Profit not Revenue
Too many business owners are fixated and focused on revenue and revenue growth – but have no idea what their profit margins are and whether their business is actually making any money or not.
Revenue growth is great – and is definitely a metric that we measure with our clients. But your profit margins are the lifeblood of your business.
Your profit margins tell you how your business is performing and whether anything is broken or needs attention.
If your revenue growth is good – but your profit margins are poor – that’s an indication that your delivery, systems & operations needs work & attention.
There may be an issue with your team delivering the projects or maybe it’s something as simple as an internal comms issue.
But without tracking the profitability of your business – you wouldn’t even know that something is wrong.
In order to maintain a healthy and successful business, you should be aiming for 30% net profit or higher. That’s what we aim for and measure every single month with our Boardroom clients.
The other thing to consider, if you’re looking to sell your business or just want a business valuation, the profit you make will be one of the determining factors taken into account. The higher the profit, the better the valuation.
So instead of a sole focus on revenue, concentrate on both profit and revenue.
Revenue-wise, think about what you can do to make more money and grow your business.
To increase profit, you’ll want to think about how to make the business better i.e. promote business efficiency.
There may be times during your business journey when you put more focus on revenue growth and other times when you focus on bedding down systems, operations & business efficiencies to increase profit.
But overall, tracking and improving both revenue and profit is the winning combination.
If you’d like to learn more, please take a look at my most recent podcast episode on this exact topic:
Click here for the podcast episode.
Click here to watch the video.
Josh ‘Profit Focus’ Stone
PS: If you’re interested, here are 4 ways I can help you right now:
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