The myth that sales and marketing drive Profit.

- September 6, 2012 3 MIN READ


I’m sure you know of “The E-Myth” but do you know “The P-Myth”? … It’s the myth that sales and marketing drive Profit.

Most entrepreneurs believe that sales and marketing drive their profit. In fact, I did too for many years, up until I met a mysterious business strategist who was introduced to me as the “Millionaire-Maker-Mathematician” (He’s represented his country for advanced maths, he does suduku in 1/3 the time and he has a tendancy to make people very rich with his advice).

I had a 90 minute meeting with him and a year later I had tripled the value of my business. Now, many great people helped me to achieve that result but I must say this one meeting was responsible for giving me a huge mindset shift that made a big difference.

In this meeting, he explained that he had crunched statistics on hundreds of businesses and he did NOT conclude that profit was a function of sales or marketing. In fact he said something VERY NEW to me. He said:

“Income follows assets”

Here’s how the conversation flowed:

Millionaire-Maker-Mathematician – “If you have a 2 bedroom house and the market price for it is £300 per week, how much can you rent it for?”

Dan Priestley – “Of course £300 per week”

MMM – “What about if you hire an amazing sales and marketing team?”

DP –  “Maybe £330 per week… but they will cost me some or all of that.”

MMM – “Ok, so what about if you made it into a 4 bedroom place?”

DP – “Well I guess it would be worth, £500 – £600 per week.”

MMM – “So you can see that in property, that income follows assets and not sales and marketing. What about in your business? What are the assets in your business?”

DP – “The assets are our database, our network of affiliates, our brand, our systems and some IP we own.”

MMM – “What do you think would happen if I doubled the size of your database, the number of affiliates, the strength of your brand, the robustness of your systems and the amount of IP you own?”

DP – [I thought for a second and then smiled] “Business would go through the roof, we’d make more than double our sales and we would be worth more than twice the value we are today.”

MMM – “Would it be sustainable?”

DP – “Yeah it would”

MMM – “What if instead of doubling your assets, I double your sales team and marketing spend?”

DP – “I’m not sure. We would likely waste some of the marketing money. There wouldn’t be enough leads for twice as many sales people, we would have to do more marketing quick, some would work, some wouldn’t, I think we would either end up spending too much on lead generation or we would annoy the sales people with too few leads”.

MMM – “Would it be sustainable?”

DP – “It has never been sustainable in the past when we’ve tried that approach.”

MMM – “So now do you see that your goal is not to get better at selling and marketing, your goal is to get better at building assets in your business; because…”

DP – “Income follows assets”

After that conversation, I changed my mindset. I focused on creating more assets in the business rather than putting 100% of my focus into sales and marketing. I also viewed sales and marketing differently as well – They were tools to build assets like a database and goodwill.

Sure enough, as he predicted, business started getting much easier. Income went up, valuation went up and opportunities rolled in.

The name of the “Millionaire-Making-Mathematician” is Darren Shirlaw. He doesn’t just make other people millionaires, he’s built his own business with a 200 person team operating in 9 countries.