I’m your host Trace Blackmore and in today’s episode, I answer your question in this Pinks and Blues episode that is all about PROFIT.
As many of you know, my favorite thing about this industry is solving my clients’ problems. Early in my career I didn’t want to take the time to look at my business’ numbers, but once I understood how to look at the data, I could make better decisions, which increased my profits, and that increase in profit made my business better. In this episode, I’m useing the teaching illustration of the true cost it takes to make one of my favorite things, a hamburger I’ve affectionately named “The Boilermaker”.
Everyone knows that profit is important. But how do you know what you’re really making when you service that new account of yours?
In today’s episode, I’m answering your questions and we’re going to walk through:
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- What is Profit, Revenue, Gross Profit, Gross Margin, Operating Profit, Net Profit, and Labor Costs
- How to know if you are making a profit
- How to see the big picture so you can make better decisions for your company
- The secret thing every business owner needs to share with their employees to increase the company’s profit
Bottom line: When you unpack the real cost of what it is that you do, you can truly see where you should be spending your time.
Your roadside friend, as you travel from client to client.
-Trace
Timestamps:
Questions from the Nation: What do revenue, gross profit, and margin mean? How can we calculate that manually if our company doesn’t have a reporting system? [3:58]
When you run your own business, you are responsible for every piece of that business [6:25]
Figuring out Gross Margin [9:30]
Looking at Operating Expenses and Net Profit [11:50]
CTA: Look at your data [14:09]
Challenge for business owners: share your financial data with your team [16:26]
Business lessons learned from my Mastermind and Business Coach [17:36]
James’ Challenge: “Install or change out corrosion coupons.” [23:38]
Quotes:
“If you understand the data, you’ll be able to make better decisions.” – Trace Blackmore
“When you run your own business, you have to be responsible for everything in that business.” – Trace Blackmore
“Gross Margin: A company’s net revenue minus the cost of goods.” – Trace Blackmore
“Most people don’t think about operating expenses.” – Trace Blackmore
“Once you subtract Operating Expenses from the Gross Profit what you have left is the Net Profit.”
“Many of us do not know what the actual profit is on an account we are service.” -Trace Blackmore
“Profit is all that matters.” – Trace Blackmore
“Many of us do not know what the actual profit is on an account we are servicing.” – Trace Blackmore
“How much is your time worth and are you using it at its highest and best value.” -Trace Blackmore
“When you unpack the real cost of what we do, you can truly see where you should be spending your time.” – Trace Blackmore
“I think if you ask any CFO worth anything, they will tell you the only number that matters is profit.” – Trace Blackmore
“Profit is all that matters.” – Trace Blackmore
“Profit allows us to grow the company and make it better.” – Trace Blackmore
Links Mentioned:
AWT (Association of Water Technologies)
Books Mentioned:
The E-Myth Revisited: Why Most Small Businesses Don’t Work and What to Do About It by Michael E. Gerber
Financial Intelligence, A Managers Guide to Knowing What the Numbers Really Mean by Berman and Knight
Accounting for Non-Accountants by Wayne A. Label
