The Equation Is Simple. Your Stage Is Not. (Part 1: Revenue)
The Equation Series, Part 1 of 3. For CEOs and Founders.
I was at a happy hour recently when a consultant shared something a professor drilled into him:
Revenue less Expenses equals Profit.
That’s it. That’s the whole business.
He’s right. It really is that simple.
And that’s exactly why so many CEOs get this wrong.
Because the equation tells you what the pieces are. It does not tell you which piece deserves your attention right now. And attention is the scarcest resource you have.
Here’s the truth I’ve watched play out across twenty years of financial strategy:
Everything in the equation always matters. But your key performance indicators change with the stage of your business.
This series walks through those stages. Revenue first. Gross margin second. Profit last.
And one thing before all of them, every single time: cash flow.
Cash Flow Is Always Number One
Let’s get this out of the way.
Cash flow is king. It was king when I wrote about it years ago and it’s king today.
You can be profitable on paper and dead in practice. Payroll doesn’t accept net income. Your landlord doesn’t take gross margin.
So whatever stage you’re in, cash flow sits above the equation, not inside it. Watch it. Forecast it. Manage it. Sleep better.
Now. Back to the equation.
Early Days: Chase Revenue. Leave a Penny on the Table.
Don’t you just hate it when an advisor tells a two-year-old business to “focus on profitability”?
I do.
Here’s my position, and it’s not a popular one with the spreadsheet crowd:
Until you’re making a million dollars annually, with a real expectation that it continues, your job is revenue. (And always cash flow.)
Not margin optimization. Not expense discipline for its own sake. Revenue.
Why? Because in the early days you are still building the business model. Your products and services might not be profitable yet, and that’s fine. You’re learning. You’re taking in feedback. You’re pivoting.
And here’s the part founders forget: you are getting paid while you fine-tune, build, and learn.
That is awesome. Read that again. You’re being paid to figure it out.
Demanding profit on top of that, this early, is unreasonable. Worse, it’s dangerous. I’ve watched businesses that squeeze every penny in year two become transactional, non-growth-minded businesses that die quick. They optimized a model they hadn’t finished building.
Leave a penny on the table. Buy the learning.
The Research Backs the Top Line
This isn’t just my gut. And it isn’t just from my years in this space.
McKinsey’s long-running growth research found that an extra five percentage points of annual revenue growth correlates with three to four additional points of total shareholder returns (McKinsey, “The Ten Rules of Growth,” 2022). Their 2026 study of 61 companies that outperformed their industries found the winners beat peers by five points on revenue growth and seven on profitability, and the common thread was that they kept investing in growth even when times got hard (McKinsey, “Inspired for Business Growth,” 2026).
Growth companies that stop feeding the top line don’t become more profitable companies.
They become small ones. Or dead ones.
What This Looks Like on a Tuesday
You have 30 minutes. Where do they go?
Thirty minutes spent finding $30 of revenue beats thirty minutes saving $30 of cost. I’ve been making this argument for years, and I’m not done making it.
A new customer becomes a repeat customer. A repeat customer refers you. That $30 compounds.
Meanwhile $30 saved… saves $30. Once.
Costs have a floor. You can’t cut below zero. Revenue has no ceiling.
That asymmetry is the whole reason stage one belongs to the top line.
The Bottom Line (Up Front, and Again Here)
The equation is real. Revenue less Expenses equals Profit.
But in the early days, with cash flow protected, revenue is the variable that deserves your best thirty minutes.
Maybe I am writing this for me. As summer progresses, I’ve found the need to remind myself. I tell myself, “Jamie, it’s revenue that matters. You aren’t behind if today’s activities don’t directly impact it. There will be lots of cold days to get back to automation and workflows.” It helps me prioritize. And remember the stage I’m in at Double U (https://doubleuadvisors.com/).
Next in the series: what changes when you cross the million mark, and why the messy middle is a gross margin game.
Many of the CEOs I work with struggle to know which financial lever matters at their stage.
That’s exactly what my Financial Strategy Coaching for Business Leaders covers: your numbers, your stage, your plan. Six months. Eight hours of 1:1 coaching. Proven frameworks. Book a call and let’s talk about where your next thirty minutes should go.
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