Does it make sense to sell without making profit?

Some people like getting advice. Others hate it. They’d rather work it out on their own.

As for me, I ask for advice and ask often. That’s why when I finished the manuscript for How to Close More Business in Less Time, I relied on the services of the best editor and proofreader I could find.

In fact, long before I get to the point of ever needing an editor, when I’m in a conceptual Profit56writing mode testing a message for an article or report, I go out of my way to ask for advice and to get a second opinion.

For example, several weeks ago I asked a long time friend (I’ll call him John because that’s his name) to review a rough draft. The piece focused on growth. Every place in the article where I said growth, John corrected it to read profitable growth. 

He and I had a lengthy conversation about that. Of course, I knew John was right, but thought a discussion was in order.

In my mind, when I said growth, I knew I meant profitable growth. But John was correct in reminding me that although I knew exactly what I meant, others might not read between the lines (or, in this case, read between the words).

That brought us around to the age-old question that many new and established businesses struggle with: Does it ever make sense to sell a job that doesn’t produce profit dollars?

John and I agreed there are times when a business is forced to make that kind of decision – to cut its margin and, correspondingly, remove profit from the equation.

It’s never an easy decision and never without consequences. However, at that moment, business owners conclude the short-term cash flow is essential in order to cover payroll and fixed overhead. They also reason that if they don’t sell the job without profit, they’d need to dip into their own resources and reserves to cover payroll and fixed overhead. That could be a whole lot less appealing than trading dollars – taking the job just to grab the cash flow.

I also know businesses sometimes pull profit out of an initial proposal with a new high-potential prospect, just to get their foot in the door. They believe if they can show off their skill and ability to deliver a top-notch product at a low price this one time, they’ll be in the running for many more projects down the road.

While the reasoning could be sound, it also opens the door to pigeonholing them into being seen as a low-cost, low-value provider. Inadvertently, they’re educating their new customer that instead of adding value they’re focused on cutting price. Ultimately, they become known as the guys that get it done fast and cheap rather than the team that comes to the rescue and helps them grow and prosper.

This profit/no-profit question and the challenge of getting a foot in the door is one that startups and younger businesses face all the time. As in the case of calling on any first time prospect, my thought is they, too, would be miles ahead by looking for ways to bring fresh ideas and innovation to the table, along with passion and enthusiasm, and solutions the customer hasn’t seen before.

Whatever the reason for selling without profit, the reality is that businesses can’t and won’t grow without profit in the deal simply because it’s the profit that finances the growth of the business. It’s the profit that buys the new equipment, hires the new people, opens the door to expansion, allows for more extensive marketing, and so on.

Next time you’re estimating a new job, put profit at the top of the list of line items rather than as at the bottom. Guard and protect that profitability as if it were the single most important item in the list – which it is!

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