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This page may includes affiliate links, which means that if you choose to make a purchase, I may earn a commission. This commission comes at no additional cost to you.\u00a0<\/em><\/p>\n \u00a0<\/p>\n \u00a0<\/p>\n \u00a0<\/p>\n Myth #1: If I make more sales, I\u2019ll automatically make more profit<\/strong><\/p>\n Given that the equation for calculating profit is total revenue \u2013 total expenses = profit It is easy to see how many business owners think if I make more sales, I\u2019ll make more revenue and therefore more profit. And whilst this may be the case it isn\u2019t always. That\u2019s because you have to monitor your expenses and ensure that in an effort to make more sales you haven\u2019t increased your expenses to the point where that additional revenue is essentially eaten up by extra expenses. For example, an easy way to make more sales in a business is to run advertising. This can bring in more sales, and therefore more revenue. But close attention needs to be paid to ensure the advertising isn\u2019t eating too much into a profit margin of a service so whilst total sales might be going up total profit isn\u2019t<\/p>\n \u00a0<\/p>\n Myth #2: Higher prices means higher profit<\/strong><\/p>\n Another common myth is that if you charge higher prices you\u2019ll make more profit, but that isn\u2019t always the case for businesses that are providing services. In the product-based world if you raise the price of a specific product and don\u2019t make any other changes in your business then yes you\u2019ll make more profit. But many businesses in the service space in an effort to charge higher prices will actually make new \u2018premium\u2019 offers. These premium offers if not carefully created can easily come with needing more resources that essentially will eat into the profit margin.<\/p>\n \u00a0<\/p>\n Myth #3: Scaling is the fastest way to increase income<\/strong><\/p>\n As a one-to-one service provider, it is easy to feel as if the fastest way to increase your income is by scaling your business. There are so many experts online telling service providers to scale and how it will mean they are able to make a lot more money.<\/p>\n \u00a0<\/p>\n Now I am a bit advocate for scaling your business, but that is more due to having sustainable growth and a business owner having the ability to make great money and also have a decent work\/life balance. I would never be telling someone it is the fastest way to increase income. And depending on how you scale whilst your income will increase overtime it\u2019s easy for your profit not to due to the additional expenses required with scaling.<\/p>\n \u00a0<\/p>\n At this point you should understand the difference between increasing revenue and increasing profit, but what is profit so important for a business, and business owner.<\/p>\n \u00a0<\/p>\n 1. Profit can enable a business to build up retained profits<\/strong><\/p>\n A business can decide what to do with profit and one of the options is to keep the profits as retained profits. Having retained profits is good for the financial stability of a business and great for peace of mind as a business owner. When you know you have a chunk of money should there be an emergency that can be a big reassurance.<\/p>\n \u00a0<\/p>\n 2. Profit can allow a business to reinvest for future growth<\/strong><\/p>\n It\u2019s very common in business to need to invest in order to support future growth. When you have been focusing on profitability and building a healthy profit margin for all of your offers you\u2019ll have the profit to be able to invest (whether that be in tech, equipment, mentors, training, advertising) to support future growth.<\/p>\n \u00a0<\/p>\n 3. Profit can mean a business owner makes more personally<\/strong><\/p>\n Depending on your business structure it might be that the level of profit you make has a direct impact on the amount of money you make personally. By increasing profit it will mean you are also better off financially.<\/p>\n \u00a0<\/p>\nWHY PROFITABILITY SHOULD BE YOUR REAL FOCUS IN BUSINESS GROWTH<\/b><\/span><\/strong><\/h2>\n
The Common Misconceptions About Growth and Profitability\u00a0<\/strong><\/h2>\n
Why Profit is so Important?<\/h2>\n