Top line income, be it sales or salary is meaningless, it’s not what you make, it’s what you keep.
Effective businesses and individuals are not interested in sales figures or gross income but in net income after tax. Looking at top line figures is just plain silly. Which would you prefer a company that has sales of £200 million and a profit of £2 million or a company that has sales of £5 million and a profit of £2.5 million? Which would you prefer a salary of £100,000 at a tax rate of 50% or a salary of £75,000 at a tax rate of 25%?
Put like that, it’s obvious. To be effective we need to look at the bottom line not the top. So why do we keep measuring success looking at top line? Banks and many other financial institutions tailor their service to customers based on their sales, not profit. Directors of companies boast of year on year increases in sales and a director of a £20 million turnover company is seen as superior to a director of a £5 million company.
This has to change. As we move to SME’s being more and more important to the economy it’s time we considered the true potential of the company or the individual and not just their ability to produce top line growth. Sales are an indicator of success but a pretty poor one.
For now I’m concentrating on the bottom line not the top. What about you?
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