Summary: Money is always flowing in one direction or another. And in a business, it needs to flow in from the customers. It needs to flow through to the employees and to the suppliers and to everybody who is providing you with services. And there needs to be something left over at the end to take home. And when you're able to make those things happen consistently, everybody's just better off.<br> <br> <br> <br> David: Hi, and welcome to the podcast. In today's episode, cohost Jay McFarland, and I will be discussing sales, profit, and personal income. Welcome Jay.<br> <br> <br> <br> Jay: Yeah. Thank you, David. I'm so excited, as usual, to talk about these topics that we discuss every podcast. I think that people often get caught up, especially small business owners, in one of these aspects, instead of having balance between all of them.<br> <br> And I feel like the one that they think about the most is sales. We have to drive sales. And if you're not focusing on profitability in that regard, you could be generating all kinds of sales, but you're not controlling your costs. And so ultimately those sales aren't helping you.<br> <br> David: Yeah. Been there, done that. I think anybody, if you've started your own business, you've probably found yourself in this situation and gross sales is usually a good place for people to start. They're thinking in terms of top line. Okay. I need to bring in as much as possible, which is true. You got to be bringing it in. But if you're not paying attention to the rest of it, as you indicated, you could be selling a lot of stuff and losing money every day. And unless you're keeping track of that, you're not going to know it.<br> <br> I remember in the early days of my promotional products business, I would get together with my accountant once every 90 days. At the end of every quarter, actually the beginning of the following quarter, we would review the numbers for the previous quarter. And at that point, it's too late to do anything about it.<br> <br> You feel like things are going well because you know, you're selling stuff, but then you look at the expenses, the cost of goods, the cost of people, all your internal costs, your overhead costs. And you find out that you're not making money on it. And 90 days later is too late.<br> <br> So once we got that in focus and we started doing it every month, reviewing what happened last month, where are our expenses too high and where are our gross sales too low? And which customers take up too much time and don't generate enough revenue?<br> <br> Once we're able to focus on the things that actually allow you to operate a profitable business, things got a lot better, a lot more quickly. And when we think in terms of these three things, sales, profit, and personal income, it's almost like you're starting here with the sales and then that generates whatever profit you have.<br> <br> And then after you've spent money on overhead and things, then you have some money to pay yourself, get some personal income going. But different businesses operate different ways. There are some business owners who are so focused on what am I going to bring in for myself that they may cut costs. They may short change people in terms of what they're delivering in terms of product.<br> <br> They may choose less quality products. And so depending on where people's focus is, determines where they're going to be successful among those three things.<br> <br> Jay: Yeah. And I think you need balance. I mean, they're all important. And so as you talked about looking at things monthly, I think having systems to identify and track each of these areas and have proper goals and benchmarks and reporting systems so that you can catch issues quickly. And pivot quickly is the only way you're going to find balance in the force with these three things.<br> <br> David: Yeah, I agree.
