📍 Hey everyone. Welcome back to No Silver Spoons. I'm Sarah Beth Herman. I wanna start today's episode with something entrepreneurs do all the time. When you've been around enough entrepreneurs, you'll start having conversations like this, if you haven't already.

Somebody asks how business is going, and we answer with revenue. We crossed a million. We are a $5 million company now. We grew 30% last year. We're on track for our biggest year ever. And everybody else goes, "Oh my gosh, that's amazing." And maybe it is, but I have a really annoying follow-up question.

How much money did you actually make, though? Because those aren't the same question, and I think that we've gotten way too comfortable acting like they are. If you tell me your company did $5 million last year, I really don't know very much about your company yet. You could be doing phenomenally well.

You could also be exhausted, overstaffed, underpriced, carrying a ridiculous amount of debt, sitting on unpaid invoices and spending $4.9 million to produce $5 million. So I don't want to know how impressive the number sounds. I want to know what happened to the money, and that's what we're gonna do for the next 15 minutes.

I run seven companies, and one thing that will humble you very quickly is realizing that money moving through a business and money being made by a business are very different things. A lot of money can move through a company. That doesn't mean a lot of money stays there. And as you grow in business, you will find that you will become desensitized to money.

The larger your company grows, the more large transactions move freely, and before you know it, $1,000 is like a penny, and then $10,000 is like a penny, and then $20,000 is like a penny, and then $100,000 is like a penny. And, it... before you know it, really, it's just all these large numbers you're talking.

You don't really worry or think about money the way you used to, maybe in your 20s or even in your 30s. , And maybe you're in your 20s or 30s, and you have a multi-million dollar company, and you totally get the whole aspect of being desensitized to dollar amounts. The larger the company becomes, the easier it can actually be to hide things inside of big numbers.

So let's say you did two million last year and 2.5 million this year. Fantastic. Half a million dollars in growth. I'd be excited too. Then I find out you added $240,000 in payroll. Marketing went up $90,000. Software and technology increased thirty-five thou- thousand dollars. You added another office, you hired a manager, merchant fees increased because you're processing more transactions, insurance went up, your owner distributions went down, and somehow the company grew by half a million dollars and it has less cash in the bank than when you did half a million dollars less.

Now we have a much more interesting conversation because you didn't lie when you said you grew. You did. The question is whether the growth improved the business. Those are, again, two different measurements. And this isn't just me being overly particular about numbers. , The Federal Reserve Bank's 2026 Small Business Credit Survey included more than sixty-five hundred small employer firms.

Seventy-seven percent reported challenges related to rising costs. Seventy-seven percent. So when somebody tells me their revenue increased this year, one of my first questions is, "What happened to the cost of producing it?" Because nearly everything around that revenue may have gotten more expensive too.

Labor, products, services, insurance, technology, shipping, advertising, whatever applies to your company. This is why a revenue target by itself can be such a lazy goal. And I don't mean that to be rude or triggering. truly, a revenue target by itself can really, really, really be a lazy goal.

" Next year, we're gonna do ten million." Okay, why? Why ten million? Why not eight million with better margins? Why not twelve million? What changes in the business when you reach ten? What does it require? How many additional customers? How many employees? How much working capital?

What additional management structure? How much more inventory? What does it do to the owner's life? If the answer is basically, "Because ten million would be awesome," that's not a business strategy. That's just a cool number. H-here's an example. I'll give you two companies. Company A does two million dollars in revenue and generates four hundred thousand in profit.

Company B does five million and generates a hundred and fifty thousand. Which one do you want? Your instinct might be company A. Maybe. I still don't know. Maybe company B just spent a million dollars opening two locations, and they're going to produce incredible returns next year. Maybe company A gets seventy percent of its revenue from one customer who's threatening to leave.

Maybe company B operates without its owner, and company A falls apart if the owner takes a three-day weekend. Maybe company A has no debt. Maybe company B has a mountain of it. I need more information, and that's exactly my point. Revenue by itself cannot tell me whether I want your business. So why are so many owners using revenue by itself to decide whether they should be proud of it?

There's another place that gets interesting. Your biggest client may not be your best client. This one gets people. Let's say client A pays you ten thousand dollars every month. Client B pays you eight thousand dollars easy. Client A is more valuable. Except client A requires two hundred labor hours a month.

Client B requires eighty. Client A pays forty-five days late, and client B is on auto-pay. Client A has three managers involved because there is constantly some special circumstance. Client B follows your processes. Client A has negotiated a discount.

Client B pays your normal rate. And every six months, client A threatens to leave unless you make another exception. Tell me again, which one is worth more? I'm not saying difficult clients are bad clients. Some of my best business relationships have required a tremendous amount of work.

I'm saying knowing what the relationship costs There's the difference. I think a lot of businesses have customers they are terrified to lose because they see the revenue attached to the account, but they never calculated the resources attached to keeping it, and I think that's worth doing. Products are the same way.

You sell something for one hundred dollars. You see the order come through, a hundred dollars. It feels great.  Except the product costs thirty-two dollars. You offered free shipping, and that was eleven dollars. The platform and payment processing took another piece. It cost you eighteen dollars in advertising to acquire the customer.

Then there was packaging, labor. A percent of orders get returned or damaged, and maybe you ran a fifteen percent promotion to get the sale in the first place. That one hundred dollars gets skinny pretty quickly. And here's where growth can actually become dangerous. If you're making almost nothing on every transaction, selling twice as many isn't necessarily the breakthrough that you've been waiting for.

You may have just doubled the amount of work required to making almost nothing. I want you to hear that because business owners are constantly being told to scale. Scale what? Before you scale something, make sure that you like the economics of the thing you're scaling. Otherwise, you're not solving the problem, you're giving it volume.

Payroll is another one, and this is where I think we can fool ourselves because hiring feels like growth. We've gone from twelve employees to twenty-five. Okay. What did the additional thirteen people allow the business to do? That's not a hostile question. That's a CEO question. The Bureau of Labor Statistics released updated employer compensation data this month.

In private industry, wages and salaries averaged thirty-two dollars and eighty-two cents per hour, while benefits averaged another fourteen dollars and seven cents. I'm not telling you that's your company's exact ratio. It almost certainly isn't. I'm telling you that the hourly wage on the offer letter is not the complete cost of employing somebody.

You have payroll taxes, benefits, depending on your company, workers' compensation, equipment, software, training, management, so if you added three hundred thousand dollars in payroll this year, I don't automatically think that's bad.

Maybe it was one of the smartest investments you made. But I want to be able to point to what changed because you spent the three hundred thousand dollars. Did revenue grow? Did capacity increase? Did turnaround time improve? Did you solve a quality problem?

Did the owner finally get out of daily operations? Did you create the infrastructure necessary for the next year's growth? What did we buy? Because payroll should produce something besides more payroll. And then there's my favorite business magic trick. You have a fantastic sales month, and somehow you're still wondering where the cash is.

Welcome to accounts receivable. If you invoice clients, bill insurance, extend payment terms, or otherwise perform work before receiving the money, you already understand this. The sale can be real, the revenue can be real, and the cash can still not be in your bank account. The Federal Reserve's 2026 small business data showed that 60% of employer firms sought some type of financing in the previous 12 months.

And among firms applying for financing, meeting operational expenses was the most commonly reported reason. That should get our attention because businesses don't operate on applause for a great sales month.

Payroll wants cash. Vendors want cash. Rent wants cash. And if two hundred thousand dollars is sitting in accounts receivable, that's important information. So if you're looking at your revenue saying, we're doing better than we've ever done before, while simultaneously wondering why cash feels tight, don't dismiss that feeling.

Find the money. Where is it? Has it been collected? Did expenses increase? Did you buy inventory? Did you pay down debt? Did you hire? Did you distribute it? Did your margins change? I don't know. I don't know what the answer is, but there is an answer. I want you to go find it. This is one of the reasons I love working in dentistry because dental practices make this incredibly easy to see.

This episode of No Silver Spoons is sponsored by Dentistry Support. And I can look at a dental practice that had an incredible production month. The doctor produced, hygiene produced, the schedule was full. Everybody was busy.

Fantastic. Now show me collections. Show me insurance AR. Show me patient balances. Show me what's aging. Show me how long claims are sitting unresolved because doing the dentistry and getting paid for the dentistry are two different operational events. And sometimes the answer isn't we need more production.

We need more new patients. We need more people on the schedule. Sometimes you need to collect the money attached to the work that you've already done. That's one of the reasons Dentistry Support exists. We help dental practices with the administrative work that has to happen behind the clinical work, billing and accounts receivable, eligibility verification, phones, and the systems that keep those things moving.

And if you're still listening and you run a dental practice, but you're not ready to work with us, use our free training. I'm serious about that. I don't need you to become my client before I'm willing to help you get better at running your business. Go to dentrystrysupport.com/freetraining. Learn something and use it. Dentistry support, delivering results and simplifying everything.  Now I want to get to the part of this episode that I think matters most. If you're already thinking about twenty twenty-seven and you have a revenue goal written down, I want you to look at it differently.

Maybe your goal is one million dollars. Maybe it's ten million dollars. Maybe it's fifty million dollars. I don't care what the number is. Before you ask yourself how you're going to get there, I want you to ask, "Do I actually want more of the business I have right now?" Because if your current service has terrible margins, I don't want twice as much of that yet.

If your employees are already drowning, I don't want to dump thirty percent more volume into the same operation and then call it growth. If every new client requires an exception, a workaround, and another piece of information that only exists inside of your head, I don't want to scale that. If you work seventy hours a week running a three million dollar company,

I really want to understand what happens to you when it's a six million dollar company. This isn't me telling you not to grow. Please grow. I love growth. I've spent a huge portion of my life building companies. But I want growth that gives you something: more profit, more opportunity, more stability, more impact, more capacity, something.

I don't want you building a bigger company because bigger became the goal somewhere along the way, and nobody stopped to ask whether bigger was actually better. So here's what you're doing after this episode, and please don't make this complicated. I want you to pull your year-to-date numbers: revenue, payroll, operating expenses, cash, accounts receivable if you carry it, and whatever you use to measure profitability in your company.

Put them next to the same period last year, then sit there for a minute. Don't explain the numbers yet. I just want you to look at them. As entrepreneurs, we think we need to justify absolutely everything and explain why something happened. Don't go there yet. Don't let your trauma responses from the past come forward and start justifying everything.

I just want you to look at them. What moved? Answer only that question. What moved faster than something else? If revenue is up eighteen percent and payroll is up forty percent, why? There might be an excellent reason, and I want you to find it. If sales are up and cash is down, well, where's the money? If revenue is flat but profit improved, what did you do differently?

If your largest client represents twenty percent of your revenue, what percentage of your resources do they consume? If you launch something new, is it actually making money yet? It doesn't mean you need to drop it if it's not yet, but we've got to have a strategy here. You don't need an MBA to answer any of these questions.

You need access to your own numbers and enough curiosity not to stop at the biggest one. And if you look at this and you realize you don't know, perfect I'm not kidding. I don't know is useful when it tells you what you need to go find out, What I don't want is I don't know followed by another year of not knowing.

That is a big difference there. Before you ask how you're going to make more money in twenty twenty-seven, figure out what happened to the money you made in twenty twenty-six. That's it. That's the work this week, and next week we're gonna go straight into one of the most expensive sentences business owners say, " I think we need to hire somebody."

Maybe you do. But before I let you add another salary to payroll, we're going to look at the work because sometimes you need another employee, and sometimes you've built a mess and you're about to hire another human being to help you manage the mess, and those are very different investments.

I'm Sarah Beth Herman, and this is No Silver Spoons. Don't chase the bigger number until you understand the number you already have.  📍 Go open your financials, and I'll catch you on the next episode.