The Magic 40
Are you in growth mode and willing to sacrifice profitability to fund growth initiatives?
Are you in your remaining years in business and want to protect profits and limit growth costs and risks?
Do you have no plan and are just letting the prevailing winds dictate what happens next in your business?
The BMK Growth/Profit Index does three things for you.
it gives you visibility into your annual growth over as many years as you care to study, and compares it to the correlating net profit in those years.
it gives you the opportunity to compare what’s actually happened with what you thought or had intended to have happen.
it gives you insight into how to plan for the coming years as you become more intentional in your growth and profit goals.
This is how it works:
• Gather your revenue numbers for the last 10 years (more or less depending on how much effort you have to commit)
• Gather your net profit numbers for the last 10 years (yes, you can recast all or some of your enormous salary to the net profit if you’re a single owner)
• Calculate the YEAR OVER YEAR profit growth percentage for each year
• Add that number to the net profit for the year
• Assemble the results for each of the 10 years.
40 is the magic number.
If your business is not growing, your profits need to be extremely high. If profit is low, it could be due to investment in growth initiatives. What you can’t accept are low growth and low profit.
Determining this number is the starting line. You now have your running shoes on and laced up. The finish line of this exercise is determining the “WHY” these numbers are what they are and how closely it reflects what you set out to do.