Every business owner knows revenue is vitally important to the success of any business. Without revenue, there is no ongoing business or continued growth, no way to pay the costs of running the business…and ultimately, without sufficient revenue, no viable business to speak of at all.
However, any business is not solely dependent on revenue. Just as important as revenue, and some can justly argue even more so, is profit. Whereas earning enough revenue to cover the operational costs of the business allows the business to survive, profit is the absolute critical key to allow the business to grow. Having enough revenue to cover costs is step one; however, having additional revenue left over after all costs are covered is profit — the all-essential step two. Without profit, there is no financial fuel to invest into the business for continued growth. In fact, any business will die without profit. Also a fact — not managing profit properly is a steadfast going-out-of-business strategy.
There is an over-obsession with revenue in the inspection industry. All too often, it is solely revenue goals being achieved that generate congratulations, high fives, “well dones,” and pats on the back. Rarely is profit discussed. Inspector networks, coaching groups and the like often make revenue the centerpiece — the be all, end all. But while achievements of revenue goals are often congratulated, that’s not the case when profit goals are accomplished. In many cases, the very same inspection companies that are being celebrated for achieving revenue goals are actually technically broke because their costs are so high that there isn’t enough profit left over to fuel the next round of growth. This is a terrible reality in the inspection industry that must change.
Conversely, profit goals should be emphasized and worked toward as much as, if not more so, than revenue goals. There should be equal emphasis on these two critical financial goals. Further, whenever an inspection company achieves its revenue goals, the next question should be, “How about your profit goals?” Only when revenue and profit goals are met should there be congratulations, high fives, well dones, and pats on the back. This is the way inspector networks and coaching groups should be run — with a full appreciation and recognition of both revenue and profit goals, not revenue alone.
Revenue minus costs equals profit. This is a very simple, yet powerful equation for any business owner, including inspection business owners. To expand upon that equation, business owners should maximize revenue, wisely manage costs to achieve that revenue, and plan for a certain amount of profit to help fuel business to the next level. Business owners in any industry should take the time to do some simple business planning around this very important equation. And by setting revenue goals and profit goals, putting plans in place to achieve those goals, all the while incurring costs within said business plan to achieve those goals, business owners are more likely to have a financially sound — and thriving — business.