Transcript:

we're goodLet's talk revenue, and how that word can bevery, very deceiving.I'm Clay, let me explain.(dramatic music)Quick disclosure up front, I'm not an accountant,I'm not a CPA so if you're one of those and you're watchingthis I'm probably gonna drive you insane,but my goal here remember with this segment is to justoffer up basic, ground level knowledge on thingsthat people can then build from.So yes, I realize that these terms I'm probably missingall the nooks and crannies but that's not the idea here.The idea here is just to convey the broad conceptthat people like I said can build knowledge from.So, revenue, what is it, how can it be deceiving?Well, let's just start with the what real quick.So revenue if you've heard the term is just money.What kind of money?Well, the kind of money that a business brings in, right?So a businessthat's probably the worst, those are supposed to besome skyscrapers, okay?So that is what a business is bringing in.That is their revenue, their sales, whatever their product,their services, whatever they're getting, that is revenue.If you set up a lemonade stand and somebody gives youa dollar for that glass of lemonade, that dollar isyour revenue as a lemonade stand company.So that's what revenue is.But a lot of people say all right, well, that's how muchmoney you make.Well, that's when things get a little sketchy.That's when things get a little deceiving.So what do I mean by how much money you make?Because yeah, you do make money, if you give me a dollar,yeah I made a dollar in the sense of I now have a dollarto put into my wallet, but there's other numbers out therethat you need to pay attention to, and that really actuallymatter and in the world of business and just numbersin general, the other term that needs to be focusedon is your expenses.And that is also money, but the expenses relate to this,meaning how much did it cost to actually generate that?Right, so let's go with the lemonade thing.You had to actually buy the lemonade.Expense.You had to buy, we'll just say it, the stereotypicallike wooden stand.You had to buy the wood to build the stand.Expense.You had to buy the cup that you would serve it in.Expense.So for all of this, if you spent, let's just say $ .95to sell a cup of lemonade that you got a dollar for,did you actually make a dollar?Well, of course not.You didn't make that at all.Now here is how the numbers, and I want to go witha little bit bigger numbers here,but let's say a company's like wow, this company made,that marker's kinda shot,so some company made, I dunno, let's just call it50 million dollars and this is the revenue.I mean, wow, that's a lot of money.50 million dollars in sales and all of that,the business was able to generate, that's a lot.But, what happens if I said, well yeah,the expenses, so the expenses over here, were 55 million.So the question becomes did the company actuallymake 50 million dollars?Well, no, they actually lost five million dollars.How so?How does that math work?Well, nothing fancy here, you always want to takerevenue minus expenses and then that's gonna giveyou what would be known as your profit.And your profit is what a business makes or loses, okay?So in this situation, revenue of 50 minus expense of 55,that's a negative number, and when you have a negativenumber in accounting and all that,that means you lost money.So that is why on the surface, for when a company is sayingyay our revenue is 50 million dollars, it's, you gotta goa little bit deeper than that.You have to understand just how much expenses it tookto generate that.Now, this is also where, maybe for it of you gotta workon your profit margin.What is a profit margin?Well, a profit margin is, well let's just say thatthe company, let's change this to expensesof 40.So again, 50 right here minus 40 equals what, 10?10 of profit, or 10 million dollars in profit.What they literally made.So for that profit margin, that's telling you that theyactually have a margin there where there is a way to,there's some wiggle room, because they are spending moneyto make money sure, but the money that they're spending,is not as a much, so there is a margin in therefor them to make money.And that's what the term profit margin means is,profit margin is just referring towhat is the relationship between these two numbers,The higher the profit margin, the better.So that is what you want to focus on.If you're operating at like a two percent profit margin,that's not very good.If a company is operating and taking it to the extremeat a 90% profit margin,that is extremely, extremely excellent.But that's all kind of, I don't wanna get too farinto the weeds because the main thing here is just makingsure that you truly understand what revenue is and whyit can be a little bit deceiving and the questionneeds to always be, so if you want to impress your friends,oh did you hear about this company they did such and suchmillion dollars in sales, in revenue?Well, what were their expenses associated with that?Because from that, now you can start to work your waydown to that profit margin discussion,but a company that makes a whole bunch of moneybut has to spend even more money to make that,that's definitely some gray territory thereand in some situations that's how companiesare gonna go bankrupt.Yeah, sure they're makin' sales, but their expenses arejust way too much relative to those sales.So, that is what revenue isand why it can be very, very deceiving.So keep that in mind, whether you're looking into to investin stocks or just general knowledge or what have you,you can't only look at how much sales there are,because there's a lot of other numbers that go into itbut the main number just boils down to those expenses.So keep that all in mind.First off, thanks so much for watching the entire video,real quick, before you go, I wanna invite you to a livewebinar, web class, training, workshop, online event,whatever you wanna call it but it will be me liverevealing to you what I've discovered that has allowedme to transform myself from being an employeeto being my own boss, including how I had only onelosing day out of 73 days in total.I'm gonna cover three keys that have helped meunlock profitable consistency within the markets.The first key, is super weird, but in a productivetype of way, the second key is super awesomebecause it is quite literally is wired into our DNAas humans making it very easy to use,but in a cruel way this becomes a pitfall for many traders,I'll explain it all though, including how to avoidthe pitfall that it creates for some,and yeah, the third key when you hear it soundsway too good to be true, but it's not and I'll show youhow it all works, then at the end I open it upfor a question and answer sessionthat is again, totally live.Even if you can't make the live session,please still sign up as it will be recordedand you can go back and watch the replaythat I will send you.Click the image on the screen or click the link downin the description box, so you can get the date and timeand claim your spot, which I should note is limiteddue to the fact that this truly is a live event.If you have any questions, let me know,if not, I'll be seeing you soon.