3d • Profit
I did this wrong for almost a decade!
And it cost me almost all of my profits…
When I hired sales reps, I just made up their commissions. I didn’t know what my exact margins were. I just decided on what felt motivating for a sales rep and that’s what I paid for their sales.
In retrospect, I look at that and wonder how the heck I didn’t see that as a problem?!
And it cost me almost every bit of profit. Because as we grew, I made less and less money. It was backwards. And I knew it was a sore spot but I didn’t realize it was suffocating the business.
Here’s my advice. Go through your services one by one. Analyze your margins. Then look at your marketing spend and your commissions. Those 2 have to add up to a simple number below CAC (Cost to Acquire Customers. (You decide what your CAC should be)
Cost to service + Overhead + CAC = Expenses + Owners pay + Profits
It sounds simple. But because it’s simple, don’t skip it. It’s the simplest math to keep you safe and protect your margins.
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I did this wrong for almost a decade!
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