Does more revenue always mean more profit? Not necessarily! The profit paradox explains how scaling a business can sometimes reduce profitability. Join Gwen Bortner and Tonya Kubo as they dissect this counterintuitive phenomenon, where hitting that coveted seven-figure mark can actually lead to less money in your pocket. They dive deep into the hidden costs of scaling a business, from unexpected software expenses to the challenges of managing a growing team, as well as what you can to do address them. Discover why focusing on passion and smart systems, not just growth, is the true key to sustainable profitability.
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The Profit Paradox: When More Income Leads To Less Profit
Understanding The Relationship Between Revenue And Profit
You’ve hit that revenue goal you have been dreaming of, but something doesn’t quite add up. Your bank account isn’t reflecting the success that you see in your top-line numbers. Maybe your growth strategy is eating up your profits. We are diving into the profit paradox when making more means keeping less. We are tackling a challenge that many successful entrepreneurs face, but few talk about. It’s the surprising reality that higher revenue does not always translate to higher profit. Understanding why this happens and how to prevent it is crucial to building a sustainable business. Gwen, I want to kick this right over to you to help us understand the relationship between revenue and profit.
People assume revenue will translate clear down to the bottom line of your income statement or your P&L or whatever you call it, which is where you see profit and it can, but it’s not an absolute. That is not the way the math works. Income and profit are two completely separate numbers. They are related with all the things that go on in between with the income statement, but they are not directly proportional.
The goal everyone talks about of, “I want a seven-figure business.” If you’ve got a successful mid-6-figure business, having a successful 7-figure business may mean you are taking home less. There’s less going in your pocket, which seems very counterintuitive to a lot of people because it is. You think there’s more income, so everything should grow on that same slope, that same scale, whatever.
If you are looking at an Excel graph or something, it’s like if income is going up, then profit should go up. Those two numbers are not necessarily related, and that is the big problem that a lot of people have. This is why we find a lot of folks wanting to burn down what they consider to be their successful businesses.
Back when we started how we talked at the beginning, you don’t have to burn down your business, but you may have grown the business thinking, “I’m going to have a seven-figure business, and that way, I’m going to be making X amount more because it’s twice as big as my current business. I will make twice as much.” They’re very disappointed to find out, “I’m making the same, possibly less, maybe working harder.” There are all sorts of things that go into that, and it’s because we aren’t looking at all of the other pieces that are related to the business.
I have seen this happen before, where you have somebody who is pretty comfortable with, say, $250,000 in revenue as a solopreneur and they are feeling that pressure to scale up to $1 million because that’s what everybody says success is. While everything is working well because they are all by themselves, as they scale up, they have to look at hiring staff.
Why Increasing Revenue Can Lead To Less Profitability
They realize that where they had the solid system of fulfillment marketing and fulfillment for themselves, marketing, sales, and fulfillment, there’s a pretty large amount of time that goes into training other people to do what was already in their head. The complaint I often hear is, “I am serving my people less, and I’m spending all this time managing other people, and that’s not what I like and my paycheck is smaller, and now I’m grumpy.” What do you think are some other reasons where increasing revenue ends up leading to less profitability?
This is one of those things where it’ll go up and down, up and down, up and down and the problem is that hitting seven figures usually is not the place where you can start making more money. It has to be a number. It’s not just $1 million. It’s usually somewhere in the $2 million to $4 million-ish where you’ll start making the profit because there’s always this curve back and forth, because you do have to staff up, and you have to train people.
Staffing and training time are additional costs, and those new staff people aren’t necessarily producing at a level that allows for that profit to be there. Often, there are other growth things we are investing more in, whether it’s advertising equipment. There are all sorts of things that we are investing in for growth and many times, we have to pre-vet that because we can’t do the thing until we have the other, but it’s not paying out yet.
There are so many things that happen and then there are a number of things that we often don’t think about that start to add up significantly. When we are a solopreneur, we are paying for one user license for everything, and often, we can use a lower level of SaaS service because we don’t need all of the bells and whistles and we have come across the same thing. We have used the free version of Asana. I have used it for eons, it seems, but we decided for it to function the way we need it to function. We are now using the paid version. It’s not only the paid version, but it’s the paid version for enough users.
You may be making less money, but you may also have more time back. Share on XAll of those costs we forget that for every new person that comes in, if they are using that tool, it’s not their salary or pay, whatever we are paying them, whether they are 1099 or an employee, but it’s also all of those user licenses that need to go along with it. That’s also an ongoing monthly cost, and we often find that we also need new tools because now, when you are communicating in your head, you don’t need Slack, for example, because you are communicating in your head and you don’t need that. When you’ve got multiple workers in different time zones and different places and all of those things, you need some of these other tools. We are adding additional tools on top of it, and so all of these things start playing into the equation.
It’s been a couple of years. We had a client who came on and they kept saying, “I need to make seven figures.” She was probably right about $500,000 to $600,000 income. She had a nice business, but she said, “It appears that if I get to seven figures, I will be making way less.” I said, “Positively, you’ll be making way less.”
If she got to $2 million to $4 million, then she probably would be making more, but part of it was, “I don’t want to manage people,” like you said. On top of it, the thing that you are often trading as we start doing this growth, especially as you get into the upper six figures like that $750,000 range, is you may be making less money, but you may also have more time back. There are other elements to play in there as well.
Before we go there because that’s like a whole different topic that we need to talk about as well because profitability, oftentimes we are thinking of dollars and cents, but there are other aspects of profitability being more profitable time-wise, being more profitable energy-wise. Going back to what you were saying, I want to make sure that for the benefit of the readers, I connect some dots, which is, when you were saying it’s not so much seven figures. It’s not $1 million but it can oftentimes be $2 million to $5 million.
What you were meaning is that when you are at, say, $250,000 to $500,000, and you are looking to scale up to get to that $1 million business. You are having to take on costs, whether they are staffing costs, SaaS costs. I love how you pointed out that there’s the hiring of the people, but then suddenly, the hiring of the people requires hiring the tools at a different level. You are having to bring on all that to get yourself to $1 million, but you don’t get the ROI or the profitability on that investment that got you to $1 million until you are at the $2 million to $2.5 million mark. Is that accurate?
That’s usually the case. What you need to get to $1 million is a lot of cost, and like you said, the ROI doesn’t hit unless you are getting into the $2 million to $5 million range and so that’s one of the problems we cross that mark and we go, “We made $1 million,” and it’s like, “But wait, but what I need to make is another $1 million.”
This is helpful. If you are reading, and this sounds so far remote, I want to bring one parallel life example here, which is this is the business equivalent of what many families in the US experience when they are a two-income household. They start having children, and they decide to stay in a two-income household. You have children, and at some point, the children have to be minded by somebody during the workday.
They can be minded by one of the parents, in which case we reduce the overall household income, or they can be minded by a childcare provider, in which case we are keeping the household income, but we are reducing the household profitability because now we are allocating a pretty large segment at least in the US, it’s a pretty large segment of your salary over to paying somebody else to take care of kids so that you can then be available to bring in the salary. It’s the same aspect. It’s interesting that we recognize that in our households, but we don’t always recognize that in our businesses.
Business Trade-Offs: What Are You Trading For?
It is. Here is what you are saying, and it’s true that in both business and household is, everything’s a trade-off. What are we trading for what? I had started to go there, and you paused me, which I completely am good with.
Let’s segue now, because this is perfect.
Maybe what we are trading is we are trading some of our income for more of our time and energy. The same conversation we had with the client was, I said, “At that $1 million, you won’t be making as much money.” Yes, but you also will probably have more time. That became part of the question like, “How important is that?” There’s no right answer. It depends on each person as to whether or not there is a right answer, but I have had story after story after story of, “I was bringing home $250,000 in my pocket when I had a $500,000 business, and I’m bringing home $100,000 when I have a $1 million business.” It is because of that investment that you have to make and where you have to get to.
$1 million is a random number. It’s just an exciting number because it’s one more digit. For some folks, $1 million could be the number they need to hit and be profitable, and for others, it’s going to be more like $5 million. There are so many variables in there for all of the pieces to play out. This, to me, goes back to the conversation. I don’t remember which episode we had it in, but where we talked about the difference between growth and scale.
Growth is about more, more, and more. Scale is about more without adding more on the expense side, or it’s not going up proportionally. It’s staying less. That’s the reason that the $2 million to $5 million piece happens. They have to grow to $1 million, but then they can scale to $2 million to $5 million. What they invested to get to $1 million is enough to take them quite a bit further, and that’s where that profitability starts coming back again. There are several places where we have these lumps where it’s like, “The expenses get high,” and it’s like, “But now they have leveled off, but the income keeps going up.” We want them to run parallel, like income and profit go up, but that’s not the way it works.
The Energy Impact Of Managing A Team
We have talked about the income side of profitability or the money side of profitability. We have talked about the time side of profitability. I feel like energy’s an interesting one because, for some of us, like for some business owners, the idea of building out an organization and having a team to manage is very energizing and would be worth pocketing less to be able to say I have an operation. Other people and I happen to think a majority of female solopreneurs, in particular, fall under this umbrella, but for others, it is so depleting to manage a team.
While they might have this organization and look outwardly super successful because they have an agency, we’ll make that up with twenty people. The idea of managing 20 people feels like they had 20 extra children in their house, and that can be very depleting. I’m curious, from your perspective, if there is any way to know before you start growing how growth and managing a team is going to affect your energy.
Unless you’ve had other experiences that you can draw on, I’m not sure that there are other experiences that aren’t business experiences that you can draw on. Have you had to manage a team in a volunteer situation, and was that fun to try and figure out how to make all the pieces work and deal with all the personalities? It was like, “That’s fun.” Was that like, “I am never going to be the chairman of the fill-in-the-blank ever again because all of those people are nuts?”
If you are in Camp A, and I love figuring out all these personalities, you are probably going to be okay with managing a team. If you are in Camp B, you are probably not. There are probably other life experiences that have given you a clue as to whether or not managing works for you and part of it is and this sounds horrible when I say it, but do you like people? This is not an introvert or extrovert question. A lot of people think that’s an introvert or extrovert question. It’s not. There are introverts who like people, and there are extroverts who don’t like people.
The best definition I have ever heard of a qualifier to answer are you a people person is you can’t say you are a people person unless you like people, even on their bad days.
I love that, and that is part of it. If you are more of a people person, you’ll probably be more likely to be a manager. This is not absolute. If you do not like dealing with people, then you are not going to want to be managing people because people are always people. I should have my little thing that says, “People are problematic. It’s the nature of being a people,” and in all the ways. I’m problematic, too. You are problematic. I love working with you, but we are still problematic because it’s the nature of being a people. We are independent. We are autonomous. We have all of our own thoughts.
Thinking free will.
We never communicate nearly as well as we all think we do.
Business growth is about more, more, more. Business scale is about more but without adding more on the expense side. Share on XIt’s true.
If having a team gives you energy, then that’s probably a good thing but if it doesn’t, then look at what are the ways if you still want to grow your business. What are the ways that you can scale it, manage it, and make that happen? A lot of folks say, “I will hire someone to manage them,” and it’s like, “You can’t even quite do that because you still need to manage that person that’s managing the other people and those people that are good managers of other people generally are quite a bit more expensive.” You are not going to get a $15-an-hour person to manage a whole other team.
Common Growth Strategies That Can Decrease Profitability
No, you are not. One of the things I like about this show, in particular, is that we confront a lot of those sacred cows that give spoiled milk. I’m curious, from your perspective, what are some of the common growth strategies that you’ve heard, those common, “This is what you have to do to build your business to be successful,” or, “This is what makes a successful business?” What are some common strategies that you have found, in your experience, decrease profitability?
I’m not going to say that all of these decrease profitability, but they can. Any strategy implemented well can also be highly profitable, but some of what I will say the common advice out there that I don’t necessarily buy into, for instance, is, “You need to stop doing one-on-one work, and you need to do group work. Group work is the only way that you can be profitable.”
That can be true. I have seen people who’ve made more profitability doing group work, but that doesn’t have to be true. Often, if we start doing group work, we end up hiring other coaches and consultants to help manage the number of people that are part of the group and so now, that’s an expense that’s starting to take the money away and I charge very differently for group work than I do for private work.
You are generally not going to get the same rate when I’m in a group of 100 or 1,000 people that I am if I’m working with you one-on-one. You need a lot more people in there and then the question becomes, “How easy is it for you to get people? How much more money are you spending on marketing and the sales process and some of these other things that don’t necessarily get discussed?” People only look at, “Now you can serve 20 people in an hour where you used to only serve 1.” They take a very narrow slice of the entire picture and say, “This is way more profitable.” It’s like that slice is more profitable, but are there other things in here that we are not looking at?
It’s interesting that you brought that up. I have a client who has a membership, and we have been talking about how we can add to the offer stack. They came to me and said, “It’s time to do a group. That’s the next step. We need to do a group,” this was the thing with doing the group. I pumped the brakes on it, and I said, “No. We have this membership that’s working well. We have 30 to 40 people showing up to the group calls on the membership.” The next step is one-on-one because we don’t have the information we need to know what does the group program need to entail that sets it apart enough from the membership that people will pay what they would consider a premium price for the group experience?
We need the one-on-one work because, first of all, one-on-one’s easier to sell. We’ll help you meet your goals around this topic for this price, and then I was like, “Once we have maybe 10 to 15 one-on-one clients, we get enough information on the felt need so that we can find the gaps with the membership. Then we can do the group.
It was a hard conversation because, to your point, there’s so much messaging out there that says group is much more profitable than one-on-one, and that’s exactly what they were thinking. They were like, “If I do one-on-one, I’m going to need people to pay me $500 a month for it to be worth my while, and if I do a group, I could have everybody charge me about $300 a month. As long as my group has five or more people, I feel like I’m doing well.” I’m like, “Yeah, except what are we selling them? What’s the transformation? We don’t have that information.”
There’s no way that group offer would be as easy of a sell as it seems, but it’s hard to fight, I’m going to say, the loud noise that’s in the marketplace that defines success for us. This is one sacred cow that gives spoiled milk. What would you say to the person reading who says, “Everything you are saying makes sense. It matches the experience I’m having, and yet I still feel like a failure because I can list 40 people telling me that I’m supposed to do it this other way?”
Any strategy implemented well can be highly profitable. Share on XMy first question always is, “Have you seen their numbers?”
We both know that answer is no. None of us see the numbers. We believe what people tell us.
We are often filling in a lot of gaps that aren’t true because it feels like it should be true, but it’s not necessarily true. Without having all the data, this belief that we have usually is not accurate or complete, and that is where the problem is. We talked about this in a previous episode because I was re-listening to one of our episodes, and we were talking about it. This is the example where we hear people say, “I know someone who did such and such based on this thing.” Over time, what you realize is there are 40 people who all know the same person, and we think it’s 40 people, but it’s not. It’s one person who has this level of success.
That’s the same thing that we are talking about here. People say, “This is super successful.” It’s like, “But is it?” They will say, “This is my income,” and you and I have talked about this before. It’s like, “That’s your income. Did you ask how many refunds they gave?” This was how much they sold. They sold X, but they refunded Y, giving you Z, which is a completely different number than the X number they are talking about.
I have run launches for several business owners. Years ago, we had a launch that we thought was going to yield one result that required hiring 10 people to help fulfill, and it did not yield that result. It sold enough to where we only needed 2 people to fulfill, but we had these 8 other people who had the promise of employment that were like, “By the average person, you or me would probably be very excited with the revenue that was generated by this launch, but that is because you and I wouldn’t have to pay 10 people to fulfill the amount of work that only necessitates 2. That is one sacred cow that gives spoiled milk. Go group all the way. What would you say is another one?
Another one is not managing expenses tightly, and this is a conversation you and I have all the time and sometimes it gives you the hives, I’m going to warn you. We start buying SaaS tools because we need this, and we need that, and we need the other thing, and we are not paying close attention to are we using this tool? Do we already have another tool that does this thing? All of those pieces and as I said, as we add people, we are adding X number of users each time on these SaaS tools, and all of a sudden, if you look, you can easily say, “This pick a tool doesn’t matter, Tool X, we don’t need that tool and/or we don’t need everybody to have access to it.” There are multiple things there.
This is another one of those pieces where we think everybody should have access to everything all the time and that we need all the tools. We don’t need all the tools. We need the right tools, and we need to make sure the right people have access. Our CRM tool for a long time, there was a point that we were giving you access, and it was like, because it made sense, because we were trying some things and once we realized, “No, it doesn’t make sense for you to have access,” we took it away.
This is $10 a month. This is not going to break the bank, but it’s a procedure, it’s a process, it’s a behavior that we are always looking to keep those numbers streamlined as much as possible. When you are growing, that’s one of the things that will go out of control that is taking away your profit. Like I said, $10 is $10, but I’d rather have the $10 in my pocket. Thank you very much.
I want to talk about this because this process that you are talking about is what business owners don’t have. It’s having a process and procedure in place to consistently identify profit leaks in your business. What happens with businesses is, if you are lucky, most business owners will check for profit leaks once a year, but most of the time, they will not look for profit leaks unless money is tight.
If they are in a flush period, welcome to anybody who was in business in 2020. The money was coming in hand over fist in most online business arenas. You didn’t have any need to look because there was always more money than you knew what to do with since it was doing so well compared to 2019 and 2018. When the market corrected, everybody was looking at every little dime.
It’s important that we make sure that we have this process and procedure for identifying profit leaks in our business. One place, and I love that you brought this up, is SaaS tools. As a marketing professional, I want to drill in on this because there are a couple of things that the average business owner who isn’t as techy as me and isn’t as systems-focused as the two of us will overlook or won’t even think about. SaaS tools change all the time, so it’s entirely possible for you to have a tech stack, a series of software services that you rely on desperately for your business that a year from now, won’t be the same tools you need to be successful.
Many business owners do not have a process in place to identify profit leaks. Many of them will only check for it when the money is tight. Share on XAny one of those tools could add features that make another tool redundant. Any one of those tools may decide to increase the fee they are charging while keeping the same level of service or lowering it. This is something that I have experienced. There’s a SaaS tool that I would have told you that I could not live without. It’s been a crucial part of my business since 2018, and at $200 a year, I couldn’t live without it until I got an email in November that told me they were increasing their fees across the board. What I was paying $200 a year for, I was now going to need to pay $800 a year for.
There was a moment where I was like, “I can’t absorb that. Oh, no. Oh, this. Oh, that,” and then I was like, “Wait a minute,” because it was such a crucial part of my business and had been doing so well for so long, I never thought to see who else was offering the same stuff. I never thought about checking how the marketplace had changed since 2018. Come to find out, I was paying for three tools that offered similar services.
First of all, theoretically, I’m saving $200 a year in real cost, but I was saving a potential $800 a year in real cost by eliminating one tool, which meant one fewer thing to keep in mind, one fewer bill to stay on top of. I then had to look at what was left and go, “What is the best solution?” Back to your earlier point, are you using the tools to their full capability? I am now using more of what’s available to me.
That’s a great point because it’s not just with marketing tools. It’s with every single tool. From time to time, I will push back on you and say, “This thing has become available on another tool that we are already paying for. Do we need this redundant tool?” Sometimes, the answer is, “It doesn’t do this one thing that we need,” and it’s like, “Okay, fine, but we have to look.”
You have to look, and you have to not get too emotionally invested in the tool. Sometimes, it’s, “I’m going to pick on a random tool. I already know how Loom works. I don’t want to learn how Zoom’s version of Loom’s features work in order to make the comparison.” It’s worth it to look at whether your profitability is important to you because your profitability doesn’t have to be important to you.
It’s your business. You get to decide what’s most important. Maybe for you, revenue is more important than profitability, but if profitability is important, looking at the tools you are paying for consistently, whether they are on an annual renewal or a monthly renewal is an important place to check if you are leaking money.
I will give one more example because I happen to know that a lot of our readers are book fans. Something that I found out. I have been using Audible since 2019. I get one credit a month for Audible. I was working for an organization that required you to read a certain number of books per month, and they would reimburse you for the cost of books. I was like, “If I get Audible, will you reimburse me for the cost of Audible? That’s going to come out a lot cheaper in the end.” They were like, “Sure.”
I left the organization and never thought to cancel Audible. Keep in mind, I also pay for Spotify, and I pay for Spotify because I use it for virtual events and things like that, and I don’t want commercials. I found out that as a Spotify user, I can get fifteen hours of audiobook listening included with what I’m paying for Spotify.
I don’t think I have ever listened to fifteen hours of audiobooks in a single month because I don’t have time for that. Some people might, but the average book I listen to is about eight hours of listening time. I could get two books with Spotify. A friend of mine told me that as an Amazon Prime user, you can get one audiobook download per month included. I am paying for three things that give me access to 1 to 2 books to listen to per month. That’s another example of looking at your professional and personal expenses and seeing where you are leaking money because honestly, $14.99 a month for Audible is not a big deal.
That $10 a month is not a big deal, but you add it up, it’s $120, $150, or $200 a year. You are probably not going to pay a mortgage with that, but it’s better in your pocket than not. What else could you be doing with that money?
Identifying Common Profit Leaks In Business Systems
I want to ask you about two other areas that are common profit leaks. One is inefficient systems. Talk to me about that.
That’s the difference between growth and scale. Scale is where we are saying we are going to do more with less, and almost always, that’s about making your systems as effective as possible, which often means we are going to do things differently than we have done before. Sometimes, it means getting different people than what we have doing things. That’s another hard step in these processes when it’s like, “Susie doesn’t want to do this.” “Susie is probably no longer the right person for this role.” Not that Susie isn’t a good person, but the role has changed, and that’s part of the scale piece.
Effective systems and efficient systems will often reduce a whole lot of costs because we are reducing time, deliverability there are so many things that can be affected in that, but you often have to get a fresh perspective on it because no matter who we are, our natural tendency is, but this is the way that we do it. How else would we do it?
That’s what I was going to add to the efficiency of systems. That’s where an outside perspective is important because oftentimes, the way that you’ve always done it is the only way you know how to do it, the only way you can think of doing it. You need somebody who has a variety of experience to say, “You can do it like this or this or this.”
Other things that we don’t think about in terms of our systems and processes include duplication of effort. I have worked with a company where there was a task we had to do every single week, and it literally involved copying and pasting between five spreadsheets. Everybody knew that you could use a pivot table to intersect the spreadsheets, but nobody knew how to do pivot tables.
Rather than stepping back and saying, “Can we go find somebody to make this into a single spreadsheet?” five of us complained every single week about having to copy and paste between these five spreadsheets. All we needed to do was find an outsider, but we didn’t feel like we had the time or space to do that. That’s another thing. We have got sacred cows that give spoiled milk, and then we have got our profit leaks. We have talked about inefficient systems. We have talked about tech tools. What about underpricing your offers or new offers?
You brought that up, and I’m not sure it’s always the problem.
I don’t think it’s always the problem at all.
I will say it’s rarely a problem if people are moving in these big ways. In the earlier stages of business, it is a problem because we underestimate what the value of things absolutely positively can be but I also think it’s one that people will jump to too fast, which isn’t always the right answer of, “Just raise your prices.” At some point, that may or may not make sense, but I do think it’s important to make sure that you are looking and saying, does it work? We created this new offer, Insight to Impact, and I’m going to use us as an example. We were going to price it low because we wanted to let everyone have access to it. We wanted to say yes and do all the things. We haven’t put it out there yet, but mentally, we were saying about $7 or $9 or something.
It was $9.
A month. One of the things that was important to us in this Insight to Impact is that we gave feedback when someone emailed us. When you say that, that takes 3 to 5 minutes. It’s not a big deal, but because we have this other product, the Weekly Course of Action product, that we do feedback on every week, and the numbers have grown over time, we are able to say, “That’s fine if you’ve only sold 1 because it doesn’t feel like that big of a deal, but when you sell 100, all of a sudden, the numbers don’t work anymore.”
You can’t pay someone with enough knowledge to be giving these replies that we want to give because it’s not just a nice job. We are trying to give insightful, thoughtful replies to someone with your level or my level of knowledge and experience. All of a sudden, it’s like, “We can’t afford to pay any.” It’s like, “If we sold 100, we’d be losing a ton of money.”
Almost no one considers money as their main driver. Make sure you do what you really love. Share on XThat’s the thing where people will get off when they come up with this new idea and they don’t run the numbers with enough numbers. Like I said, if you say, “It’s only going to take three minutes.” “You’re right. That’s only going to take three minutes,” but if we have 100, that’s 300 minutes, which is 5 hours of time and 5 hours of time, that’s $900. It’s like, “That’s fine, but that’s per week.”
Now we need to do twenty hours of time, and it’s like, “Am I going to be able to get somebody that I want to pay for $900 for 20 hours of time? I’m not sure that the level of person I need is going to do that at that rate. All of a sudden, that’s where you start running through the numbers. People are always like, “You’ll make it up in volume.” That only works if there’s some profit there.
I see that same mistake made when people start taking on affiliates for their offers, especially if they are used to digital products because most of the time with digital products, the affiliate commission is 50%, but they want to do an affiliate offer with their group coaching and so, in their mind, I have to offer 50%. What they don’t realize is, in your group coaching program, you now said, “I’m going to take half.” If you go through with that and try to make it up in volume, who’s going to coach all these people? When you cut it in half, assuming you have a reasonable price that you are charging, you now don’t have enough money to hire anybody else.
Practical Ideas For Growing A Profitable Business
We have given so much value. I’m wondering, if I was reading this, and was like, “Fine then. You have poked holes in my balloon and every idea I ever had about how I was going to grow my revenue and be profitable. What next?” Could you give us 1 or 2 ideas of ways that we can grow our business, which almost always tends to be profitable? Is there anything like that? I don’t even know.
I don’t think there’s any absolutes on that. It is about being careful and looking at the small and large picture and saying, “Do these things work the way that makes sense?” Not just looking at the tiny slice but also at the whole slice. I’m not saying, “I’m going to make this much and it’s going to cost this much, so I’m going to make this much more,” but it’s like, “What are all the other things that go into making this more money whatever it happens to be?” If you are finding things that are profitable, then do more of that.
I have to say this because this is important for what our whole philosophy is. Don’t just do more just to make more money unless your driver is truly money, almost knowing that their driver is truly money. Make sure that it’s what you love. The quickest way I have ever seen people be more profitable is by focusing on doing more of what they truly love.
We have explored why making more money doesn’t always mean keeping more money and how to ensure your growth strategy supports rather than sabotages your profitability. Remember that sustainable success isn’t just about increasing your revenue. It’s also about growing in a way that maintains or improves your profit margins, and as Gwen pointed out, your satisfaction as a business owner matters because you are a people, too, so you matter.
If you found value in this discussion, you might be interested in Insight to Impact, the product that Gwen was talking about. It’s our premium weekly accountability subscription that helps you gain clarity on your business, one reflection at a time. Each Friday, you receive a thought-provoking question designed to help you examine a specific aspect of your business. When you respond, you’ll get personal feedback to help you implement positive change that creates sustainable, consistent performance across your business. Head to EverydayEffectiveness.com to learn more. We’ll see you next time.
Mentioned In This Episode
- Insight to Impact
- Is Burning Down Your Business Really the Only Way Out?
- The Growth Trap: Why It’s Holding Your Business Back And How To Break Free
About Your Hosts
Gwen Bortner has spent four decades advising executives and entrepreneurs in 45+ industries. She helps women succeed in business without sacrificing happiness by identifying their true desires and aligning their business functions. She spots overlooked bottlenecks and crafts efficient plans toward sustainable success that center your values and priorities. Known for her unique approach to problem-solving and accountability through the G.E.A.R.S. framework, Gwen empowers clients to achieve their definition of success without sacrificing what matters most.
Tonya Kubo is a marketing strategist and community builder who helps entrepreneurs build thriving online communities. As co-host of The Business You Really Want and Chief Marketing and Operations Officer (CMOO) at Everyday Effectiveness, she keeps conversations on track and ensures complex business concepts are accessible to everyone. A master facilitator with 18+ years of experience in online community building, Tonya takes a people-first approach to marketing and centers the human experience in all she does.
