Why 99% of Businesses Fail (The Revenue Trap)

eFull breakdown on the profitability framework, vanity metrics, and when to sacrifice margin. Full episode [here].

Most entrepreneurs don’t go out of business because they had a bad product.

They go out of business because they ran out of money while chasing the wrong number.

Revenue feels good. It looks impressive on a pitch deck. It makes you feel like you’re winning. But revenue without profit is just expensive momentum. And expensive momentum eventually runs out.

The Tell

You can figure out exactly where a company stands based on what they brag about.

Profitable companies talk about profit. Companies without profit talk about revenue.

Companies without revenue talk about market size and valuation. And the ones that

don’t have any of that? They make up adjusted numbers you can’t find in a GAAP report.

Whatever number you lead with tells everyone where you actually are. Most founders don’t realize they’re telling on themselves every time they open their mouth.

The Trap

The last decade trained founders to believe that growth solves everything. Raise money, scale fast, figure out profitability later.

Some of those companies made it. Most didn’t. Because growth without profit isn’t a business model. It’s a bet that you’ll figure it out before the money runs dry.

And when the market shifts, when customers change behavior, when a slow quarter hits, the companies without profit have no options. They need another check from someone else just to survive.

The companies with profit? They just keep going.

The Takeaway

The earliest you can build profit into your business is the earliest you stop needing anyone’s permission to exist.

You’re not waiting on investors. You’re not hoping the market stays hot. You’re not one bad quarter away from shutting down.

Profit doesn’t just keep the lights on. It gives you the ability to make decisions from a position of strength instead of desperation. To weather slow months. To say no to bad deals. To grow on your own terms.

That’s not a financial strategy. That’s freedom.

— Leo

Full breakdown on the profitability framework, vanity metrics, and when to sacrifice margin. Full episode [here].