Revenue Doesn't Matter

I believe a man should accept the consequences of his actions. Therefore, I freely admit that I am the father of Jennifer Aniston's unborn baby. I am willing to suffer the consequences. You should admire me for that. On another note, Mike Shanahan, the Redskins head coach, has once again refused my wise counsel. He has selected Rex “the Wonder Dog” Grossman as his starting quarterback. I advised him to sign my beloved Jen as a free agent quarterback. Until coach Shanahan realizes and fixes his error, I am boycotting Redskins home games. Actually, I don't have tickets until the second game. That makes boycotting the first one considerably easier. I'll probably even picket the Ashburn practice facility. Or – maybe I'll just drive by it a couple of times and give him a stern glance. It's on my way home from work. Rex and Jen actually have a few football characteristics in common. First, neither Rex nor Jen can avoid a pass rush. Second, neither can throw deep routes. Lastly, neither has won a Super Bowl. OK, that last one is a cheap shot. Rex has been there, but I'll bet Jen has attended at least one – probably with ex-hubby, Brad Pitt. I will gladly take her, and our love child, to the next one. I bet Rex won't be there. Last week, I read a sad story on the front page of the Washington Post. A man, who had immigrated from El Salvador twenty years ago, had lost his house and all of his savings in the recession. He came to the U.S. in the eighties, taught himself English, and graduated from high school. Then he took a series of jobs, starting out as a menial laborer. Finally, after starting a family and saving a considerable amount of money, he started a painting business. He hoped to manage four or five crews of painters working on residential remodeling jobs in our affluent D.C. Suburbs. His first couple years in business coincided with the end of the real estate boom. When the boom went bust, so did his business. He lost his house, his savings, all of his work crews, and most of his working equipment. He is now down to just himself, some broken equipment, and one man he calls on the rare occasions when he has work. He now feels lucky to get one prospect of a job per week. At this point, most of you are expecting a snarky punch line from me. OK – I know I deserve that. I am a repeat offender in the snark department. However, I feel nothing but admiration for this guy. I barely speak English well let alone another language. I am fortunate enough to have been able to afford a college education and start a business that has lasted for more than twenty years. I have had a lot of advantages of which this guy could only dream. However, his story is instructive from a business standpoint. He made one very big mistake from the outset. He assumed revenue as a given in his plans. He probably didn't even realize his assumption. You might reply, “Frank, a lot of people went bust in this recession. Once housing died, a lot of contractors bought the farm.” That is true except that I know a lot of contractors who survived. I know one painting company in particular that has just been sold. His revenue went down, but it didn't go away. Why was his business different from the Salvadoran immigrant's business? Both had four or five painting crews working during the boom. Both served affluent D.C. homeowners. As far as I know, paint even dried at the same rate for both. They differed in their personal focus. My client was focused from the very inception of his business on finding and developing revenue sources. Revenue was his first priority. He joined networking groups and developed relationships with HVAC companies, home remodelers, and other building tradesmen. A lead they developed could become a lead for him as well. The immigrant didn't focus on revenue generation. He relied on his own meager and underfunded advertising. Because he started during the boom, revenue came in easily at the start. He never developed a marketing plan to develop sources of revenue that would continue during a bust. Revenue matters. That's why it's called the top line. Revenue is never a given in a business plan. Lately, I have been spending a lot of time on a business advice web site, www.focus.com. The site features questions from business owners that are answered by a group of experts. I have been designated one of the experts in accounting and taxation. Obviously becoming an expert isn't that hard. Last week, a person posted the following question which was really more of a comment. “I am considering starting a small business, but I am hesitant given Obama's tax policies.” Now you know why I admire the Salvadoran immigrant. How do you even start to answer this question? Snark was oozing from my pores and dripping onto the keyboard. Here is the answer I would have liked to give him along with a punch in the face. I toned it down for the site. If you are interested in Frank writing politely, go to www.focus.com. Hopefully, you have better things to do. Here is my real answer. Dude, Obama's tax policy is about the 4,377,891th thing you should be worrying about if you are considering starting a business. The fact that it made your list at all should not only disqualify you from starting a business but also from the human race. You are precisely the sort of wannabe I chase from my office with a shotgun. (I'll bet you didn't know I am packing heat in the office. The great state of Virginia promotes concealed weapons.) Part of Obama's new tax law should be the forced sterilization of idiots like you – without anesthesia. I feel better now. The drugs are kicking in. This guy is a wannabe politician not a prospective business owner. The first concern and priority of a prospective business owner should be - “Where and how will I earn revenue?” If you can't answer that question, your business won't survive. When a new business owner meets with me and speaks first about anything other than how she plans on creating revenue, I lose interest immediately. If she wants to talk taxes first, she has no chance to succeed. About ten years ago I met with someone who was about to open a food consulting business. He left a salaried corporate job to advise food distributors. He met with me to discuss his business plan. His main concern was that he couldn't accurately forecast his expenses. For instance, he wasn't certain whether his phone bill would be $45 per month or $47 per month. Yes, I am serious. He never brought up the subject of revenue. I had to quiz him. He had one customer, his former employer, and no ideas on getting second or third customers. A few months later I met with him to prepare his tax returns. He had closed his business. His one customer dropped him. Are you really surprised? Revenue has to come first. My wife has just given birth to a bouncing baby business. She is opening an IT services business providing information security services to federal government agencies. Guess what we discussed first? You fail if you answered anything other than where her revenue will come from. The name is LAMAR Security Controls, LLC. Why the name LAMAR? It's my middle name. Laura likes my middle name. My first wife hated it. Maybe she only hated it because it was attached to me. I had never considered that possibility?! I will keep you updated on her progress. As always, thanks for reading. You can get non-snarky tax and accounting advice at the S&K main web site www.skcpas.com.