Did you know nearly 600,000 small businesses in the U.S. close each year? Businesses close for a number of reasons, but according to a Global Entrepreneurship Monitor report by Babson College, “the most common was a lack of either profitability or capital, accounting for an average of 45% of exits [globally].” So, after running your promotional product business for years, do you find yourself in the same boat of low profitability as thousands of other businesses? Are the problems of inefficiencies, cash flow, sales slump and fierce competition keeping you up at night?

Through this series of 12 monthly articles, I will attempt to share my wisdom of 25½ years as a successful distributor with about double the industry average profitability (between 44% and 54% over my last five years in business, compared to average distributor figures of 22%-26%). In all these years, my business grew every year except for one. I not only survived but thrived during the financial crisis of 2008-2010 and COVID in 2020. The reason was my laser-sharp focus on, in my opinion, the most crucial number that matters: the bottom line. As a result, I was able to achieve financial independence at the young age of 49 and exited my business at 53.

Like you, I’ve been in the trenches and understand your pain, struggles and challenges. I have made some of the same mistakes you have. You get to benefit from some of the lessons I had to learn the hard way. Whenever I get into a challenging situation, I ask myself these questions. Let’s see if we’re on the same page:

What’s the reason you set out on this journey of entrepreneurship?
To make money, to pay yourself, provide a comfortable lifestyle for your family and a good education for your children, save enough for worry-free golden years and be able to exit on your own terms.

Are you willing to put in the time and effort needed to make it a success?
Yes. You would’ve taken a 9 to 5 job if you weren’t. You’ve got to work harder and smarter than the competition.

Are you one who blames everybody else but yourself for the issues?
No. You’ve got to take responsibility for all facets of your business. You’re the boss. You’re the one in charge. The buck stops with you.

Are you in direct contact with your major customers?
Yes. If not, why not? Are you “too busy” or too good for the sales activities? Get rid of that ego.

Running a promotional products business isn’t easy. To help me help you, you’ve got to make two promises to yourself.

First, develop an “I Love Profit” attitude. No matter what action is taken in a particular department or unit of your business, it needs to result in profit. If not, don’t do it. In one of my talks, when I made this point, one person became philosophical and told me that he cared more about the community, his church and volunteering than making money. My answer to him was, “Wouldn’t you be able to do more for the folks you want to help if you had more money?” With that extra money, you can do more for those in need and help your community by providing jobs in your growing empire, wage increases for your staff, and much more.

Focusing on profit is a change in mindset. Without that mindset, you would be clocking in countless hours doing nothing but paying your suppliers, staff and other operational expenses. I see business owners brag about the size of their company, number of employees, locations, big fancy offices with expensive furniture, big-name customers, contracts, and other glittery stuff. However, the number that really matters is the bottom line. How profitable is your business?

“No matter what action is taken in a particular department or unit of your business, it needs to result in profit. If not, don’t do it.”

Second, no excuses. Do not blame anything or anybody for your profitability woes. Issues are right in front of you. Most are internal, not external. You need to identify, uncover, and take the appropriate actions to rectify them and stick with your decisions.

You might say, “No, I don’t make excuses.” Let me put it a different way. Do you procrastinate making the tough decisions of firing an under-performing employee or meeting with your sales team on the slumping sales? Do you delay returning your banker’s call when they want to talk about the outstanding loan? Do you hesitate to ask for a significant past due balance from a client in favor of what you enjoy, which could be going to the local Chamber of Commerce event or golf outing? Hiding or ignoring the issues doesn’t solve them. Take them head-on. The sooner you tackle them, the sooner you return to increased productivity. A change in attitude can make the difference between the survival and demise of a company.

According to the U.S. Bureau of Labor Statistics, the failure rate of small businesses that have stayed afloat for 10 years is about 65%. Is the issue with growth for these businesses in existence for that long? Many business owners are very capable of growing revenues but lack the necessary knowledge, discipline and focus on putting systems in place that result in a positive cash flow. You need to prudently manage expenses and increase profitability. Fasten your seat belt. Starting next month, I’ll address some major issues in depth and provide practical solutions you can implement in your businesses.