Building a business with high profit, not just revenue.

Hi and welcome to her Empire Builder Show. I am your host, Tina Tower. It is great to be here with you today. Today we are talking about building a business with high profit, not just revenue. Now, I know in this wonderful world of online courses that we hear all the time people throwing around big numbers with, you know, we're doing a six figure launch and we're doing seven figures this year or multi seven figures and all of the really high numbers. And one of the questions that I often have, how much of that do you actually keep? Because one of my favorite sayings is revenues for vanity. Profit is for sanity. Cash flow is reality. And it is something that I think that especially in the industry that we're in, can often be overlooked. And it is the most vital thing, like your cash flow, is your absolute vitality to the health and longevity and sustainability of your business. So that is what we are going to get into today, is how do we keep our businesses high profit as well as high revenue? Let's get into it.

Welcome to her Empire Builder Show. I'm your host, Tina Tower, business strategist, course creator, best selling author, and unapologetic champion for women chasing big, audacious dreams. Since starting my first business at 20, I've built and sold multiple companies, traveled the globe and discovered the magic of online courses. A business model that has changed my life for ever. Building a business is no easy feat. It's a long road filled with sometimes challenges. But with the right strategy and consistency, your success is not only possible, but it's inevitable. Here on the show, I'm bringing you candid conversations with extraordinary humans, practical strategies and a whole lot of inspiration to help you scale your online business. Create wealth, freedom and impact that you deserve. This is where bold dreams meet proven action, where we ditch the limits and go all in on business building. And we get to live lives full of fun and freedom that light us up. If you're ready to play bigger, earn more and step into your power as a fearless empire builder, you're in the right place. Let's make it happen.

Okay, so you could be making $500,000 a year and still be broke. You could end up with less money than someone that makes $100,000 a year in revenue but is really good on their profitability and their cash flow forecasting and all of the things that keeps a business really, really healthy. And so what I want to talk about is how that actually happens. The red flags that I see in people's businesses so that you know what to avoid to keep your Business really, really healthy for the long term. So let's break down what that actually what actually matters and how you can increase that take home profit and how you can increase that financial security. So there's four different things that I think matter more than revenue. That is profit creates sustainability. So a high revenue, low profit business will burn you out straight away. I have seen this time and time again where you know, people create a beast and they've created something that you've got to keep feeding that beast to keep it at that level. But they're treading water quite a lot. And what profit does is like with everything with finances is it buys you that freedom, it buys you that choice, it buys you that space to breathe. And so the only way that a business can be sustainable is to be profitable. Also on the sustainability level is if you are working really, really hard and you are not seeing enough profit come through for the work that you're putting in and the effort is not being rewarded financially. You're going to start to build up resentment for the business, which means that it's not going to be sustainable because you're going to throw your toys and go, I don't want to do this anymore. And what profit does is makes you go, hang on, take a breath, let's refocus, let's work out what we can change. Because this business is working really well. So sustainable business is a profitable business. The second is freedom. Profit allows you to pay yourself well, it allows you to hire well, and it also allows you to invest in growth. So you want to be able to do all of those things. If you are working with really, really small margins, where you're not watching where your expenses are going, then it means that you know you're not paying yourself as well as what you can. And I will caveat this in saying at the beginning of a business, so if you're like 0 to 100,000, it is very difficult to have enough money going around. You are probably having more month at the end of your money than money at the end of your month. And that is very normal for the start. And it's why I tell people time and time again, you want to sprint from that zero to a hundred thousand as quickly as humanly possible. Because it is in my view the hardest part of business because you don't have enough time, you don't have enough money, you don't have enough resources. So getting past that point is the hardest thing. Spread there as fast as you can and just know you're going to be overworked and underpaid. And accept that because on the other side of that, you're going to be underworked and overpaid. The reward is worth it if you get there, but you also have to learn how to control that profit. So I'm talking to you as if you have already got a handle on that and you are looking to get that more freedom into your business. That is when you want to be able to hire that team that's going to free you up. And you can only do that if your business is healthy and profitable. The third is resilience. So businesses with a higher profit can survive more in uncertain economic times, let's just say academic times, then in uncertain economic times. And we need that like it is so essential. I know I've been in business 11 million years. I started in 2004 in. And so when I was about like four years in was the global financial crisis hit in 2008. I've been through quite a few, or not quite a few, like official three recessions. And so there's been different things that will happen throughout the economic times. I mean, Covid wasn't officially a recession, but so many businesses were hit in those times that if you don't have a sustainable, profitable business and you haven't built that buffer up, so many businesses in those uncertain times will go down. What we're experiencing in the last couple of years have been massive economic uncertainty. And so if you're not running profitable businesses, the resilience level isn't there. You're like one big catastrophe away from kissing that business goodbye. So that is why it's important there. The fourth is an exit strategy. Now I know that for most people listening to this podcast, you're not thinking about exit yet, but you may one day. And so part of our role as business owners is being prepared for all possible futures. And we always want to make sure that we're creating something with our ip, with our legacy building that we could leave behind if we so choose to one day. And if you want to ever sell your business, investors do not care about top line revenue. They don't. There is small segments of like, you know, the mystical unicorn world in startup Silicon Valley where they talk about multiples of revenue, but that is very, very rare. I know when I have sold my past businesses and everybody that I know that sold businesses, it is based on multiples of profit. And so what you actually have left, at the end of the day, that is the most important part. Okay, I want to talk about common profit Killers and how to fix those. So the first one that I see, like all the time is hiring too soon. I cannot tell you how many podcasts I listen to that say, you know, if you're a business owner and you're doing $20 an hour tasks, you need to hire someone for that straight away. Like, don't spend your time on that. And while I think there is, you know, there's a point to that and there is a point where you have to stop doing that, there is also so many people do it too soon. So many people I see are like, I'm the CEO of the business. I need to be hiring people to do these menial tasks. At the beginning, you are everything. And I know that that is a really unpopular opinion and I know we're sold. This thing of, you know, business is easy and it's so easy to make money. Um, and I think it does people a disservice because I think that then you're left kind of sitting there going, well, what am I doing wrong? It's so easy for everyone else. It's so hard for me. If you are in like making your first couple hundred thousand a year and it's hard, welcome to the game. Like, that's the game. You're. You're in it, you're right where you should be. Um, and so while we need to hire help, and I do think, you know, let me give you a practical example. So say you're not very tech and you're starting out and it's going to take you three months to learn to build your website or you're going to second guess yourself if you're diying so much that it's going to take you a few months to get it out there, even though you don't have the revenue to support it. I would 100% support you hiring someone to build that Kajabi site so that you can be launched in a month and then making money. And so there's different things. It's not always black and white where you're going. You know, you want to take that money and invest so that you can make more money in the future. But also if you are hiring, say you hire a va, which is most course creators first hire. I always like to sit at around 20% of cost of revenue is my cost of team. And so if you're looking at your, your profit loss statement now and you're like, you know, I'm spending 50% of my revenue on team, let me tell you, by the time you take those Other expenses out, your business is not going to be profitable. And that is where I see people with massive revenues. I was talking to someone the other day who they do 6 million a year, right? And I would hear that and go, $6 million a year. Like, imagine making that much. That's a lot of dollars, right? And so I sit there and think, like, are they showering in dollar bills? Like, what is going on here? This must be wonderful. It was not. They made no money. And to me, I was going, how, how on earth can you get in the situation where you are making that much money and serving that many people? It's just heartbreaking to not be making a profit at the end of the day. And I think that too many business owners don't focus on this. Whether it's from money beliefs and money is greed, or you don't want to focus on it, or you feel like you're not good at it, so you ignore it. I don't know what it is, but what I find is for a lot of people, when they've struggled with money, you get really good at it. And so for a long time, we had no money at all. Every dollar was so stretched to its absolute optimized level of return. And what that has meant is I respect my dollars a lot. And so I don't waste any money. I don't waste any time. In fact, like my husband would probably say, if you really want to tick me off, waste time and money. Nothing pisses me off more than that. Um, but when we are looking at it and going like, if I go back to the example of my friend who's does 6 million, she When I said, like, show me your profit and loss statement. Let me see if I can find something here that can, can help you. Because I love systems, I love strategy. That's. That's where my favorite part lies. And the first thing I looked at, and she had 58% of revenue going on wages. And that's just not sustainable. And so with that, and then the cost of ad spend that they were doing and then the churn that they were doing and the amount of marketing they had to do, it just. There's just not enough in the pie. And this is what I mean by it's not about revenue, it's about profit. So that is a really big red flag is hiring too soon before your revenue can support it and it'll eat up all of those profits. So you want to start lean. You want to use contractors at the beginning so that you're not like tied into that permanency. So if you need someone, like I know when I started I had a marketing contractor that I would get to do, you know, some graphic design here and there, or I would get them to do my slides, or I would get them to do my videos. Like just using people ad hoc before I trusted the, the kind of consistency in the business could support it ongoing. And then you've got bloated expenses. So I know that this is probably, you know, this is some people's least favorite thing to do. But go through your profit and loss statement, open it up, go through every single line item and work out where your money is actually going. Like where are all of those expenses going and then what can you cut from there? So a big one is subscriptions. I know in this day and age, right? So you probably very much like me that all of the AI tools come out and you get really excited about all the software that you can use and how many different things we can use in our businesses to free up time and money. I have subscribed to so many things, it's ridiculous. And so Now I use Monday.com, which is my favorite subscription. Um, and it has my whole brain basically. But inside that I now have a board where I keep track of subscriptions and when their renewal dates are, because for some of them that I paid annually, I was looking at and you know, the annual thing had come around and it's $500, like it's not going to break the bank. But you have enough of those. I was working out that like last year I spent about four and a half thousand dollars on subscriptions that I was no longer actively using inside the business, which is huge. That's like a holiday. And so we don't want to be wasting any of that. So go through all of the subscriptions. Are you actually using all of those? And if not, get rid of them, all of the tools, all of the software, cut anything that isn't directly like making you more efficient or directly adding more revenue. So it's got to save you time, it's going to make you money. Otherwise it's gone. And you know, in Inside Her Empire Builder we talk about Wealthy Wednesday. So it's something that I do every Wednesday. I encourage people to have one day a week where you've got like a regular hour or two hour slot on your calendar where you will go in and just check your accounts, check your credit cards, check your bank accounts, check your profit and loss statement, look at your cash flow, look at your Forecast, look at how everything's going and just get really familiar with it. Because I know that a lot of people resist getting familiar with their numbers because they feel like I'm not good with money. I wasn't good at math when I was in high school. I want you to know. I did general maths in high school. I in my HSC got 54%, was not a mathematician. I am brilliant at money and that is because of the time I've spent and the familiarity that I have with it. It's just practice and it is way easier than what we did in high school maths. Okay, number three thing to look for is underpricing your offers. Now this is something that is like, I see underpricing more often than not, but I will also caveat it with the other way. So too many course creators undercharge out of fear. There was someone I was talking to just last night and she's running an online program, but also has live in person accountability circles. And so every month she gets together her accountability circles of her members. So there's eight of them in each one. Um, and she has that half a day, she hires the room in the city. She has beautiful food and drinks coming in. She has an online program to support them in between. They have a big Christmas party at the end of the year. So it's very, it's not like it's very hybrid. It's not just online course, it is very hybrid and it has, has both of those, those things going on. Um, and she's charging, she's charging like $4,000 a year for that, which I'm like, you're very tapped out to. If you're doing something that's so high touch point, then there's, you're very limited. It's not as scalable. You can't have hundreds of people doing it. Because when you're doing something as, as high touch point as accountability circles, you're holding those people in your mind. You know, you're, you're feeling responsible for their success in a way like you're knowing them very well. And so you're going to tap out at a certain number, which means, you know, say you can do 50 at 4,000, that's 200,000 a year. That is not going to be, I mean, maybe that's going to be sustainable if you don't have to do any marketing at all. If it's all word of mouth, if, if you can have really minimal software, but you're working really hard for that and you're not able to scale beyond that level. So we were having a conversation about whether that is actually an underpriced offer and how to actually change that. So you want to look at your offers and go, are you undercharging for what you are offering? At the same time though, I think especially in the online course industry, people can go nuts with this too far in the other direction. Um, I have seen someone that's doing $100,000 a year mastermind, which I'm like, who you are that your time is worth that much. There, there, there is very like, I just don't know. I don't know with that. So I think there is, there is a line, but you can get well paid for what you're doing. And there has to be a very clear value exchange for that to know that the people are getting a massive return on investment for the, for the investment that they've got putting in. And if you can say that hand on heart, then sure, raise those prices. And I'm sure the chickadee that does a hundred thousand a year probably justifies it like that to herself, but I'm just like, oh my gosh, that's a lot. So your prices should reflect your transformation promise. When you are looking at the transformation promise that you provide, making sure that your price is in line with that. Number four is marketing spend without roi. I know I have been guilty of this in the past. I know you're probably guilty of this. We're all going to fall into it at different times. I, like I was going to say, I famously, it's not famous, but I was well known for building my business to a million dollars a year without spending any money on ads. So it's something that I was never wanting to play with at the start. And organic marketing is what I'm comfortable with. It is how I built my previous business that I owned and then sold. And it is, it is what I find to work really well in connection. So my idea is I never wanted to be famous. I never wanted a big following. What I want is good customers. I want to do good work with good people. It's as simple as that. And so I didn't want to have a bazillion people following me on Instagram, judging me, writing crappy comments like all of that. I didn't want to have a bazillion people on my email list that may or may not buy. I wanted to have the right people on my list that I wanted to work with. And when we hit that million dollars, I only had 3,000 people on my email list. I had like 4,000 followers on Instagram, and we hadn't used any ads. Now we've just started getting into ads because I want to grow beyond where the organic has taken us to. But I'm very purposeful in the ROI of that. And what I see a lot of people in the early days is gonna, you know, I don't want to. Not that I don't want to put in the effort, but everyone wants a shortcut. And so instead of putting in the effort and playing the long game and letting it ride, going, well, what if I just like whack 20 grand onto Facebook ads? Will that shoot me into the stratosphere? And often it doesn't. Often really good ad strategy works behind really effective organic campaigns. And so when you've got the organic going really well, you can boost that up with really Facebook advertising. But if you, if you don't have the organic there yet, it's really hard to start from scratch. I know that I'm starting my new brand course quickies at the moment from scratch without building it with personal brand, but building it just with Facebook ads, it is a whole different game to be playing. And so if your ads are bringing in profit, great. But if they're not working out what you, what level you can operate at so that it's sustainable with that. So always track your cost per lead, always track your cost per conversion and making sure that you're marketing not just on ads, but on all, all of your spend is actually profitable. Okay, so now I want to go into how to actually build a profitable business, not just a big one. One thing that I say quite often is bigger isn't always better. I used to, throughout my 20s, probably even until I was about 35, always just thought, bigger is better. Like, we want more. Like, let's see how far we can go if we reach to one level. Like, how do we push beyond that? How do we go bigger than that? And I have since learned bigger is certainly not better. I used to see people that would say, you know, I'm happy where I am. Like, this is a perfect spot for me. And I would kind of go, like, that's not true. No one thinks that. Surely, surely they're just saying that as a cop out because they didn't actually have the, like, gumption to get there. That is what I thought. One of the best things about getting older is we can change our minds. And so I have since learned that bigger isn't always better. I am in A mastermind with some fantastic people. I have the smallest business there by revenue stages, except I have one of the most profitable businesses. And so I look at that and I look at a lot of their businesses and I go, I don't want that. Like you can see behind the curtain. And it's perfect for them and what they want. But one of the best things about, you know, being a grownup is we get to create exactly what we want. And I want to tell you, more revenue does not equal more profit. You want to be focused right from the very beginning on how can you create a profitable, sustainable business. And so the first thing is to set a profit goal first before you even set your revenue goal, Set your profit goal, because that is going to be your, your kind of guiding path that's going to take you through how to set up your office, how many launches you're going to do, what marketing you're going to do, what comfort zone you're willing to put yourself out of because you're absolutely determined to get that result. And so what I mean by that is a lot of people will start out and they're like, you know what? I want to make 200,000 in my first year. And I like, do you want to make personally 200,000 or you want to do a revenue of 200,000? Because they are two very, very different. Um, so if you want to make 200,000 in profit and you've got say a 50% profit margin, which in online courses is very standard, then you're going to have to do a 400,000 revenue. Um, and that's even like, that's taking out the tax. And so looking at all of that and going kind of completion backwards, going, all right, if I want to get personally this amount of money, what do I need to do top line to enable that to happen? So working on that profit first principle and having that like profit first, the book is one of my favorite books. It's something that I read like at least once a year. So you really want to want to be reading that if you haven't already. I know that I don't know many business people that haven't read it, but if you haven't, add that to your list. So always implementing that profit first accounting. So that means paying yourself first. It's something that I went years in my business not doing. And I wish I knew then what I knew what I know now. But paying myself first I was always too scared to do because I wanted to keep putting money in to reinvest to grow the business. But what it leads to is that burnout and that resentment because if you are not paying yourself first, you're like, what am I doing all this work for? Like, I'm working so hard, I'm so exhausted and I have nothing to show for it. And as a business owner, you are carrying so much risk and so much responsibility that you deserve to be paid for that before anybody else. And so if you are paying other people on your team more than you're paying yourself, that is something to look at straight away. Allocate your revenue into buckets. So like I said before, I've got like my 20% pie goes on team. So I have a very, a very clear pie that is a hundred divided into its segments. For example, 20% goes on team, 20% goes straight to me. That goes straight to me every single week. 10% gets retained for profits for future buffer building. We have 4% goes to charity, we have 10% goes to marketing. I've got 5% on travel. Like your pie. While they say that your money is very black and white, money in, money out, it's not. It's very, very emotional and it's very, very different for each person. And so what you need to do as a business owner is work out. All right, if I've got a hundred points in my pie, what allocation am I going to do that's going to make me happy and that's going to be sustainable. And so you know, the example I gave before of the 200,000 take home pay for 400,000 revenue, that's 50%, I take 20%. And so, you know, there's always some leftover at the end of the year that I can then take in directors drawings. But as that like consistency, I take 20% of that revenue and then the rest is spent on, on growth activities, on team, on lifestyle, on like most business owners putting a lot of our life through the business as well. And so you get to look at that and go, what do you want that allocation to be for you? You might not spend as much on travel and charity or you might spend more like everyone's got their own things. Number three is creating high profit offers. So looking at each of your offers and going, is that the easiest way to like create that profit inside the business? So I'll give you a real example of this inside my business. I started AI Circle at the end of 2024. So part of that was we created the course AI for course creators, which is an amazing course. If you haven't taken it yet. It'll show you how to create all your custom GPTs. Really, really great. Go to the aicircle.com but we did that and then on the back end of that, the intention was to create a membership. So the membership was going to be low cost, high volume, 29amonth. Go for it. What I have since decided a few months later is I'm not going to do it. I'm going to keep the course going as an evergreen and we've got ads feeding to that, which is going really, really well and people are getting really good results, which is great. But then when it comes to the membership, $29 a month membership, like the having to show up for that, having to do the masterclass, come up with all the content, manage the big community, all of that takes a lot of resources. And so working out how many people we need to have inside that membership so that it can be sustainable and then comparing that with our other offers. And so if I look at her empire builder, which is, you know, my, my flagship, where 80% of our revenue comes from, and my favorite thing to do, if I go, if I put the same amount of effort into her empire builder as I would to AI circle, which one is going to bring me more profit? Which one's going to bring me more like fulfillment personally, which one's going to give my clients better results? Which one's going to give me more impact? Her empire builder wins like hands down. And so that is why we decided to kill that offer and not even worry about starting it. And so when you're looking at your different offers, really important to go. Which one is going to create the sustainable business that I'm going for and look at it from profit first sort of percentage in there. I would also encourage memberships. So I love memberships because you've got that recurring revenue happening. And that's something we teach a lot of inside her empire builder number four is to keep an eye on your margins. So really like going back to that wealthy Wednesday and reviewing those financials so that you are aware and making decisions from a place of knowledge and not a place of fear. Um, I have been in the place of fear many times and made like some of my silliest money mistakes that I have made have been because I've been like too quick to jump into things and I've been too afraid of what's going to happen. So I'm making those decisions out of fear. Being able to have. I had a coach once that I used to think having money just Sitting in a bank account was a waste because I was like, I either want to invest it or I want to spend it. I want to, like, go for more. I want to use it. Like just sitting there looking at is kind of worthless. And he explained to me the psychological advantage of having a buffer. And in my mind I thought, what's the point of just having the money sitting there? Like, I want it to be used every cent. I was one of those people that would ride my bank account like it would never have more than $1,000 in it. When it got up to 10, I'd spend it, get it back down to one, like, just ride this roller coaster. And I was fine like that because I didn't know any different. And then once I started building a buffer, so at the start it was like, okay, let's make it ten thousand. Then it was, let's make it a hundred thousand and we keep that psychological buffer there. And what I mean by the psychological advantage is when shit hits the fan, or when something goes wrong, or when I want to say no to something, or when my family might need me more, or when I want to take a couple of months without my foot just shell bent on the gas, I have that ability because I have that buffer there. So I always can take a bit that calmer confidence in going. I don't need to push that hard. And ironically, what that has done is that that has increased the growth because I'm able to make more solid decisions. So the psychological advantage of having a buffer is very, very real. So if you take one thing away from today's episode, I want it to be this. A business that looks good on paper only will not give you the life that you want. It doesn't matter what anything looks like from the outside. Don't judge anyone by what they put on Instagram. Don't judge anyone really on what they say. Only look at you. Only look at your business, only look at your back end and create the business that is going to give you the life that you want and a life that is going to be sustained by this beautiful business that you've created. When you do that, it won't just be about making money. It's all like playing this game and being able to do work we love and work that is highly impactful. I hope you enjoyed the episode and I will catch you again next week.