Ryan Deiss explains how to double your take-home profit by pre-allocating money before spending it. He recommends a 20% profit margin minimum and uses the Rule of 40: profit margin plus growth rate should equal at least 40%. A Google Sheet built in under an hour can track this.
I've scaled 8 companies to $20 million and beyond, and I see business owners go from barely making minimum wage to making more than $500,000 a year after implementing just one tool they can build in less than 1 hour. This is part 2 of how to double your take-home profit using one simple Google Sheet. Step 1 of this process is we've got to budget for profit first. Now, if you hear that and you roll your eyes because you're thinking, Ryan, that's friggin' dumb, I don't get to just pick how much money I make, then you are exactly who this is for. 'Cause listen, an optimistic entrepreneur's ability to spend will always outpace their ability to earn, which is why profit must be determined ahead of time. If you're just taking what's left at the end of the month, then you're gonna wind up with exactly that, what's left. And you know what's usually left? Yep, nothing. Why? Because again, you're always going to spend faster than you earn. It's what we do. And just because your top line is up, that doesn't mean that the cash is automatically gonna trickle down. In fact, your top line being up means you're growing, and that's good, but growth is expensive. And that's why we say growth doesn't equal profit. Growth eats profit. So you want to know what the real dream outcome is. The real dream outcome is when you look at your revenue, you pick a percentage, and you decide ahead of time, this is how much we're going to keep. But how do you pick it? How do you know how much you should be holding back in profit? Well, other than just Googling it or asking AI what's the average profit margin for my industry, you can also use what's known as the Rule of 40. And the Rule of 40 states that your profit margin plus your growth rate should be 40 or more. So if you're growing at a 15% annual rate, your profit should be at least 25%. This rule helps you balance growth and profitability, but I still wouldn't plan for less than 20% profit margin even if you're growing quickly because, well, crap happens. So stick with 20% as your bare minimum. It works for most businesses. And once you've chosen your profit percentage, I want you to document it. I want you to write it down, share it with your team. What I do is I actually put it— mine— right here in my expense analyzer spreadsheet for all to see. This is shared with the entire company. And look, if you want a copy of this, just comment "for profit" and I'll send it to you. And follow for part 3 where I'll show you how to make that number that you just documented a reality.
