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Introduction to Profit Margins 5:03

• Understand the importance of achieving a 20% profit margin for business sustainability.

• Recognize that profit margins are targets for businesses generating over $60,000 a month.

Step 1: Establish Revenue Goals 6:05

• Focus on reaching a minimum revenue of $60,000 per month.

• Prioritize growth and reinvest profits until reaching this threshold.

Step 2: Understand Cost of Goods Sold (COGS) 14:40

• Allocate 55% of revenue to COGS, which includes:

  • Cleaner wages

  • Payroll taxes

  • Supplies and uniforms

• Recognize that COGS is a necessary expense that directly correlates with revenue generation.

Step 3: Manage Office Staff Expenses 26:07

• Limit office staff wages to 12% of revenue.

• Invest in coaching and training before hiring additional staff to ensure efficiency.

Step 4: Allocate Marketing Expenses 34:05

• Set aside 6% of revenue for marketing efforts aimed at acquiring new clients and cleaners.

• Adjust marketing spend based on business needs and revenue growth.

Step 5: Control Other Office Expenses 39:59

• Keep other office expenses, including utilities and software, to 7% of revenue.

• Be flexible in reallocating funds based on operational needs.

Final Calculation of Profit Margin 40:04

• After accounting for all expenses, ensure that the remaining revenue equals 20% profit margin.

• Regularly review profit margins quarterly to account for variations in expenses.

• Ensure that all financial records are accurately maintained using accounting software like QuickBooks.

• Avoid common pitfalls such as misclassifying expenses that cannot be deducted, including:

  • Federal and state income taxes

  • Self-employment taxes

  • Tax penalties and interest

  • Credit card payments

  • Down payments for real estate

  • Distributions from the business.

• Regularly review and adjust your budget to reflect changes in revenue and expenses.

• Invest in training and coaching to improve operational efficiency before hiring additional staff.

• Monitor your profit margins quarterly to identify trends and make necessary adjustments.