Find the best financial tools available today

Do Business Like Bezos by Considering These Crucial Factors for Running a Company in the Red

Struggles pulling a profit, or extreme financial losses in the early days, are some of the most common reasons why 70% of small businesses fail in their first ten years. Meanwhile, billionaires like Jeff Bezos famously ran at a loss for 14 years before ensuring that Amazon finally created a net profit, a fact that he shares with notable names including Elon Musk.

This can lead to a range of confusing questions surrounding what success actually looks like, and how these big-hitting businessmen have managed to flourish in a way that’s caused so many others to fail.

Far from magic, the thing that most often distinguishes billionaire losses against those of so many small businesses is simply the intent behind the action. In standard small business territory, losses are too often a result of inaction and inefficiency. By comparison, billionaires like Bezos use loss as a tool for transformation. Of course, to some extent, this is the privilege of the incredibly rich, who can afford to cover even notable losses. But, even if you’re running a business on a shoestring, falling into the red needn’t mean the death march if you simply take the time for the following crucial considerations.

#1: Ensure That You Intricately Understand Your Accounts

A failure to recognize loss is, most often, the problem that gives gaps in profitability a chance to grow and become fatal. By ensuring full awareness of where losses were happening and why, Bezos kept these risks where he could keep a close eye on them, enabling him to curb spending and address pain points as they arose.

Hiring an in-house or outsourced accounting team can help here, but companies truly looking to achieve a Bezos-style turnaround could especially benefit from taking their financial understanding a step further through the implementation of insights that inform improved processes moving forward. A highly recommended revenue cycle management software like PMMC can prove especially useful in this regard by ensuring actionable insights that not only shine the light on finances but also pave the way for improvements that could ultimately turn things around. That way, even if you continue running in the red to advance your opportunities (as we’ll discuss later,) you’re always aware of and managing, the situation to keep yourself afloat.

#2: Make Sure You’re Losing Money for the Right Reasons

A business mind like Bezos will never lose money because he’s being careless. Rather, every year that he spent in the red was a year when he worked tirelessly to ensure a market position that saw Amazon changing the face of retail. Unlike more foolish reasons for loss, which largely center around human error or oversight, this intentional approach is a business slow game that, when done right, can provide significant success down the line.

Businesses looking to mimic this profitability in-point therefore need to make sure that, wherever losses are happening, they’re happening for the right reasons. Perhaps the most obvious example of this comes from companies who compromise profit for their first year or so in order to perfect marketing focuses that make their name. Equally, in true Bezos style, companies who run at a loss to undercut their competitors can, ultimately, find themselves at the helm of a market from which they can drive profits at last.

# 3: Always Have a Plan

Business plans always matter a great deal to success, but they’re especially imperative for anyone running a company in the red. Bezos most definitely didn’t fluke Amazon’s success, after all. Rather, he had a plan throughout its entire 14 years or non-profitability. While most companies won’t need quite as expansive or intricate attention to detail, planning for loss in your budget ensures that those stings won’t send your business down in the short term. Equally, always taking the time to plan how you will account for necessary losses, either from your money pot now or in the future, is the best way to keep yourself astride on even shaky financial footing. Certainly, having an end date when you would ideally like to start seeing profits provides you with a platform from which to reassess and consider realistically whether your current approach to loss is working to make you one of the greats, or just another failure.

Loss is a frightening term for any company, but in true Bezos style, you might find that embracing non-profitability rather than running from it helps you to ultimately make your millions, especially if you approach this open-armed method of loss in these fundamental ways.

Leave a Reply

NOTE: all comments are moderated. it might take a few days for your comment to be approved. Thnx for your understanding

Your email address will not be published. Required fields are marked *