Track your net income percentage to gauge business health: below 10% means you're stressed, 10-20% is acceptable, above 20% is the goal. Grow revenue with new streams and better pricing, or cut expenses that don't drive client acquisition. Aim for the middle ground between pure profit and pure people focus.
If you're 10% or lower, you don't have a healthy business. You're at risk. You're probably pretty stressed out. Cash flow is super tight. We don't know what our net income is. You got to know that number. What is your net income percentage? The goal we're looking for is more than 20%. Between 10% and 20%, not bad, but it's not quite 20%. That's what we're shooting for. Ways to improve this. All about profit and all about people on both ends of this, what I call Forbes-Ramsey spectrum, is not a place we want to be. We want to be in the middle, which is the 3.3 zone. We have to make decisions, of course, for the profitability of the business, but we also need to make decisions that keep our team in mind. We either need a bigger shovel, which could relate to new revenue streams, looking at a market comparison, maybe you're not charging enough for what you're offering, or is there any way I can make a hole smaller? That would be the expense side. So the bigger shovel is related to looking at your income, smaller hole side is looking at expenses. Ask yourself, does this expense help me get a client or keep a client? And if it doesn't, then we need to cut it. Learn more in chapter 7 or at 33rule.com.
