Revenues are Temporary. Profits are Forever! ™ – Part I

It doesn’t matter what stage of business you are in and how big your business is. We all share the same basic issues when building a business i.e. we focus mainly on revenues.

I’m going to tell you the One lie that’s being sold that keeps entrepreneurs and business owners Stuck, Frustrated and Broke and the importance of why you need to track both revenues AND profits.

What are revenues?

Revenues are the proceeds you earn from the sales of your services or products.

So, if you’re in retail, the number of units multiplied by the dollar amount you charge for each unit equals your revenue. If you’re a service professional and selling a package, you must be able to price the package, not according to the number of hours you expect to provide to the client but the value of the results TO the client.

So your revenues are sales in dollars. However why should your focus be on bigger profits and higher net income?

Because these are what actually grow the business!

Now don’t get me wrong! Constant AND increasing revenues are critical for any business, whether you’re just starting out or you have a 6, 7 or 8-figure Company. Revenues are a critical driver to growing any business.

But here’s where a serious problem arises! Here’s where many business owners may be going down the wrong road, and one of the primary reasons that their business has remained stuck for years.

THIS is the One lie that’s being sold that keeps entrepreneurs and business owners Stuck, Frustrated and Broke!

Business Owners who are focused entirely on revenue generation and do not pay enough attention to PROFITABLE strategies, will indeed find their businesses in negative growth patterns or simply just flat-lining!

Now gross profits are your revenues less what it takes to generate those revenues, namely all the direct costs to earn one dollar of revenue. Having gotten down to your gross profits, you now have to consider your expenses.

This is where the ‘rubber meets the road’ for many entrepreneurs because it’s not how much you earn but how much you keep!

You must monitor and control your expenses so you have as much as possible left over to reinvest in your business.

In business what is left over is called your profits. Profits are your focus in business. Profits grow the business through re-investment.

Look out for Part II next week!