If you’re growing a good business in this industry, doing these types of services with the right pricing and the right fees, this is what you need to be thinking about.
At $250,000 in sales, we need to have zero team members, which means zero employees and zero contractors.
This is revenue. Zero team members and we need to be at 70-80% profit margin.
Think about that. Revenue. Team members. Profit margin.
If you’re not hitting these numbers, then something’s wrong.
Maybe pricing is too low. Are we charging less than $1,000 a month on the accounting?
Are we charging less than $2,000 on the business returns? What are we doing?
Are we not piecing out the different services?
Are we lumping in AP with monthly accounting and with CFO work?
Are we lumping in the tax planning with the tax prep? You’re not breaking it out enough?
Maybe that’s why.
$500,000 in sales, you should have 1 to 1.5 team members including yourself in addition to that, and the margin should be 60-70% percent.
And at a million plus, I really want to see 3 to 3.5 team members. And I want to see really anywhere from 40-60% margin, somewhere in that range.
That’s what is possible guys.
But if you’re not negotiating good deals, if you’re not selling the right way, if you’re not closing, if you don’t have the right price……I see people that have 26 team members. I got a client recently, she signed up with us…..26 full time employees. I think some are part time, I’ll cut her a break on that. ….
26 employees, a million a year in sales.
She was not even making $100,000 taxable income.
She made it to a million, but she wasn’t specific enough.
She should have said, I want to make a million a year with these margins.
You’ve got to be really specific.
Because you can hit a million a year doing a 1040 business and be living in a hell in a hand basket.
It’s not going to be fun. So this is what I’m talking about.
With that in mind, what kind of pricing do you need to have to get there?
We’re going to go through this in detail.