What Adjusted Net Profit Means for Your Business

By Andy Mulholland

He has a background in leading a top real estate team for over a decade and an understanding of the critical role of clear financials, Andy, along with his wife Ellyn, a seasoned real estate CFO, co-founded Simple-Numbers.

Many real estate team leaders feel trapped because their business can’t run without them making sales. While the numbers might look good on paper, the reality is that your business depends on your next deal to stay afloat. This reliance on your personal sales is holding you back from growing and finding the freedom you want. It’s time to change that.

The problem: reliance on your sales. It’s frustrating. You want to build a business that works for you, not the other way around. But when your business relies on you to make every sale, it’s difficult to scale or take time off. Without realizing it, you might be building a business that can’t function without you.

The root of the issue often comes down to how you’re measuring your profitability. If you don’t know your adjusted net profit, you’re probably working with the wrong numbers. And if your bookkeeper or CPA doesn’t understand the unique needs of the real estate industry, they may not be calculating it correctly.

What is adjusted net profit? Adjusted net profit is the true profit your business generates after factoring in the amount of sales you, as the team leader, are personally making. It also includes your salary and any indirect expenses running through your business for tax purposes.

Simply put, adjusted net profit is the profit your business would make if you stopped selling real estate. If your business can’t run without your personal production, that’s a red flag. A true business should be profitable even if you decide to scale back or exit altogether.

Why does it matter? If you don’t know your adjusted net profit, you may be making decisions based on incomplete or inaccurate data. This can lead to frustration and poor choices that prevent your business from growing. To get your business to a place where it works for you, it’s essential to know where you stand financially.

Frustrated team leaders often don’t realize they’re operating with incorrect or missing data. Understanding your adjusted net profit helps you make better decisions. It gives you the clarity you need to plan for the future and take control of your business.

If you want your business to run without relying on your personal sales, start by calculating your adjusted net profit. This number will give you a clear picture of whether your business is truly profitable or if it’s relying too much on your efforts.

By knowing your adjusted net profit, you can begin building a business that works for you, whether you’re scaling back or planning to exit in the future. This knowledge empowers you to make smarter decisions that will lead to more freedom and control over your business. If you have any questions, feel free to email me at andy@simple-numbers.com.