I read an authoritative article about a very, very famous “personal finance guru”, who grossed over $40-million in her business, but had less than $4-million left for herself. If I did $40-mill and kept only 10% of it, I’d shoot myself.
Another “guru” I know reportedly grossed twice that much, yet I happen to know for fact he had zero net, and is in hock up to his eyeballs.
Even Dr Atkins dove into Chapter 11 bankruptcy. I can only guess that lawsuits, settlements, infighting between the head doc and Dr. Atkins’ surviving family, all contributed. Still, there are millions of dollars of licensing fees and royalties flowing in; how can there be none left?
I work. But I stopped working for free a long, long time ago. I insist on profit, AND on gains in net worth/wealth as well, and I track and measure both constantly. I’m big on keeping score. I’m also very cognizant that big is rarely better, unless running a company up for sale or a public offering. At a certain point, dollars of gross added on cost proportionately more, and there’s less and less net with more and more gross.
Few people spend enough time analyzing, analyzing, analyzing what parts of their business…what products and services….what customers….what geographic territories….etc., etc., are most NET profitable vs. least net profitable. They let low profit stuff consume the same resources as high profit stuff. They justify continuing to feed what should be shot and put out of its misery.
They pee away money in overly fancy offices, addresses, staff and stuff to impress people without profitable purpose. The questions are: how does this contribute to NET? How much does this contribute to NET? All other benefits are fine ‘n dandy, as extras, not without net. Every justification I’ve ever heard for doing things with little or no net are b.s.
The Most Important Discipline
I have, in earlier times, ignored this, to my own pain and suffering. The rule is: pay yourself first. Take a pre-determined % of every dollar off the very, very top and move it away from your business, do not spend it, and place it in illiquid, untouchable, sound investments. If whatever you are doing will not support this, stop doing it immediately. A business is a thing to take wealth out of, not just have wealth locked up in.
You must not settle for whatever’s left over. Others get what’s left over after you are properly paid, and if the leftovers aren’t enough for the others, reduce staff, cut expenses, and if that won’t cut it, do the mercy killing now not later, and move on. You must not con yourself into nothing now for more later. If you can’t take at least 1% off the top now, there won’t be any later.