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The CEO Shift: Why Understanding Your Numbers Changes Everything · Profit Points Podcast

• 0:00
  SPEAKER_00: Hey, glad you're here.
• 0:01
  SPEAKER_00: This is Profit Points, and I'm Megan Schwant, your accounting sidekick and certified Profit First Professional and Fix the Snext Advisor.
• 0:09
  SPEAKER_00: If you're a small business owner who wants to actually understand what is happening in your business financially, not just survive it, but genuinely get it, you're in the right place.
• 0:20
  SPEAKER_00: Every episode covers one concept, uses real numbers, and ends with something you can actually do.
• 0:26
  SPEAKER_00: That's the deal.
• 0:27
  SPEAKER_00: Let's talk about today's topic.
• 0:31
  SPEAKER_00: There's a moment I've watched transform client after client.
• 0:36
  SPEAKER_00: It's not when they hit a revenue milestone, it's not when they land their biggest client or even hire their first employee.
• 0:46
  SPEAKER_00: It's the moment they decide that understanding their business financially is their job.
• 0:54
  SPEAKER_00: That's what I refer to as the CEO shift.
• 0:57
  SPEAKER_00: And most business owners never make it.
• 1:01
  SPEAKER_00: Not because they can't, but because nobody told them that it was theirs to make.
• 1:06
  SPEAKER_00: So today I want to help you make that very choice.
• 1:11
  SPEAKER_00: I'm Megan Schwann, your accounting sidekick, and this is the Profit Points podcast.
• 1:17
  SPEAKER_00: Here's a concept I come back to constantly with clients.
• 1:21
  SPEAKER_00: You may have heard it before.
• 1:23
  SPEAKER_00: The difference between working in your business and working on your business.
• 1:28
  SPEAKER_00: We've all heard that, right?
• 1:30
  SPEAKER_00: Most business owners, especially in the early and middle stages, are almost exclusively in operator mode.
• 1:38
  SPEAKER_00: This basically means they're doing the work, they're serving the clients, they're answering the emails, they're creating the content, they're putting out all of the fires.
• 1:48
  SPEAKER_00: And it's completely necessary, especially at those stages.
• 1:52
  SPEAKER_00: You have to do the work.
• 1:54
  SPEAKER_00: But operator mode has a ceiling, and it's a low ceiling.
• 2:01
  SPEAKER_00: Because when you're only in operator mode, the business is entirely dependent on your labor.
• 2:08
  SPEAKER_00: If you stop, it stops.
• 2:10
  SPEAKER_00: And more relevant to today's conversation, when you're in operator mode, you're making financial decisions reactively.
• 2:20
  SPEAKER_00: For example, something breaks, you fix it, revenue dips, now you panic, a tax bill hits, you scramble.
• 2:29
  SPEAKER_00: There's no strategy to that.
• 2:31
  SPEAKER_00: There's no plan, there's just response.
• 2:34
  SPEAKER_00: And that part is exhausting.
• 2:38
  SPEAKER_00: So today, our revenue point is revenue quality.
• 2:44
  SPEAKER_00: And honestly, this is one of my favorites.
• 2:47
  SPEAKER_00: I've said that before, but it's one of my favorites because it fundamentally changes how a business owner looks at their work.
• 2:55
  SPEAKER_00: Revenue quality means that you stop asking how much did I make and you start asking, how profitably did I make it?
• 3:04
  SPEAKER_00: Because what a lot of business owners miss, especially while in operator mode, is that not all revenue is created equal.
• 3:14
  SPEAKER_00: A dollar of revenue from a high margin service is worth a lot more to your business than a dollar of revenue from a service that you're practically giving away.
• 3:26
  SPEAKER_00: CEOs that think about revenue quality, they ask which of my services or products generates the most profit per hour of my time?
• 3:37
  SPEAKER_00: Which clients are the most profitable?
• 3:40
  SPEAKER_00: Not just the high and pay, highest paying, but the most profitable relative to what it costs me to serve them.
• 3:47
  SPEAKER_00: Which parts of my business are actually subsidizing other parts that aren't pulling their weight?
• 3:54
  SPEAKER_00: Who's robbing Peter to pay Paul?
• 3:57
  SPEAKER_00: These are CEO questions.
• 3:59
  SPEAKER_00: And you can only answer them when you know your numbers.
• 4:04
  SPEAKER_00: Okay, so let's go through a more concrete example.
• 4:10
  SPEAKER_00: Um I'm gonna try this today.
• 4:13
  SPEAKER_00: I have a PowerPoint.
• 4:15
  SPEAKER_00: Let's see if it works.
• 4:23
  SPEAKER_00: Okay, never mind because now I can't find where it went.
• 4:33
  SPEAKER_00: Hold on, hold on, hold on.
• 4:35
  SPEAKER_00: I forgot I was doing this live too.
• 4:38
  SPEAKER_00: Uh okay.
• 4:40
  SPEAKER_00: Nope.
• 4:41
  SPEAKER_00: Okay, we're gonna skip it.
• 4:42
  SPEAKER_00: We're gonna just we're gonna just gonna talk about it today.
• 4:45
  SPEAKER_00: And next time I have a visual, I'm gonna practice beforehand.
• 4:48
  SPEAKER_00: My bad, guys.
• 4:49
  SPEAKER_00: Okay, so let's go through a more concrete example.
• 4:52
  SPEAKER_00: Let's say you offer two different services.
• 4:55
  SPEAKER_00: Service A brings in$2,000 per client per month.
• 4:59
  SPEAKER_00: It takes you and your team about 15 hours to deliver that service.
• 5:04
  SPEAKER_00: So your revenue hour is about$133.
• 5:09
  SPEAKER_00: So every hour that you're spending, it's worth$133.
• 5:15
  SPEAKER_00: Now service B brings in$800 per client per month and it takes four hours to deliver.
• 5:21
  SPEAKER_00: So your revenue per hour on that one is$200.
• 5:26
  SPEAKER_00: So which service is more valuable to your business?
• 5:31
  SPEAKER_00: Even though service A is bringing in$2,000, so it sounds better, seems better, right?
• 5:39
  SPEAKER_00: Really, it's service B because you're making more per hour that is actually better for your business, right?
• 5:47
  SPEAKER_00: Okay, so we got that$133 versus$200.
• 5:51
  SPEAKER_00: Service B is generating more revenue per hour of work.
• 5:55
  SPEAKER_00: That concept, that's revenue quality thinking.
• 5:59
  SPEAKER_00: That's how you think about it.
• 6:01
  SPEAKER_00: And when you see that clearly, you start making very different decisions about where to focus your energy and your marketing.
• 6:09
  SPEAKER_00: Okay, so now let's layer in some expenses.
• 6:12
  SPEAKER_00: What does it cost you to deliver each service?
• 6:16
  SPEAKER_00: If service A has$500 in associated cost, not including labor, and service B has$50, your profit per engagement on service A is$1,500.
• 6:29
  SPEAKER_00: And on service B, it's$750, right?
• 6:32
  SPEAKER_00: If we're taking out those costs.
• 6:34
  SPEAKER_00: So then service A still wins on total profit, but now you know that full picture, not just labor per hour, but also the costs associated.
• 6:44
  SPEAKER_00: And now you know what you're trading.
• 6:46
  SPEAKER_00: That's what it means to think like a CEO.
• 6:49
  SPEAKER_00: You understand the real economics of your business, not just the top-line revenue number.
• 6:56
  SPEAKER_00: So here's the part that I want you to sit with.
• 7:00
  SPEAKER_00: The shift from operator to CEO isn't just a skills thing, it's an identity thing.
• 7:06
  SPEAKER_00: It's deciding that understanding your numbers is your responsibility, not your accountant's job all by itself, not something you outsource entirely and never think about.
• 7:18
  SPEAKER_00: It's yours because at the end of the day, no one is more invested in the health of your business than you are.
• 7:27
  SPEAKER_00: And the most powerful thing you can do for your business is to become the kind of leader who knows what's happening financially and uses the knowledge to make smart, proactive decisions.
• 7:43
  SPEAKER_00: So to this week, action item, I want you to do a revenue quality audit on just one of your services or products.
• 7:53
  SPEAKER_00: Not all of them.
• 7:54
  SPEAKER_00: Maybe pick the most popular offering, the one that you sell the most of, or maybe it's the one you most enjoy doing.
• 8:02
  SPEAKER_00: But I want you to write down three things.
• 8:05
  SPEAKER_00: One, how much revenue does it generate per month or per engagement?
• 8:10
  SPEAKER_00: Two, how many hours does it take to deliver?
• 8:15
  SPEAKER_00: And then three, what does it cost you in direct expenses to deliver it?
• 8:21
  SPEAKER_00: Then calculate your profit per hour.
• 8:25
  SPEAKER_00: That number will tell you a story, and it honestly might surprise you.
• 8:32
  SPEAKER_00: Okay, action item for the week.
• 8:34
  SPEAKER_00: Drop me a comment if you go ahead and do that or if you've done this activity in the past, I'd love to hear about it.
• 8:39
  SPEAKER_00: The shift from business owner to CEO doesn't happen because of a revenue milestone.
• 8:44
  SPEAKER_00: It happens the moment that you decide that your numbers deserve your attention.
• 8:50
  SPEAKER_00: That decision is available to you right now, not when you hit six figures, not when you hire a team, not when things slow down enough to figure it out.
• 9:00
  SPEAKER_00: Right now, make that decision and then the rest will start to follow.
• 9:05
  SPEAKER_00: If you're ready to make that shift and you want or need a strategic partner to help you think through your numbers, book a strategy call with me at Sidekick Accounting.
• 9:15
  SPEAKER_00: You can go to chat with Meg, chatwithmeg.com, and book a call.
• 9:21
  SPEAKER_00: Um, we work with business owners exactly like you to build the clarity and confidence that comes from knowing your numbers inside and out.
• 9:30
  SPEAKER_00: All right, that's all that I had for today.
• 9:32
  SPEAKER_00: I will see you next week.
• 9:35
  SPEAKER_00: And don't forget to actually take action on what you're hearing.
• 9:38
  SPEAKER_00: Bye.
• 9:39
  SPEAKER_00: All right, that's your episode this time.
• 9:41
  SPEAKER_00: Don't forget your action step.
• 9:43
  SPEAKER_00: I want you to actually do it, not just add it to the list.
• 9:47
  SPEAKER_00: If this episode was helpful, share it with a fellow business owner who needs to hear it.
• 9:51
  SPEAKER_00: And if you're ready to go deeper on your specific numbers, book a strategy call with Sidekick Accounting.
• 9:56
  SPEAKER_00: Go to chatwithmeg.com, and I'll see you next time on Profit Points.