Growth vs Profit: Debating w/ a Marketer, Operator and CPA

November 28, 2018. By Joshua Frazier

Today we’re taking the Profit vs Growth head on in a lively debate between a marketer, a CPA and a growth minded property management entrepreneur. Should you focus on doors, dollars, EBIDTA? Check out this royal rumble with Alex Osenenko, Greg Crabtree and Brad Larsen on Profit versus Growth.

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Topics covered:

• (01:30) – Importance of Profit
  • (02:13) – Greg discusses having no profit at the end of the year
  • (02:51) – Greg walks through an example of a Build to Sell Model
  • (03:41) – 3 Plays of Business Groups
    • (03:44) – “Run to Harvest” Play
    • (04:09) – “Harvest to Premium Sale”
    • (04:50) – “Build to Sell”
• (05:31) – Taxation and Zero Profit
  • (05:35) – Brad questions the tax liability of making 0 money.
  • (05:50) – Greg explains how an accountant approaches taxes
  • (07:18) – Alex gives his take-away from Greg’s book
• (08:05) – Greg provides the “Magic Pixie Dust” of business Growth
  • (08:26) – Greg gives background on origins of books
  • (09:06) – Return on invested Capital
  • (09:57) – Alex and Greg discuss returns
  • (11:34) – 4 Components of Capital
    • (12:35) – Launch Capital
      • (14:13) – Greg gives some background on accountants and Profit and Loss
      • (16:15) – Earning a return
• (18:45) – Accountability and Profit
  • (19:36) –  Questions for Growth
  • (20:53) – Example of Balance
• (21:48) – Profit vs Growth
  • (22:11) Brad discusses balancing growth revenue and profit generation
  • (23: 13) Alex discusses his method
  • (25:59) Jordan discusses maintenance and money from brokerage and accountability
  • (27:39) Greg touches on the importance of accountability with growth.
• (32:00) – What playbook are you running?
  • (32:28) Build-to-Sell is not right for the majority of entrepreneurs
  • (32:51) – “How do you learn to be an entrepreneur?”
  • (34:56) – Why do many property management companies only run a 6-8% profit margin?
  • (35:40) – The future of technology in business
  • (40:05) – Biggest capitalization risk for a property management company
• (41:19) – At what point does staff for growth come in to play?
  • (42:50) – Brad talks about staff for growth in flatline companies
  • (43:15) – Staff member cost vs Adding Fees
  • (43:48) – Fee Maxing vs Value/Relationship Maxing
  • (45:00) – Employee value, Profit and growth
  • (48:28) – Pattern Learning
• (50:35) – Where should we be in profitability? (51:15) Target Profitability Margin
  • (52:18) – The top 25%
  • (54:48) – Real Estate is cyclical
  • (56:50) – Growth is CBU as well
  • (57:40) – Summary of discussion
  • (58:30) – Closing

Resources Mentioned: 

• Greg Crabtree’s Book: Simple Numbers, Straight Talk, Big Profits

Where to Learn More: 

• Come and join us at the PM Grow Summit in Austin 2019!