Chris WiserSerial Entrepreneur and MSP Growth Catalyst

How to work back from profit...

Name: How to work back from profit...
Uploaded: 2024-03-19T18:34:01Z
Channel: Chris Wiser
Description: Chris Wiser shows how to build a budget by starting with your target profit margin, then working backward to allocate revenue across payroll, sales and…

19 Mar 2024

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Chris Wiser shows how to build a budget by starting with your target profit margin, then working backward to allocate revenue across payroll, sales and marketing, and overhead. He uses revenue-per-employee (like $250,000 per person) to model personnel costs and distribute the rest so you hit your profit goal.

To get our profits where they need to be. We need to work back from profit. So we need to bring in. All right, we want to make XYZ. We want to make 30%. Yeah. Okay. To make 30%, we've got to dial it back into our sales and marketing, our g and a cost of goods sold, which is always going to be our people, and then our revenue allocate budgets around each one. So for the example, the revenue per employee, right. We know how much money we're going to pay out for that one person to bring us $250,000. Yes. Then our biggest cost is taken into consideration right there. And then we can kind of break it up into buckets. And we can allocate for our operating expenses a certain amount of money. We can allocate a certain amount of money for our sales and marketing. And so if we know we've got 100% as our. Our revenue amount, we can cut that up. However, we need to to get to our 30% profitability, and then we can allocate that to the side automatically and kind of grow it from there.