What’s Your Bottom Line?

Your Bottom Line

I think it may be worth thinking about your bottom line.

In business, there are a lot of numbers that get thrown around:

  • revenue
  • margin
  • EBITDA
  • the list goes on

But in my opinion, the purpose of a for-profit business is to…

Yep, you guessed it… make a profit.

A profit for its owners, whether that’s a 57-year-old woman operating as a sole proprietor or a publicly-traded Fortune 500 company with thousands of shareholders.

And while people think of revenue as a gauge of how large or successful a business is (along with the number of employees), I think revenue is simply a vanity metric.

Sure, revenue may allow someone to say they own and operate a $3 million business, but that doesn’t tell the entire story.

Now let’s be clear – profit isn’t the ONLY reason to start and run a business. But without it, the business might not be around for long.

Take, for example, 2 fictional businesses – ABC Corp. and XYZ Inc.

ABC Corp. has been in business for 57+ years across 3 generations of the ABC family. They have $3 million in revenue with an annual profit of $450,000. They employ 17 people and are a pillar in their local community.

XYZ Inc. has been in business for 6 years, founded by a 32-year-old single Mom. XYZ has $1.5 million in revenue with an annual profit of $1 million. XYZ employees 2 people – the single Mom founder and her cat, Whiskers. The business runs with a carefully selected group of contractors and other outsourced services.

So between ABC and XYZ, which is the better business?

I think that’s the wrong question…

People start and run businesses for different reasons, and as long as there’s a healthy profit to sustain the business into the future, I can’t say how or why one business is “better” than another.

But these are different businesses.

However, if you simply went by top-line revenue or the number of employees, you might assume that ABC Corp. is the bigger, better business.

But if you look solely at profit or the owner’s bottom line, XYZ comes out as the bigger business.

Again, not necessarily better.

But bigger as measured by profit.

The same problems arise in personal financial planning…

Who has the best financial plan? Or investment portfolio? Or risk management strategy? Or estate plan?

Is it you?

Or your friend from church?

Or your Mom & Dad?

Or your brother?

Your boss?

Or whoever wrote that article you found online?

Is there a BEST financial plan?

I’m here to tell you YES! There absolutely is.

The BEST financial plan is YOUR financial plan.

Here’s why…

Only YOUR financial plan will reflect the values, priorities, people, experiences, and things that are important to you and those you care about.

Maybe your primary goal is to achieve a better work/life balance. So maybe that means “retiring” in your early 50s so you can change careers to something that’s more rewarding and less demanding of your time away from the office.

Or perhaps you want more time to volunteer.

Maybe you want to save more now so you can better support your aging parents.

Or so you can give more to the charities that are important to you.

It could be as simple as taking less investment risk so your money and investments aren’t a source of stress and anxiety.

This is why, despite their good intentions, you should be cautious about taking advice and suggestions from folks who don’t have a deep understanding of what’s important to you.

No matter how much you like them or respect their opinion.

Despite how successful they appear to have become.

Regardless of how idyllic their life seems to be.

Because what worked for them might work for you.

But what if it doesn’t?

Can they be objective about your situation, your needs, your hopes, and dreams for the future?

Maybe they can… but please tread cautiously.

This is also why it’s dangerous to compare yourself to others.

Before you start down the rabbit hole of thinking or wishing you were doing what your family, friends, or neighbors are doing financially, just remember:

You’re not them.

And they’re not you.

Add to all this the jackasses out there masquerading as financial advisors who are more interested in selling you a high-commission “product” (they’ll probably refer to it as a solution) than actually considering what’s best for you…

It can be a lot to navigate.

If I can help or you’d like to discuss your situation, please get in touch and let me know.

I’m not going to assume I’m the best person to help you with your personal circumstances, but we can start with a conversation and explore the idea if you like.

Just remember, your bottom line is probably very different from anyone else.

And your personal financial planning and decision-making should reflect this.

“Personal finance is more personal than finance.”

Tim Maurer

And whether you reach out to me or another fee-only, fiduciary advisor, the biggest financial planning mistake is not having a plan.

Get started today.

Thanks for reading. While you’re here, be sure to sign up for my weekly email newsletter where I share tips, advice, and stories about the intersection of money and our lives. Just click here to join the community.

Russ Thornton
Russ Thornton
Hi there! I'm Russ, and I help women in their 50s and 60s achieve and maintain their desired lifestyle leading up to and throughout their retirement years. Imagine being able to look forward to a comfortable and confident financial future...
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