Revenue Does Not Equal Income: Why Understanding the Difference Matters ~ Christine McIver
As entrepreneurs, we can often fall into the trap of chasing big revenue numbers. We celebrate the milestones, the sales, and the influx of clients – but when we look at our bank accounts, we’re left scratching our heads. Why is there still so little to show for all that effort? It’s a reality I’ve faced myself, and one that many of my clients have too.
In my recent podcast episode Revenue Does Not Equal Income, I explored this very issue. The truth is, while revenue refers to the total amount of money coming into your business, income is what you actually keep after covering expenses, taxes, and other costs. Without understanding the difference, you’re essentially chasing a dream, not building a sustainable business.
It’s Time to Get Real About Your Numbers
One of the most important steps you can take as a business owner is to truly understand your business numbers. How much of your revenue is being eaten up by operational costs? Are you accurately tracking expenses for services and products? If you’re just tracking sales without understanding the costs attached, you’re setting yourself up for a rough road ahead. You need to know your numbers – every single one of them.
When I hit a major revenue milestone in my business, I realized that despite all the sales, I wasn’t making the money I thought I would. I had been undercharging for some of my services, which led to a huge gap between what I was earning and what I was actually able to keep. But once I dug into the details, I saw what I was missing. I was spending way too much time on certain tasks and underpricing my services. Once I adjusted my pricing and got clear on my financials, everything changed.
Your Beliefs Around Money Matter
The challenge isn’t always just the numbers; it’s also your beliefs around money. If you’ve been taught to undervalue yourself, or if you’re stuck in a scarcity mindset, you’ll likely find it difficult to raise your prices or even accept the value of your own work. This is a crucial area of growth for many entrepreneurs. You can’t have a thriving business if you don’t believe in the value you bring to the table.
It’s okay to start small and make mistakes along the way – what matters is that you keep learning and adjusting. You might feel uncomfortable raising your prices, but it’s often the best decision you can make. You deserve to earn what your services are worth, and your clients will respect you more for it.
Streamlining for Success
If you feel like you’re running on a hamster wheel, it’s time to slow down in order to speed up. Look at your processes, your offers, and your expenses. Are there areas where you can cut back? Are you relying on inefficient systems that are draining your energy and your finances? Being mindful of these aspects will help you make better decisions and build a stronger, more profitable business.
Remember, true success isn’t just about how much you make – it’s about how much you keep and how it makes you feel. Building a business that not only grows your bank account but also enriches your life takes time, effort, and a willingness to shift your mindset.
Christine McIver, Business Optimization Expert