Simple Numbers, Straight Talk, Big Profits! by Greg Crabtree & Beverly Blair Harzog Summary

Simple Numbers, Straight Talk, Big Profits! provides actionable financial strategies for small businesses, focusing on owner compensation, profit targets, labor productivity, and cash flow management. It emphasizes data-driven decision-making to build sustainable profitability, with tools like pre-tax profit benchmarks and labor efficiency metrics. The book helps entrepreneurs avoid common pitfalls in scaling from $1M to $5M in revenue.

This book is ideal for small business owners, founders, and entrepreneurs with revenues under $5 million. It’s particularly valuable for those struggling to translate revenue growth into real profitability or seeking to optimize labor costs, cash flow, and owner compensation structures.

Yes—it’s praised for simplifying complex financial concepts into practical steps. Readers gain frameworks to set market-based salaries, avoid "false profits," and allocate resources efficiently during growth phases. Free tools like profit calculators and labor efficiency templates add immediate value.

• Market-based owner salary: Pay yourself what a replacement would cost to avoid distorting profit metrics.
• Pre-tax profit benchmarks: Aim for 10%+ profitability to ensure business health.
• Labor productivity: Track revenue per labor hour to optimize team performance.
• Cash flow discipline: Reinvest profits strategically during scaling phases.

"False profit" occurs when business owners underpay themselves, artificially inflating profits. Crabtree argues this masks true financial health and discourages hiring competent replacements. Paying a fair market salary ensures profit calculations reflect reality.

The "Black Hole" refers to the $1M–$5M revenue phase where businesses often overspend on staffing and infrastructure too early. Crabtree advises reinvesting profits to build sustainable systems before scaling, avoiding profit-loss traps.

The book recommends prioritizing pre-tax profit margins over revenue growth, using metrics like labor efficiency ratios. It also provides templates to forecast cash needs and allocate profits wisely during expansion.

Free downloadable resources include profit-target calculators, labor productivity trackers, and cash flow templates. These tools help implement the book’s frameworks without costly software.

The original focuses on foundational finance for startups to $5M businesses, while Simple Numbers 2.0 addresses scaling beyond $5M with advanced labor metrics and investment strategies. Both emphasize data-driven decisions but target different growth stages.

Some note the advice is most applicable to U.S.-based businesses with traditional structures. Others suggest the labor efficiency metrics may oversimplify complex team dynamics, requiring adaptation for creative or service-based industries.

By shifting focus from revenue to profitability metrics, owners gain clarity on true business performance. The book’s benchmarks help identify inefficiencies in labor, overhead, or owner compensation, enabling targeted improvements.

For deeper dives into scaling, pair with Scaling Up by Verne Harnish (which features Crabtree’s labor efficiency chapter). For cash flow strategies, consider Profit First by Mike Michalowicz.