The host of CNBC’s The Profit explains to Jimmy Walicek, CEO of WAKA Kickball and Social Sports, how his business could be more profitable if it made less money.
As you grow your revenue, your profit should grow even more because some of your fixed costs remain constant, says Marcus Lemonis, famed CEO of Camping World and star of CNBC’s hit series The Profit.
To that end, he has advice for Jimmy Walicek, a co-founder of WAKA Kickball and Social Sports. “Dissect and understand your $6.8 million more,” he says to Walicek. “I’ve seen businesses go from $5 million to $10 million, and they actually make less!”
Walicek appears as the featured entrepreneur in the most recent episode of Inc.’s Ask Marcus Lemonis video series. Each week on Inc.com, Lemonis meets with a private business owner, who then asks Lemonis one question about his or her most pressing business challenge.
Walicek admits that his company, which generates 90 percent of its revenue through individual sports league sign-ups, is seeing a decline in revenue growth. Though WAKA brought in more than $6.8 million in 2014–across a total of 57 markets–he still would not call his business “very profitable.” He has high overhead costs–mostly to pay for full-time staff–and net margins around just 5 percent. To address that, Walicek’s current plan, he explains to Lemonis, is to pour more money into marketing, for instance, by hiring a new marketing director.
Lemonis doesn’t agree that this is the best move right now. The solution, Lemonis says, is to determine which of your markets are making the most money, and then consider what to do with the ones that are lagging behind. That way, Walicek can “re-dedicate” resources where they’re more likely to make more money, and help the company scale.
For more on how to fix a stagnant bottom line, watch the episode in its entirety above
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