Scott Todd tackles the scaling trap that's secretly draining profits from growing businesses. When Brian, a home flipper with 8 years of experience, asks why he's taking home less money despite higher revenue, Scott reveals the hidden problem: margin erosion. As businesses scale, expenses often grow faster than revenue, creating the illusion of success while actually reducing profitability. Scott shares his proven three-step system for identifying and eliminating the "bad guys" in your financials using percentage-of-revenue analysis—the same method he uses to manage his own business.

What You'll Learn:

• Why growing revenue doesn't automatically mean you're making more money
• The scaling trap: how expenses creep up faster than sales as businesses grow
• Why looking at whole dollar amounts on financial statements misleads you
• The power of percentage-of-revenue analysis for spotting profit leaks
• How to identify your biggest expense problem in under 30 minutes
• The deep dive methodology for getting expenses back under control

Key Takeaways:

• The Scaling Trap Reality: Every new sale at a lower margin means you're working harder for less—your revenue might grow 10% while expenses grow 12%, silently killing profitability
• Percentage Over Dollars: Whole dollar amounts don't tell the story—percentage of revenue reveals the true villains in your business
• The Three-Year Rule: Compare your current year to three years ago to spot margin erosion patterns (example: if cost of goods sold was 25% in 2022 and is 32% today, that 700 basis point change is your enemy)
• One Bad Guy at a Time: Circle the biggest percentage increase first—trying to fix everything at once leads to fixing nothing
• The Three Decision Framework: After your deep dive, you'll face three choices: cut costs, raise prices, or have an all-hands meeting to control spending
• Monthly Vigilance: Review percentage-of-revenue statements every single month with your team—this is non-negotiable for business health

Resources Mentioned:

• ScottTodd.net/ask - Submit your business question for the show