vanity metrics and what to optimize for

Summary

for years my scoreboard was top line revenue. seven figures was the goal. I hit it and realized I’d been optimizing for the wrong number.

the two numbers that actually matter.

1. net profit. what the business keeps after every expense. revenue is ego, profit is reality.

2. personal take home. what hits your account and stays. I use a distribution tracker so I know exactly what I’m paying myself after reinvestment.

the other vanity trap is followers. a six figure follower count doesn’t pay your mortgage. the email list and the customer list pay your mortgage.

if next year’s plan is built around growing top line revenue and growing your following, you might be setting yourself up to hit the goal and still hate the business. optimize for profit, optimize for take home, retain the customers you already have, and the rest follows.

Transcript

introduction: discussing the importance of focusing on the right performance indicators for 2025

The most impactful business is the business that genuinely improves another human, a better human business. And to grow a business like this, you have to continually improve yourself. This podcast is a documentation of that thesis, scaling businesses and also personal growth. My goal is for you to shortcut this journey. So if you’re ready to try hard, subscribe. If you like what you’re hearing, please share and enjoy. All right, let’s talk about maybe what you should optimize for in 2025 and what the vanity metrics are that you should avoid.

I know when I first got started as an entrepreneur, all I wanted to do was get to that one million dollar business. And I wanted to be able to say that I had a seven figure business and that was it. So let’s talk about what we should optimize for and how this might change your actions throughout the next year. This is the Better Human Business podcast. I’m Jerred Moon. And like I said, that’s all I wanted when I started.

I just wanted to get to a seven figure business. I wanted to be able to say, hey, I’ve made a million dollars. You know, I have a million dollar per year business. I just wanted to be able to say that I want to check that box. I thought it was cool. But what I found out once I got there is. I got there and I wasn’t very happy, like I wasn’t happy with what I was taking home, I just wasn’t happy with the workload, I just really wasn’t happy with anything.

explaining the pitfalls of vanity metrics and why they can mislead entrepreneurs

And I found out I could actually shrink the business quite a bit, work less and take home more money. And I was like, well, that’s that’s way cooler than saying that you have a seven figure business. So I even made those adjustments and everything was better. Everything was better now, fast forward many, many years, and I do have companies that do a lot more revenue than that when I started, but I’ve maintained all those rules of we’re going to maintain profitability, we’re going to maintain a work life balance, and I’m in a much better position than I’ve ever been with my family, with my finances, with everything.

It’s just in such a better situation. So I want to tell you what you should maybe avoid if you are chasing any vanity metrics and then also what you want to optimize for and how that will change your actions. So the vanity metrics that don’t matter these days. One, I’ve already kind of stated it, overall revenue, like who cares? It really it doesn’t matter how much money you make, it matters how much you take home, what you do with that, how comfortable you are in living your life, those kind of things.

key performance indicators to focus on for real business success

So it’s like don’t optimize for how much you are going to make. There’s no point in saying, hey, I made this much money this year because all that really matters is ultimately what you’re going to take home. So don’t worry about that overall gross revenue. And the other vanity metric these days that you don’t want to chase is anything with social media, like I want 100,000 followers, 250,000 followers, something like that. Because again, why would you optimize for that?

It doesn’t really matter. You need to be optimizing for something else. Like on the business side, instead of gross revenue, it could be net profit that you’re optimizing for. And then on the social media side, instead of 100,000 followers or 10,000 followers, maybe it’s engagement or number of direct messages or customers that came from social media. Because when you’re playing the vanity game, you’re not getting anywhere. Nobody cares if you have multiple seven figure businesses, right?

strategies for balancing business optimization with personal and family well-being

Like it doesn’t matter. I would actually rather have just one giant business as opposed to multiple seven figure businesses. So all of those vanity metrics that people like to spout out there are really silly and they don’t make any sense. So what do we optimize for? Well, here’s the biggest thing I like to optimize for in my business. And that is not only profit, but how much am I specifically taking home? And I’ve talked about this on the podcast before.

I have a distribution tracker that you can go and check these things. You just input some numbers and it’ll kind of tell you. So if you are part of the newsletter, it’s in the resource section right now. So in the month of December, you can go to the courses section of the website. You can look at the distribution tracker. But the reason I’m talking about this so much is because I’m seeing so many annual plans pop up with entrepreneurs for like reviews of what happened this year and then also the plans for next year.

using tools like HubSpot for tracking and improving business performance

And anytime I’m coaching anybody or giving any information, I always say, yeah, you can say you want to make $100,000 next month, but what’s the profit stipulation? Like I want to make $100,000 with 50% profit. That’s a goal. I want to make $100,000. That’s not a goal. Because what if you have 1% profit? Is it? Who cares? Again, who cares that you made the $100,000 if it’s just all going away? So the metric I track is what am I actually taking home?

And it doesn’t mean that I need to that needs to be always increasing forever. I mean, that’s the goal with the business growing, right? But the reason that’s such a great way to look at it is because I will only take home what I can take home. It doesn’t mean I’m trying to take every penny out of the business. If you take every penny out of the business, you could actually hurt the business. So I still want that number to grow, but I will only take money home after every employee has been paid, marketing has been paid, new initiatives have been paid, meaning profit from the business is been reinvested into new advertising campaigns, maybe another new employee, maybe whatever it is.

wrap-up: encouraging entrepreneurs to refine their focus and optimize for meaningful growth in the coming year

So after, even after profit, because you can only do new things with profit, right? Like there are only so many things in your business that are mandatory expenses. Then you have profit, but that profit then should go back into the business. So you continue to get these massive ROIs that businesses can provide. Then you take home money. And so the reason that’s what I optimize for, it’s not necessarily a selfish thing. Like, Oh, well, I just, I just need to make the most money.

And like, that’s it. That’s not really what it is. Is it forces me to optimize around making the best possible decisions for the company and for my family. So it’s that intersection between, okay, here’s what’s best for the business. And here’s what’s best for my family. Because if I only do what’s best for the business, I wouldn’t take any profit. I only take the minimum amount I needed to survive. I would keep everything in the business and we would just have this war chest of money or we’d end up wasting it or whatever.

So that’s best case for the business. Best case for my family is to, Hey, you know what? I’m not sure if we need all these employees. Let’s fire them. Let’s spend a little bit less on marketing. I just want to take home as much as I possibly can. That’s great for my family. Really probably for a short amount of time, in all honesty, before the business starts to shrink. That’s, but that’s great for my family. That’s bad for my business.

So I really want that intersection of like, how can the business continue to do well? How can it grow? And then also, how can I still provide for my family, take home enough money to pursue our goals and live our lives and do all the things that we want to do and live bigger lives. Like I’m not trying to live a small life in all honesty. And so that’s what I want. That’s what I optimize for.

So when you do this, here’s the decisions that will force you to make next year. If you want to kind of take this mindset is it’ll force you into that decision framework of like, what’s best for the business? Where can I reinvest profits? And also how can I do the best for my family? So what’s, what’s it going to do? It’s going to force your hand in a certain, certain capacity. Cause say you set a number on this now, a goal, a target, and you’re like, okay, well I want to take home this month, this much every single month.

And you’ve made that your goal in 2025, maybe just for the quarter, whatever. Now you have a goal, not just a profit, but you have a goal of like what you actually want to take home from the business and it make it a stretch goal. Whatever it is, it could be as much as you want. But when you write that down on paper, now that’s your goal. You start to optimize for different things. You’re like, okay, well, first off, we do have some expenses that we can cut.

Maybe you have too many different software programs. Maybe you can cut some things out of the budget. Maybe, you know, there’s some redundant redundancies. Maybe there is some wasted money on marketing. Make sure your business is efficient. That’s, that’s step one. But that runs out real fast because you can’t keep cutting your way to wealth. You can’t keep cutting your way to growth. You just can’t cut, cut, cut until, and that makes your business bigger and better.

That’s like a one-time thing. It’s like, you could do it once a year. Like, okay, I need to cut all these frivolous expenses. Cool. I increased profit by 5% by doing that. That’s a one-time deal. You can’t continue to do that. And honestly, it’s a horrible mindset to maintain. So now you’re like looking at things like, okay, I’ve cut as much as I can now. Like, how do I tow this line of wanting to be extremely profitable for my family and, you know, reinvest into the business.

And what it typically forces most people to do is raise their prices or improve their product. And that’s where your mindset needs to be. So either you’re not charging enough for what you’re doing and you’re like, well, the only, I’m going to do the math. If I want to make this much and I need to reinvest this much into the business and I need to take home this much, well, then I’m going to need to raise my prices to what, and then you can forecast that.

You’d be like, well, my prices need to be here. But at the same time, nobody likes to pretend this is true. There is an upper threshold for the prices for the, for the services you provide. Like everyone acts like that’s not true. Like, well, you gotta pay, you gotta, you gotta charge what you’re worth. It’s like, yeah, but you’re only worth so much or else like, why aren’t you charging $10,000 a month for every single thing that you do, every single person that you see or $100,000 a month, because you’re not worth that, right?

There’s an upper limit to every single thing that can be provided. And so once you get to upper limit and you probably don’t want to be, you go beyond that to where you’re like your conversion rates on getting people into the door are lower. So what you want to optimize for now is keeping customers around for as long as possible. And those are the two things that it’s going to force you to optimize for when you stop focusing on vanity metrics and you start focusing on ultimately what am I going to take home?

Now it’s going to be like, okay, am I charging the highest prices I possibly can that are fair for the service that I provide? And then also how many key people around to the best of my ability, provide them with the best possible experience. So once they’re kind of in my system, my ecosystem, they never want to leave. And you have to tow that line that cause that might even fluctuate on like what you charge or the different products or services that you provide.

Maybe you provide new things, maybe different do different launches, but this is what you should be optimizing for in 2025. Okay. Optimize for that number that you want to take home because it will help you make the best decisions, not only for the business, but for your family. And that’s where you want to be. Try harder.