In this monologue, Mike Andes dissects a small‑business scenario where the company generates roughly $570,000 in annual revenue and $138,000 in profit (about a 24‑25% margin). He points out that paying the two owners $70‑80k each would consume the entire profit, leaving the business cash‑starved. Andes argues that for businesses earning under about $750,000, profitability hinges on the owner or general manager actively producing labor revenue. He explains that while scaling toward $1 million in revenue typically allows owners to shift focus to sales and strategic work, at the current size the owners must stay in the field to generate cash and resolve the immediate cash‑crunch. The advice is to prioritize hands‑on work now, then transition to “working on the business” once the revenue threshold is reached.
Chapters
if both of them need, you know, $70,000, $80,000 to survive, that $138,000 is gone and the business is now starved of cash. Because if you look at this, you have $138,000 in profit on $570,000 in revenue. That's like 24%, 25% profit margin. And so that's the biggest flaw I'm seeing here is like, I don't think you all have officer wages in here or any sort of salaries. But as soon as you divide that between two people, the owners, the business basically has no cash. And that's what we're running into. I genuinely believe that if a business is doing under $750,000 in annual revenue, the profitability of the business will usually come down to whether or not the owner or general manager is in the field producing work. And so I know both of you want to get out, out of the field and grow the business to $1 million. I think if I was talking to you a year and a half ago, back when you did $700,000, I would say that would be in the cards because at $750,000 or so is usually where I see people needing to get out of operations and start focusing on sales and other aspects of growing the business or working on the business. But I think that at $570,000, let's call it, in annual revenue, if you're needing to be profitable, which I feel like there's a cash crunch in the short term, I need you to actually go out in the field and work. Like, I need the work to get done because your profitability will simply hinge on how much labor revenue the general manager or owner produces at your current size. Now, if you're going to go to $1 million, then yes, like You have to work on the business, you have to work on sales, etc. But in the short term, to solve this cash crunch, you working on the business makes you complete overhead and a cost to the business instead of a labor-producing and revenue-producing team member. And to solve the current cash crunch, I think that's what's going to be required.
