If you are running a business or your own life, and you haven't read Profit First, you should give it a read. That book saved my ass.
Lemme tell you how 👇
In October last year I was invoice-to-invoice. For reasons that are completely my fault. I had just downsized my day job to 4 days/week to focus on the sidehustle, slashed my regular income, and spent a bunch of money at the same time.
Invoice-to-invoice is a stressful place to be. No fun at all.
By December 31st, I had about ~$7000 in the bank. That's not a lot for San Francisco.
Now there's $50,000. Enough for 5 months of expenses AND for taxes too. 💪
So how did Profit First let me save up almost $50k in 5 months?
Well a lot of things panned out, but Profit First is how I kept the money 😇
The core idea is this: You're thinking about profit all wrong.
Profit isn't what's left over after expenses.
Expenses are what's left over after profit 😉
Take your revenue, put aside desired profit, then pay yourself. You can use what's left to play business. Invest in growth, expenses, etc.
If there isn't enough money left after profit and paying yourself (and taxes), then your business needs to be optimized. Focus on that until it fits.
"Oh but Swiz I'm in debt, I can't just put money aside for profit and even to pay myself"
How are you gonna pay down your debt if you don't have profit? You need left-over cashflow to pay debt otherwise you're just going into debt somewhere else.
As @tenlinesofcode said:
eventually while running an unprofitable business, it's time to get a new and less expensive hobby
Keep that in mind and you'll be fine :)
PS: there's a lot of tactical stuff that goes into all this, but @MikeMichalowicz is much better at explaining it than I am, go read his book