Don't Rush Into Profitability
Have you ever had one of those moments where you did something dumb, and then every time you think about it you can't help but shake your head? It's almost like reliving the moment over and over.
Yeah, I had one of those moments...
Early on in my coaching days, I was working with a client on their personal finances. I had just read the book Profit First and already thought I was an expert (face palm moment #1). This client happened to own a business, so I decided to share Profit First with him.
He loved the idea, and we started calculating his percentages. He had about 70% of his revenue going to his operating expenses, while the recommended percentage is 30%.
Ugh, this is where I screwed up (face palm moment #2).
I told him he needed to get his percentage down to 30%, and he immediately started trying to cut everything.
Why is this so bad?
Because it didn't work! He took a machete to his operating expenses but couldn't get it low enough. Then after a month he became frustrated and decided to throw the whole idea out the window.
I let him down big time (final face palm moment).
I lead him to believe he needed to cut his spending in half over night. It's like trying to lose 30 pounds in 24 hours. It's almost impossible! And if somehow you do achieve it, it's definitely not healthy.
It's best to reach your target percentage slowly over time. Each quarter set a target and slowly move toward it. Instead of going from 70% to 30%, maybe he could try and cut it down by 10% in the first quarter, and then another 10% the next quarter.
It's best to roll things out slow and steady.
If you'd like some help figuring out how to best roll this out, let's chat. Click here to schedule a free call.
Craig is a Certified Profit First Professional who is passionate about helping service based businesses become permanently profitable.