Revenue Vs. Profit - Which Is More Important

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I have some friends who say profit is all that matters, and they have no interest in the revenue numbers of a business.

There’s a big difference between profit and revenue, obviously. A company can have huge revenue numbers and very small profit. So, how do we know if revenue is important or not.

Let’s imagine there are two coaching businesses. Business #1 has $100,000 in monthly revenue, and Business #2 has $25,000 in monthly revenue. Which of those do you think is better off?
 
 It’s hard to say for sure. Business #1 is most likely spending money on ads to bring in customers, paying salespeople commission, etc. It’s probably a business that doesn’t depend on one person to run. Let’s say this business is bringing in $20,000 of profit.

Business #2 is a solopreneur coaching business that’s also bringing in $20,000 of profit, but this business depends on one person to run. They might be working 80 hours a week, and as soon as they stop, no money is being made.

In my eyes, Business #1 is clearly superior. Any person that says revenue doesn’t matter is missing the whole point of a business. We need revenues to support the business and scale it.

Business #2 probably can’t scale very much at all next month, but Business #1 can probably double their revenue and profit. See the difference?

Revenue matters more than most people think. If you think that profit is all that matters, remember that the order matters. If you want a sustainable business, you need to reinvest your profits into the business.

If you want to learn more about getting your business to work for you, visit https://www.digitalnomad.com/Podcast/