Episode 140: The Only Number That Really Matters In Your Business
Episode 140: The Only Number That Really Matters In Your Business
If you want to sell your business, the only thing that matters is profitability.
Today we’re discussing why focusing on profitability is one of the most important things you can do for your business!
82% go out of business because of cash flow problems.
They don’t have enough margin – they run out of money. The good news is that studies over the last five years have shown that service companies have a higher success rate than many other industries.
However, if you aren’t profitable, then things get weird. My very first service I made $20/hr. I was super excited to reach this since I started in a trailer park…but I didn’t have the overhead or equipment. It’s completely different with employees, systems, etc.
Maybe you were just trying to get away from “working for the man”. So you started a company. You don’t understand any business stuff. When you have a real business, there is a cost structure. It will help you tremendously to understand what the cost structure looks like for a company that does $2 million a year.
If there isn’t enough space inside of your pricing to pay an operations manager, office manager, assistants, etc., keep in mind you will hire these people eventually. Your current pricing needs to take this into consideration.