The E Hustle 36: Are you scaling or failing?

profit turnaround May 12, 2024

Read time: 2 mins

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As I’ve started speaking with more brands again, expanding my coaching program, ECOM100 (reply to this email if you want to learn more about that), it’s alarming how many business owners are making the same mistakes, and getting fed the wrong advice.


Trust your gut

If you’re 2-3 years into your business, and you’re paying yourself less than you would be earning in a decent job, then something is wrong.

If you’re 2-3 years into your business, and you haven’t built an asset that you could easily sell for a million dollars plus, then something is wrong.

If you’re 2-3 years into your business and you’re always short on cash, or borrowing and feeling stressed, then something is wrong.

Trust your gut. If it feels like your business only works when you’re on sale, or 2-3 times a year, then something is wrong.

If you need to spend 30% of your monthly sales on advertising, then something is wrong.


Misguided advice

You see, your coach or guru will tell you you’re scaling. You need to spend more to make more - but that’s not true. The fundamental definition of profitability is the difference between how much you make, and how much you spend - but why do we spend nearly as much as we make? It’s outrageous!


The root cause

People have a bias to work on what we like, or what we’re good at.

You know, when you go to the gym and work on your biceps but not your legs? Or when you do weights, but not cardio? It’s the same in ecommerce. Generally we like to work on buying lots of products, and spending lots of money on ads, because, well, that’s what we’re told to do.

But what if I told you that this is the wrong way to go about business?

I think 90% of brand owners I have spoken to this past few weeks are doing the same thing, and many of them are in denial.

They think that eventually their fortunes will change. Except that they won’t. You have to force the change, or be the change that you want to see in your business.

My job is easy - I look at your business and tell you where you’re going well, and where you aren’t going well, and that’s where you need to focus.


The simple fact comes back to my 50/30/20 rule

You should be aiming for a 20% net profit - at least! Why? Because as a business owner you want to be pulling at least $500k a year in profit. Otherwise seriously, is it worth all the effort? The average cost of living is increasing, house prices are booming, if you want to be wealthy, you actually need to be earning well over $500k, if you want to be rich, you need to be over $1m a year mark in terms of what you’re paying yourself.

Read more about my 50/30/20 rule here.

If you want to pull 500k a year out of your business in profit, then you need to make $2.5m a year with a 20% net profit - a revenue number which many of you are doing. However, if you’re on a 5% net profit (which also many of you are), then you need to be turning over $10m! Let that sink in!

Anyone running a business on less than 5% net profit is going to need to turn over well over $10m to even be in the running to become wealthy.

What seems closer? $10m with 5% net profit, or $2.5m with a 20% net profit?

Let me tell you which one is easier - the second. However, are you pushing towards the first? Which is more stressful, because you need more capital, and because you’re trying to rapidly increase revenue, which isn’t always easy without going on sale.

If I had a dollar for every time I saw a business failing by scaling, I’d have a lot of dollars.


Change your business model now

If your business model is broken, then you need to fix it. The definition of insanity is doing the same thing over and over and expecting different results.

Remember, people lie - the number's don't. 

If your business model feels broken, reply to this email to see how I can help.


Until next week,




Here's how to work with me:

1. Watch my free ecommerce lesson for beginners here.

2. Start your online business with Ecom Start for beginners here

3. Scale your existing business - reply Scale to this email.

 4. Ecom Nation - Digital marketing for your business

6. Buy my book, Shopify for Dummies

7. Pre order my book, Selling Online for Dummies

8. Speaking: Email me at [email protected]