Hi,

Two professional services firms. Same revenue. $8 million each.

Firm A has 25 people. Firm B has 35 people.

Which one would you rather own?

Most founders would say “it depends” and start asking about culture, client satisfaction, or growth trajectory. All important. But there’s one number that tells you almost everything you need to know about which business is actually better.

watts not working: Measuring firm health by revenue alone when the real question is efficiency per person.

I’ve been obsessing over a metric called Return on Person (ROP) – gross profit divided by total payroll. It tells you how much value each person on your payroll actually generates.

Firm A (25 people): $6M gross profit ÷ $3M payroll = 200% ROP
Firm B (35 people): $6M gross profit ÷ $4.2M payroll = 143% ROP

Same revenue. Wildly different businesses.

watts really happening: The firms that scale well aren’t the ones that hire fastest. They’re the ones that get more from each person.

In the AI era, every smart founder I know is asking: How do I get more output from the people I already have? How do I know when to swap people in or out? How do I build a firm that doesn’t require adding bodies to grow?

Because here’s what I keep seeing: Firms that grow by just adding more people hit walls around $5M. Lower margins. Harder to manage. Less attractive to buyers.

watts working: Founders who think about their team as a portfolio of investments, not just a headcount.

They’re obsessed with ROP because it predicts everything that matters: whether the firm scales well, runs without the founder, and sells for a premium.

High ROP firms are lean, focused, and valuable. Low ROP firms are bloated, founder-dependent, and hard to sell.

watts the real game changer: In professional services, your people ARE your product. ROP tells you how good that product actually is.

It’s the difference between building a firm and building a job that employs a lot of people.

Have a week of thinking about return, not just revenue!

Sel

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P.S. Visit the wattsnextpx website and blog, and stay tuned for our weekly updates.