James Schramko here, and here’s something you may not be doing that’s costing you. This is going to sound really counter-intuitive but quite often when I see people struggling to go from five or six figures a year to seven figures, simply they’re not spending enough.
That’s crazy, right? But you need to spend money to invest in your company to grow your company. Let me give you an example. If you’re making a hundred thousand dollars a year and your expenses are only 10 thousand dollars then you’re making a 90-thousand-dollar profit. You could brag about your 90 percent profit margin; however, I’d rather have a two-million-dollar business with a 50 percent profit margin. That means I am spending a million dollars a year to make a million-dollars-a-year profit from my two-million-dollar-a-year business. So, at a million-dollars-a-year profit, I’ll take that 50 percent profit margin over my 90 percent profit margin of 90 thousand dollars.
And it also in likelihood means that I’ve got other people doing a lot of the things that I don’t want to do because that hundred-thousand-dollar-a-year business with a ten-thousand-dollar expenses means you’re doing everything. So, think about this, how can you invest more in your business to grow it to have more net profit, not as a percentage but more net profit where you’re not doing the things you don’t want to do anymore? And that’s how you have a great seven-plus-figure business.