How Much Profit Should I Be Making?

Growth as a CEO often looks like more stress, more responsibility, too much work, and not enough profit. Even if making good money, many businesses are slowed by how little profits they retain. Real profitability is what a CEO would actually make if they were paid at market rate instead of their own salary. But how do you measure that? Mandi Ellefson shares how to calculate your business’ real profits in this solo episode of Hands-Off CEO.

Key Ideas:

1. It is common for CEOs of consultancy firms to rake in loads of money without retaining much profit, which ultimately diminishes over time. Their accounting may even be wrong. Mandi discusses why this happens. “If you don’t know [how much profit you’re actually bringing into your business]... you don’t have an accurate benchmark to start [growing your company from],” she adds. [1:01]
2. When calculating your profit, start with your gross sales. [2:08]
3. The market rate of a CEO who is able to generate millions of dollars of growth in their company is much more than $100,000 a year. [2:55]
4. Having low profits as a CEO does not mean that you’re not making good money or that your company isn’t good - it just means that there is a wide gap, and therefore an opportunity, to create a sustainable business that you’ll be able to run hands-off. [4:56]
5. Before cutting down costs and generating more sales to increase profit, consider this: with your current offer, are you generating enough income from your existing clients and the news ones you’re onboarding to reach your goals? [5:44]
6. Gross profit margin refers to how much each individual client project costs to deliver before your overhead. [7:56]
7. The Hands-Off CEO team helps clients build an irresistible offer in four weeks. They have helped beauty and skincare brands generate $10 million of profitable growth using this process. [9:37]

KEY QUOTE

“[You double] gross profit margins by getting really clear and focused on what direction you want to grow your business in.”

Resources

Mandi Ellefson on LinkedIn | Twitter | Facebook

Hands-Off CEO - Executive Briefing