Quote:
Originally Posted by TOS'd
7 figure revenue, but also 7 figure expenses  |
I was taught a long time ago, the bank would prefer to see a business that makes 15 points on $1 million of sales than a company that makes 5 points on $10 million in sales.
I have a feeling pasta's friend also doesn't understand that. As an example he probably passes all event rental bookings or event spending expenses through his business, even though the client directly pays for all of them and they likely dont get marked up. This dilutes his revenue to profit ratio.
You should only incur costs on your books if you are allowed to mark up those costs. The same way I dont pass purchases of equipment for my clients through my books, the client just pays for them directly, and I manage the sale. The client isn't going to accept a markup of 10 or 15% on the purchase of $30 million bucks worth of yellow iron, so while I could pass that purchase through my books, it would still mean I dont make profit on it, which means it would dilute my revenue to profit margin so fucking much the bank thinks I basically can't grow a business while still making money.
EDIT: just to clarify this is just a guess. Or maybe buddy just spends a lot on hookers and blow.