Talking Turnover
We’ve all been around people that like to talk about their turnover.
Last week I was in California on business and got chatting to a guy called Sam at the restaurant near my hotel.
Sam was waiting for friends so we only had a few minutes but within seconds he had told me what his business did and what his revenue was (Revenue is the US version of Turnover).
It turned out that Sam had just hit $3m in turnover and he was out celebrating with friends.
This number meant so much to Sam.
He had been working for ten years to achieve this milestone and he was out to paint the town red.
I wasn’t sure if I should be happy for Sam or not, as turnover is a useless figure in my book for measuring whether a business is successful or not, but we had a drink and chatted some more.
Sam asked me about what I did and after I explained he asked me what I could do to help him reach his next milestone of $5m turnover.
I asked him what his profit margin was on his $3m turnover.
A simple enough question, I thought, but he said he didn’t know but he would check with his accountant.
This is a very dangerous way to run a business and I was immediately nervous for Sam.
Sam had become so fixated on the turnover goal of $3m that he hadn’t focused on any other numbers.
The problem is that focusing on turnover, and talking turnover in bars and restaurants across the world, has become such a common way for people to describe the success of their businesses that it’s become the go-to number for business people all around the world.
I think people look up to big companies that are turning over $500m or $3bn and then set their goals on the basis of turnover.
The problem is that there are far too many conversations going on around the world about this.
Whether the figure they use is $100k, $3m or $1bn it’s a meaningless number.
The only number that really helps determine whether a business is successful or not is the one that sits right next to the word profits!
I said to Sam that I wouldn’t be interested in helping him achieve his goal of $5m turnover until we had figured out what his profit margins were and what impact this new goal would have on the business. Intrigued, he asked for my card and went to join his friends.
If you’re guilty of talking turnover maybe take a few minutes to dig a little deeper into the numbers and see what your profits are.
Without profits, a business won’t exist for long.
Hence why I believe, profit is everything!
Like what you’ve read?
If you like what you’ve read, I recommend reading Time to Focus and Get Richer. Alternatively, sign up to The Monaghan Method online course where you’ll access all of the insights that I have gained over the last 30 years.
Get in touch
If you’d prefer my direct input and help advising you of the necessary steps to achieving the growth that you desire, please get in touch.
Next step?
> Time to Focus and Get Richer?