are all the costs associated with achieving these sales to consider: office, travel, representation / solicitation fees, etc ...

So in fact, if your company is in this situation, you could be selling $ 1,000,000 at 10% commission rate less your various fixed costs and have a profit of $ 15,000. What is more important? The sales value or your profitability?

Of course, we are all in business for a variety of reasons:
- Make money
- Make a difference
- Have a better work/family balance
- Have more freedom
- Realize a vision / an idea
- Absence of work in the field or of a particular market
- Etc ...

Why is all this important? Because by clearly identifying the reasons why we are in business, it becomes easier to determine the indicators of success and thus understanding if we are on the right path. If you want to make a difference on a group of people and you measure your profitability, you may be disappointed with your results.

How do you determine your indicators? Want to make money? Profitability should be near the top of the list (much more than sales). You want to reach people? Having a database of people you have helped is much more important than your profitability. You have an idea in mind and you want to realize it? Commercial success is a good measure, but so is also to see our idea take shape, test it, refine it, etc .... Is having more freedom important to you? Are you able to travel more thanks to your business? See more locations? Have more flexibility with your work schedule? If freedom is important to you, you must clarify how you define freedom. 

This article wants to be another opinion on the different “success” ideals I often see on social media: obtaining wealth. The images that are associated with success are often luxury cars and lavish homes. From time to time, we see the beautiful beaches as the "office". I think success in business can certainly include these objectives, but it is not exclusively defined by them.

What are your motivations? What prompted you to start a business?

Looking forward to reading your comments.

Stéphane Elmaleh-Riel, B.Ed., MBA
Marketing consultant