Profit vs. Revenue: The Bottom Line Reality
Gresham Harkless challenges the common focus on top-line revenue, noting that while hitting milestones like $100,000 sounds impressive, it is often a “vanity metric” that doesn't tell the whole story. He explains that revenue is what gets the headlines, but profit is what actually pays the bills and sustains a lifestyle. For instance, generating $100,000 in revenue might result in only $30,000 in take-home pay after $70,000 in expenses, which may be less than what an individual would earn in a steady job despite carrying all the business risk and stress. By shifting the focus from “how much we make” to “how much we keep,” entrepreneurs can ensure their bank accounts reflect their hard work.
Building Smart: The Goal of Sustainability
As the episode concludes, Harkless emphasizes that the ultimate goal for any leader shouldn't just be hitting a high top-line number, but rather achieving high profit margins and long-term sustainability. He urges business owners to be incredibly clear on what their financial milestones actually mean for their personal lives and their bank accounts. By prioritizing “building smart” over simply “building big,” entrepreneurs can create a foundation that supports them rather than just adding to their stress. This focus on the bottom line ensures that the business is actually serving the owner, rather than the owner solely serving the business.
The Non-Linear Path and the Success Equation
Drawing from over 1,600 episodes, Harkless reflects on the fact that success is rarely a straight or linear path; instead, it often resembles a “plate of spaghetti”. He encourages listeners to “run your own race,” asserting that staying true to your unique journey is the only way to ensure you can't lose. To navigate this complex path, he provides a simple success equation: Visibility plus Resources times Connections equals Success. By combining these practical nuggets with a focus on what truly matters—profit and sustainability—entrepreneurs can level up their business and build something truly meaningful
Previous Episode: https://iamceo.co/iam2696-the-blueprint-advantage-what-a-franchise-really-is/
- Blue Star Franchise: bluestarfranchise.com
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- Is franchising right for you? Check this out to see: bluestarfranchise.com/assessment
- Franchise CEO (A CBNation Site – coming soon) – franchiseceo.co
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Transcription:
Gresham Harkless 00:00
When you're setting goals, when you're chasing the next milestone, make sure you're clear on what it actually means for your life and, of course, for your bank account. Keep in mind, revenue does get the headlines, but it's profit that actually pays the bills. Focus on the one that actually matters. Build smart, not just Big.
If you're building something meaningful, you're in the right place. This is the I am CEO Podcast. I'm gresh, and for over a decade I've had the honor and the privilege of Learning directly from CEOs, entrepreneurs and business owners just like you on how to build. After recording more than 1600 episodes, one thing has become clear. Success isn't about following someone else's blueprint. And as I like to say on the show, if you run your own race, you can't lose. Even when we feel the journey should be a straight and linear path, what I've come to find out is success is a lot more like a plate of spaghetti. So in this special segment and episode, I'm starting to curate and share some CEO hacks and CEO nuggets that I've been dying to share. Drawn from thousands of episodes with phenomenal guests that have provided awesome value on the show, but also my 10 years of business experience as well too. These lessons are designed to strengthen the foundational principles that every business is built on and guided by a simple equation that we always go back to with our content. Visibility plus resources times connections equals success. This is practical wisdom you can apply almost immediately, so be sure to check out the show notes for more resources and next steps on how to level up. And of course, enjoy this special episode of the I Am CEO podcast.
Gresham Harkless 01:41
Hitting $100,000 in revenue sounds like a huge milestone, and it absolutely is. Don't get me wrong, it's absolutely something worth celebrating. But here's what nobody wants to tell you about that actual number. And frankly, whether it's $100,000, a million dollars, it's $10. Revenue is not profit. You want to understand the difference between those two things? 100,000, 100k in revenue could mean 70,000 in expenses, which leaves you with 30k for the year. And that might mean it's a lot less than what people might be making in their steady job. You're carrying all the risk, stress and the uncertainty, so ask yourself, is that really what I thought it was? By no means am I saying this to discourage you, but. But I'm saying it so you know what you're actually building towards and how to actually build it. The goal that I imagine that you want to shoot for isn't just about revenue. It's not top line revenue. It's profit margin. It's take home, it's sustainability. When you're setting goals, when you're chasing the next milestone, make sure you're clear on what it actually means for your life and of course, for your bank account. Keep in mind, revenue does get the headlines, but it's profit that actually pays the bills. Focus on the one that actually matters. Build smart, not just big.