Brian Kaskavalciyan argues that scaling revenue won't fix a broken business model. If your financials don't work at $2M, they won't work at $100M either. You need a healthy gross margin that covers COGS, marketing, and overhead while hitting 15-20% net margin, or you're just amplifying losses.
So many contractors think if I just sell more, if we just get more revenue, that's going to fix everything. The challenge is, is that if your system, the underlying system is broken at $2 million, it's more than likely unless you've done something, it's going to be broken at $5 million. If it's broken at $5 million, it's going to be broken at $10 million. This is particularly important with profit model. If you're not making money at $2 million, how do you expect to make money at $5 million? How do you expect to make money at $20 million? I know people that do $100+ million a year. That don't know how to make money. They know how to sell, they know how to bring in revenue, they don't know how to make money. Learning how to make money is a fundamental thing that business owners must have. You have to understand the economics of how your business works. There's revenue, there's your cost of goods sold. What does it cost me to install this job? That number, that gross margin number, needs to be high enough so that I can cover my marketing expenses, my overhead expenses, and still leave 15 to 20 points on the bottom line. How do I learn how to do that? You get around smart people that have already figured it out. It's not complicated. It's simple. It's a P&L. It's the scorecard for the business. And it's the same with hiring. It's the same with processes and systems. It's the same with leadership and management.
