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A Weird Reality About Doubling Your Profits

Nov 15, 2021

Growing a creative business is a long-term endeavor. The things that make a business thrive and grow often take months or years to do. 

But there is one weird reality about doubling your profits that is basically... a shortcut. And here’s how it works. 

 

Many makers and creative small business owners operate on pretty small margins. For instance, a newer maker’s finances might look something like this: 

  • Gross revenue (all the money that came in the door): $27,000
  • Costs (all the money that went out the door): $22,000
  • Profit (what she keeps): $5,000

If you were to say to this maker: “How hard would it be to double your profit? She might say, “Very hard.” 

And if you asked her, “How hard would it be to increase your revenue by 20%? She might say, “I could do that.” Her brain would immediately start thinking of all the marketing tweaks, website refinements, additional in-person appearances, and simple new products that could create that 20%. 

 

But here’s the thing: in this maker’s case, doubling her profits and increasing revenue by 20% are the same thing. 

 

If this maker were to increase her revenue by 20%, her finances would then look like this: 

  • Gross revenue (all the money that came in the door): $27,000 $32,400
  • Costs (all the money that went out the door): $22,000
  • Profit (what she keeps): $5,000 $10,400

Her revenue went up by 20% but her profits went up by 208%. 😮

Obviously the numbers work out a bit differently for everyone -- and the effect of increasing your revenue by 20% might not be as dramatic as it is in the example above. Plus, it’s possible, but not certain, that if this maker’s revenue increased by 20%, her costs would increase a bit as well. But the general principle is a powerful one and does hold true for most lower-margin businesses. 

 

You’ve done SO MUCH WORK in your business already. And although it can feel hard to bring up profits, the weird reality is that even a little lift in revenue could have a really big impact on the money you bring home. So think strategically and, as trite as it sounds: don’t give up.

 

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