Three types of profitability

Profit is defined as revenue minus expenses. If your agency brings in more cash from its customers than it spends keeping the business going, it’s profitable. This is the kind of profitability you see on your monthly profit and loss statement.

But that’s an incomplete view of profitability. Saying you want to run a profitable business is not only not specific (who doesn’t?), but it’s also not actionable.

So rather than focus just on profitability in monthly or annual terms, we need a broader understanding of what profitability means.

Financial performance This is how we typically think of profitability. Is the business generating more cash from operations than its spending? If so, then it’s profitable. And those profits should be producing money for the owner(s).
Business valuation Just because a business is profitable for its owner doesn’t make it a valuable business. Many owners are shocked to find out their businesses are virtually worthless. When it comes time to move on or retire, they wind up trapped because they rely on the income from the company to survive. Ignoring the valuation of your business can mean locking yourself into a job until well past your prime.
Quality of life Does your work in your business bring you joy? For most owners, it depends on the day, maybe even the hour. Ultimately, it comes down to your role in the business and the work you’ve set yourself up to do in it. Profits provide the freedom to (re)define your role, choose your work, and afford breaks.

Owners need a more holistic view of profitability. That’s why I created the Profit Partner Program.

In the Program, you get

An easy-to-use dashboard with clear, actionable information
Periodic video calls to review your dashboard and make strategic decisions to boost your agency’s bottom line and drive up its value
Oversight of your bookkeeping and accounting practices to ensure your business runs a tight financial ship (even if I don’t handle your books!)

Think of it as having a CFO as a business partner without giving up equity.

Sound interesting? Click here to schedule a call, and I’ll give you all the details.