The Diamond Cutter / Staying Above the Line / Offense and Defense
Diamond Cutter + Above the Line
Grow, then polish. Profit in every season.
After the top line grows, net profit often lags. Polish the stone. Then manage so the company stays above break-even when it is busy and when it is slow.
GMOwner
01
Grow it
Build demand and capacity with balanced blocks.
02
Polish it
Remove unnecessary expense. Smooth rough parts. Make it simple and elegant. Aim to run on 90% of revenue.
03
Know the line
Break-even = monthly fixed cost ÷ gross profit margin.
04
Balance is a verb
Offense (growth, top line) and defense (stability, bottom line). Notice, think, adjust. Fixed costs are not really fixed.
How to use it
- Do not start the next growth push until the current machine runs clean.
- Post break-even. Update it when costs change.
- In a down season, protect the good people and cut what does not produce.