My Mistake: Accepting Razor-Thin Margins

Dan Kahn says he spent years chasing top-line revenue but somehow the bottom line never scaled the same way.

Good Morning!

Here are today’s highlights:

• Alan Pentz says he initially dismissed the AI hype. Now he thinks it’s changing everything.

• Actually, says Josh Patrick, accepting an earnout when you sell a business is even worse than you think.

• The owner of a roofing business says his clients have shifted from growth mode to no-spending mode.

• Having trouble finding skilled workers? Stop waiting for someone else to solve your problem, says a former CEO.

MANAGEMENT

The Problem With Chasing Revenue: “I started Kahn Media nearly 17 years ago with a journalism degree, a background in PR, and zero formal training in business or finance. I bootstrapped this thing from a laptop in a spare bedroom to one of the top agencies in the industry. But I made a critical error along the way: I assumed that running an agency meant razor-thin margins were just the cost of doing business. Growth meant chasing top-line revenue. And yes, our revenue grew year over year. So did our team, our influence, and our client roster. But the bottom line never quite scaled the same way. I figured that was just how it worked. Until recently.”

• “I joined a mastermind group for agency owners. On our first call, I listened to five or six agency founders talk about real profitability. Margins I used to think were fantasy. I was floored. Honestly? I was embarrassed. And more than a little nauseous. That’s when someone recommended the book Profit First by Mike Michalowicz.”

• “The book is a game-changer. It flips traditional accounting on its head. Instead of ‘Revenue - Expenses = Profit,’ it reframes the formula as ‘Revenue - Profit = Expenses.’”

• “Michalowicz applies a concept similar to the envelope budgeting system Dave Ramsey made famous, but tailored to how a business manages cash flow. You allocate profit first, then pay everything else with what remains. It’s simple in theory, hard in practice, but powerful.”

• “We’re now implementing the system at Kahn Media. It’s a heavy lift, but it’s already making a measurable difference.” READ MORE