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Free minibook · PDF, 27 pages
The Ten-Minute Income-Statement Test That Shows Whether Your Growth Is Actually Making Money
Revenue is climbing, the monthly pack is green, and something still smells wrong: profit isn't keeping pace, cash is tighter than it should be, and the business is doing more work for less profit. This free minibook gives you a ten-minute test that answers one question: is your growth making money, or eating it?
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By Todd Hagopian, who has led business transformations at Berkshire Hathaway, Illinois Tool Works and Whirlpool.
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Who it's for
P&L owners whose revenue is climbing while profit and cash tell a different story. You'll calculate three numbers from two years of your income statement, band each one High, Moderate or Low, and come away with a three-letter signature that tells you which layer of the business is breaking. You need two consecutive fiscal years of revenue, gross profit and operating profit, a defensible estimate of your industry's growth, a calculator and ten minutes.
Not for you if you have less than two full years of comparable numbers, or you want a valuation, a tax answer or an audit. It's an operating diagnostic: it measures; it doesn't prescribe.
What you'll learn
- The Record Year That Lost Ground
- Revenue Velocity: Are You Beating Your Market?
- Profit Velocity: Direction Beats Level
- Flow-Through: What Each New Dollar Is Worth
- The Ten-Minute Run
- Reading Your Three Letters
Plus a final action plan and a worksheet you can use the same week.
Key takeaways
- Every growing business is one of two machines. An ATM turns each additional dollar of revenue into a healthy share of additional profit. A money pit absorbs each additional dollar and returns less and less.
- Revenue velocity is your organic growth minus your industry's. Fifteen percent in a market growing 20 percent is lost ground.
- Profit velocity is the change in gross margin, in basis points. A 33 percent margin tells you where you are, not where you're heading.
- Flow-through asks how many cents of each additional revenue dollar reached operating profit.
- Rerun the test every quarter on trailing twelve months, so you get a trajectory, not a snapshot.
From the book
The math in this book takes ten minutes. The hard part is the eleventh minute, when the numbers say something your building has quietly agreed not to hear.
Most companies deliver good news fast and bad news late. Revenue gets announced. A slipping margin gets a footnote and a promise. Nobody lies. That isn't a character flaw. It's an instrument flaw: a machine with nothing but a speedometer reports a perfect day right up until a bearing seizes.
So settle one thing before you pick up a calculator: what happens if the numbers come back bad. Who sees the sheet, which meeting it goes to, and whether a weak result gets an owner and a date or an explanation.
Decide while the boxes are still blank. Once they're filled in, your instincts start negotiating. The mind guards good news like a bodyguard and treats bad news like a trespasser.
Todd Hagopian, ATM or Money Pit?, from the prologue "The Eleventh Minute"
Frequently asked questions
If revenue is up, how can the business be getting worse?
Because revenue counts what you sold, not what each sale left behind. A business can sell more every year and keep less of every new dollar. When that happens, growth isn't building the company. It's consuming it.
We grew 15 percent. Isn't that good?
Only if your market grew less. Fifteen percent in a market growing 20 percent is lost ground. Four percent in a market growing 1 percent is share taken. Revenue velocity, your organic growth rate minus your industry's organic growth rate, separates your skill from your weather.
What numbers do I need to run the test?
Seven numbers: current and prior-year revenue, current and prior-year gross profit, current and prior-year operating profit, and your industry's organic growth for the same period. Add acquired revenue and any genuine one-time items. Any annual income statement or divisional P&L has them.
Related free minibooks
Plug the Profit Leaks
Find the customers and products quietly draining your margin, then fix, reprice or exit.
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Which Business Are You?
Turn your three-letter signature into a named diagnosis and the right first move.
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The First 90 Days of a Turnaround
Pick your path on Day 1, then run the 90 days week by week.
Read moreRelated reading on the blog
- The Growth Trap: Revenue Up, Profit Gone
- What Margin Leaks Actually Cost You
- Business Health Check in 10 Minutes: ATM Test
Go further
This minibook is one piece. 10-Minute Transformation: Diagnose and Destroy Your Profit Killers (Koehler Books, out February 23, 2027) carries the full ten-minute diagnostic, the twelve business types, the five structural upgrades and a complete 90-day playbook.
The full library
Two ways to get it. Preorder now and it ships on release. Or buy on launch day, February 23, 2027, and get three free audiobooks (10-Minute Transformation, Stagnation Assassin and The Unfair Advantage) plus the full minibook library, on the honor system. Preorders don't include the launch-day bonuses.
About the author
Todd Hagopian, The Stagnation Assassin, is VP of Product Strategy and Marketing. He has led business transformations at Berkshire Hathaway, Illinois Tool Works, and Whirlpool Corporation, with $3B+ shareholder value across five turnarounds. He speaks to leadership teams on business transformation, turnarounds, and breaking stagnation.