I read something that struck me as just plain wrong from a so-called author once.
It was concerning his view on the diet and weight-loss industry.
He said that if he wrote a diet book it would be the shortest book in the history of books.
Eat less. Exercise more. The End.
Sure, buddy. Aren’t you clever?
I mean, sure, that would work, but as everyone over the age of 35 knows there’s more to it than that.
Plus, there are, I would guess, hundreds of somatotypes. Some people eat and eat and CAN’T gain weight, and actually consider that a problem!
I started out with this thought because I’d like to offer a unnuanced and unconsidered version of how to win at business as a building block for a lengthier discussion.
Ready?
Make more money, spend less money equals larger bottom line. The End.
I’m quite certain if you’ve been following along for a while that you KNOW it’s not that simple.
You see what I’m getting at here?
We have a little bit of a corollary here between being at peak physical fitness, and success in business.
Both, in a manner of speaking, require the intake and burning of calories.
So to speak.
There’s a reason why over half of America is overweight to some degree, and why over half do not create self-employment income.
It’s just not that simple.
Can you win? You bet. History is replete with many success stories, both fitness and wealth-oriented.
Can someone sell you a handful of magic beans and make it happen for you?
Pretty much a big fat no.
It will require effort. That means doing things other than laying around playing World of Warcraft, Cheetoh dust collecting on your unwashed t-shirt.
Or even binge-watching 10-episode series on streaming services, one after the other.
It will require time. This is just a given. Be ready to spend hours devouring every word you can get your hands on concerning the subject of your object of desire.
Get thyself educated, in other words. Coached, even.
Education/training remains one of my higher expense items on my profit & loss, and it always will.
But you didn’t read this far to get shuffled off to another source of information, now, did you?
I brazenly titled this little piece of information as if I know what I’m talking about, so let me offer you some professional and personal advice here.
Let’s talk about profit. Profit is the result of a linear math equation.
Gross revenue minus costs of goods sold (includes labor) minus expense equals profit.
For higher profit, therefore, one must increase the first, and/or decrease the other two.
I want to work backwards, and end with the good part. So first…expenses.
In IRS terms, ordinary and necessary expenses are a legitimate write-off, and they reduce your taxable income.
Sounds like a good thing, but consider this: write-offs are not tax credits.
You are ONLY reducing income, not tax.
That client you take out to lunch and foot a $60 lunch check for only gets you a $9 write-off if you pay a fairly average effective tax rate of 15%.
And that’s assuming that’s this year, the last year we get 100% meal deductions. That goes away with 2023, the way the expanded child tax credit already has.
“Then you’re talking $4.50 next January? Is that right?”
Yes sir and yes ma’am, correct. Back to 50%, and still reduced to the actual effective tax rate.
You need expenses, because you need things to keep the engine turning. Utilities, advertising, accounting services for goodness sakes.
Just don’t overdo it, is what I’m preachin’ here.
,
And for the love of a graceful God, don’t spend money in December to get your taxes down unless it’s something you’re going to need in the next few months anyway. Every time I see this cringe-worthy advice dispensed I froth at the mouth, a little.
Next thing, the cost of goods sold, or COGS for short.
This should be where you have your subcontractors, your employees, and for my S Corp officer-employees your own salary.
Plus of course the materials that go into your widget manufacture, or in the case of general contractors the things that stay behind with the customer.
I would caution against scrimping too tightly on labor, especially in the brave new COVID world. It’s hard enough to get people to work without paying them the barest minimum possible.
Coupled with that, make sure they are imbued with a sense of mission and purpose. Folks that believe in what they do for you is one of your greatest advantages.
If you want to provide astonishing things for people you need astonishing people supporting you.
Treat them that way. Sounds simple, but too many horror stories abound about people that don’t grasp this well.
In layman’s terms: you don’t have to be a dick to be a boss.
Plus, bonus here: the right support staff will increase your sales, so get this part as right as possible.
I promised you the best for last. That of course is the top of the profit food chain, gross revenue.
The price you charge in exchange for the value you provide.
I have developed an understanding of what that means to me, and what I need this to mean to our clientele, and it boils down to the idea that you can provide more value than the price a person pays you.
You can astonish your client or customer with value, in fact.
Have you ever had a customer service experience that was so over-the-top incredible that it surprised you?
Just discussing it inspires me, and I hope to do so for you too, here.
To quote “The Science of Getting Rich” by Wallace D Wattles:
“Give every man more in use value than you take from him in cash value.” (Applies to women too, of course. This was written, remarkably enough, 111 years ago in 1910!).
If you can continue to scale the use value of this logic process, guess what?
You can continue to scale the cash value, the gross revenue, as well.
People will pay more for amazing service, or an amazing product, or even something just a little amazing but with high-speed fulfillment.
That’s how we’ll always strive to continue to play the game of business.
We can play to win, and still be of 100% transparent service to mankind, morally and honestly.
Your customers win, you win, and most of all your family and your beneficiaries win, too.
See? Who says good guys finish last?
Nobody here, that’s for sure.
Get out there, get good, be good, and win at business!