Marketing - Knowing When to Scale

It’s the critical moment where most businesses either scale or stall. The ads are working, the system is proven, but the thought of spending more money feels terrifying. Why do so many business owners pull back right when they should be pushing forward?

In this practical, numbers-driven episode of the Stay Hungry Podcast, Joel and Martha tackle the single biggest hurdle for growing businesses: knowing when to stop breaking even and start scaling with confidence. They break down why so many entrepreneurs get a proven formula for success, only to choke at the finish line because they do not truly understand their own numbers.

From ROAS (Return on Ad Spend) and Cost of Goods Sold to agency fees and profit margins, this episode strips away the guesswork. It provides a simple, repeatable formula to understand your exact breakeven point and unlock serious profitability.

📈 The Maths of Scaling: How a £5k ad spend can generate over £23k in net profit.

🧠 The Scarcity Mindset: Why fear and a lack of clarity are the real reasons businesses fail to grow.

📊 Know Your Breakeven: A step-by-step walkthrough to calculate the exact point your marketing pays for itself.

💰 Beyond Breakeven: What happens when you push past that point and every sale becomes pure profit.

🔑 Agency Ready?: Why you must have a handle on these numbers before you can scale successfully with a marketing partner.

If you're tired of the "wait and see" approach and want to build a predictable, profitable marketing machine, this is your guide.

Listen now!

Links:

Website: https://www.codebreak.co.uk
Instagram: https://www.instagram.com/codebreakcrew/
Facebook: https://facebook.com/codebreakcrew/

Joel's Instagram: https://www.instagram.com/joelstoneofficial/
Joel's Facebook: https://facebook.com/joelstoneofficial/

Free Marketing Budget Calculator: https://codebreak.outgrow.us/knowyournumbers

Arrange a call with Codebreak: https://form.jotform.com/241272835208051

Transcript

0:13

Marth, we're back and no we haven't just recorded for 15 minutes without pressing record. Yeah and we can't do the ironing chat again. I can't talk about irons anymore. If you want the rundown, basically me and Martha don't own irons, we've both got steamers, life is better without irons. We think they're being phased out. But this podcast is not about ironing. No, it is about... Fucking hell Marth! Today is not my day, someone's just started drilling upstairs. I'm trying to record a podcast. The window's open. And it's an important one, this is going to be like countdown shit. This is the one. Marketing, knowing when to scale. We're going to help you stop breaking even and start scaling with confidence. Yeah, like drilling into the numbers. I like that. I like that. So the reason this has come up, I would say nine out of ten of our clients actually shit a brick just as they should start to scale. Yes. They get really uncomfortable because it's really difficult to know where your break even point is if you've never had to calculate it before. It's really difficult to know that the ads are working just because your agency's telling you they are. It's really difficult to take those risks where you spend ten grand on ads for the first time ever or twenty grand or fifty grand when historically you've maybe spent five hundred quid. And the risk to reward ratio doesn't seem that sexy compared to everything you get bombarded with in life. So we mentioned when we were trying to record before that people do the lottery because it's two pound fifty in and a hundred million back. So the risk to reward seems amazing and you're not you haven't lost much if it goes wrong. But. That's not reality. I just find people who play the I don't know, like I don't know if you're like sad if you play the lot. Not sad as in you're sad, like as in physically sad. We're just unhappy because you're looking for an escape out of life. Like I haven't played the lottery in a long time. Yeah, because everybody is talking about it and I felt like it was a sign and I wanted to like, you know, be in the chat like, did we get any numbers, guys? But like genuinely, I don't think on a weekly basis I'm going to the lottery today because I want to win a million pounds. I'm in charge of my own destiny. No, I don't know who runs the lottery anymore. It used to be Camelot. There's not them anymore. Camelot don't control me. No, but they do good shit, right? I guess that's that. Yeah. So to be fair, that makes the risk even worse. My wife's more sane than me. She lives a normal life-ish. Not really. But she quite likes doing the lottery and I justify it by saying, well, they support some amazing causes. Yeah. I mean, even just on the weekend. So it's a charity donation. Well, yeah, effectively. So I'm cool with that. On the weekend, we went to a bike track and that was, I thought it was like lottery funded. Was Nessie there? Martha just did this like weird snake. Well, I fell off because my pedal hit the, because I'm not a biker. You went to a bike track and you were going over jumps? Yeah. Right. Well, risk to reward ratio there. That was rubbish. There was no reward, actually. I fucking hate those places. My friends used to take me to like tracks in the woods that have jumps and stuff. I used to just think, why? Like, it's not thrilling enough for me to be exciting, but it is still dangerous. So I'd literally rather go whitewater rafting or bungee jumping. Yeah. I think I'm a road biker because I enjoy the biking, but the like, when I see roots and stuff in the ground and I'm going to fall off, I'm like screaming out loud or in my head. Yeah. I remember on my paper round, I was a nutter. Like I'd come down hill as fast as I could and love it. And like, you know, they have the little speed monitors to tell how fast the cars are going. I'd always want to set them off. Yeah. That would be like, that was a thrill as a 14 year old. But I'm 38 now and I need to remember. Yeah. And if you fall off now, I think if I fall off now. It really fucking hurts. Yeah. I had a really bad cycling accident when I was a kid. I've never heard this story before. Yeah. I've not brought it up on the podcast. It's quite sad. So we didn't have much money growing up and one Christmas we got bikes for Christmas and they weren't like a lot of the kids had like conas and treks and giants, which were like fucking expensive. And we didn't get those, but it was still epic to get bikes. And it had a front suspension and my parents knew that I needed a front suspension to be cool. And like, it was just ace, like they were hidden behind the curtains in the back room of the house. And I love this bike and I rode it everywhere. And I mean, at times were a bit different. You could ride around in a group with your mates and no one would call you a gang. You're just kids out playing sort of thing. Or maybe they were, but you just didn't realise because you were a kid. Yeah. So I went down the park playing as we always did at the bike jumps, ironically, and then rode home. And as I was riding home, you'd always jump the curbs like so that you don't like just belt it and like buckle your wheel or whatever. And we had like a back lane down the back of my house, like a ginnel and it was all gravel. And as I was coming up towards it, I had to jump the curb and I went to jump the curb. And as I did, the front wheel rolled away and someone had taken the nut off the wheel. Of your bike? Yeah. And the forks went smack down into the rocks. I went straight over the handlebars and my elbow went straight through the front wheel and I pulled a spoke out of my elbow and it made a horrible metal noise. And I think I was like 11 or 12 at the time. And the only thing that was going through my head was this bike cost my mum and dad a fortune and I just wrecked it. And so I picked it up and carried it home with one hand, which must have been adrenaline because it would have been heavy to carry it. Got there, my parents were there. Ironically, five minutes before and we didn't have mobiles, they'd leave you a paper note on the side. We've just popped to the hospital to see your auntie. Fucking hell. So I lived in a village, so I ran around the corner to my nan's, but my nan was like post-war hardcore. So she was just like, pull yourself together, there's nothing wrong with you. And fortunately my other auntie was there and she got tweezers to get the gravel out of my arm and clean it up and stuff. And I was certain it was broken because I couldn't move it at all. But my nan wasn't having it. Was it broke? That was that, well. Never been the same since. I can't touch my shoulder. That's just massive bicep though, no? I just got a bigger bicep on this arm than I can do on that one. Well, you're right-handed. Yeah, so parents came back, my arm was like a balloon. They were like, well, you've managed a couple of hours, just sleep the night. Put a wet paper towel on it. The following morning I woke up, it was like purple. Took me to the hospital, they x-rayed it and it was like, times were weird, things have changed. So they gave the x-ray to my dad to take back to the consultant from the radiologist, which he would just never do now. So we had a look, and my dad's like one of those people who's broken every bone in his body, so he looked at it and went yeah, you've cracked your elbow. Straight off, you've cracked your elbow, I can see it there on the x-ray. Oh don't, it's giving me the heebie-jeebies. Went back and the guy went, I think you've cracked your elbow. And my dad went, he has cracked his elbow, I can see it there. They put me in this gutter cast from my hand all the way up to my shoulder, and said I'll come back tomorrow and we'll put you in a different set up where we can have a proper look at it. And fine, first thing I did, went to my nan's. Yeah, sign this. Look what I've fucking done here. Give me some money, I want to go to the video shop and rent a film. And she did, bless her. But yeah, that's my cycling accident. So I lost my confidence on my bike for a bit. Yeah, well that'll do it. Yeah, because I was a nutter before then, jumps and everything, and then when you've seen your arm get smashed a bit. And then it's difficult living with a cast on your arm. Oh, the next day they took it off and put it in like a more spongy thing with a... Like a hook. Yeah, it was like hooked around my neck. It was a long time getting better though, and obviously it's still not fully better, I can't fully... Yeah, that's my sad cycling story. There endeth the lesson. And we never found out who took the bolt off that wheel, bastards. Do you have an inkling? Older boys. Older boys who think they're cool, who were always down there messing. They would have been the only ones with tools because they were messing with their bikes. They must be a psycho, like don't fuck with cats, don't fuck with John. Well, there was two. One who was always showing off to the other, but the leader was fucking nuts. What's he doing now? Probably nothing. He was like the one who always had a girlfriend five years younger than him, and it was creepy and weird. Probably still has. Yeah, yeah. So, yeah. I don't know what that's got to do with scaling your marketing, but don't sabotage people's bikes, people. Yeah. Yeah. So, anyway, we've got a client. I'm obviously going to not name them. I'm certainly going to change some of the figures a little bit to protect them. But we're going to go over some stuff today. I want you to leave this episode knowing exactly when and how to scale profitably. It's really important to me that this gives you some insight. Now, there will be some numbers and a bit of formula to follow, but just bear with me. Yeah. Maybe write this down if it is something you're interested in. One of the terms that will come up a lot is ROAS. What's that, Marth? Return on Ad Spend. What does that mean? It means for every £1 you get in, how much will you get back? Okay. So, if I had a ROAS of £10, talk to me. So, for every £1 you'd put in, you'd get £10 back. Right. So, I'm making £9 on my ads. Exactly that. Right. But it's not always that. It could be £5.5, £5.1. Yeah. It's very rarely going to be a nice round number.£10 would be great. So, what's a good ROAS? Well, it really depends on… The numbers. The numbers. Exactly. Yeah. Because a 3 ROAS, some of our clients… It's amazing. Yeah. A 2 is amazing for some coaching clients because they've got no other overheads. So, if they know for every £1 they put in, they get £2 back. So, it depends on their attitude as well. I'm going to find as many pounds as I can. If you're selling a £49 e-book that already exists and all you have to do is send it out as soon as somebody hits checkout, 2 ROAS is great. Yeah. 3 ROAS is amazing. 4 ROAS, you're lucky. Whereas, if you're selling something for £100, but the cost of it is £90, you're going to need a lot higher ROAS, and that's where you need to know your numbers. So, one of the other things that will come up is cost of goods sold. So, cost of goods sold is all the costs that go into the good that you're selling, probably other than your agency fees and your ad spend. Right. And your general overheads. Yeah. So, if you sell socks, it's the wool for the socks. The wool, the manufacturer of the sock, the shipping, the cost of selling the good, how much you have to pay the person for the percentage of time they spent making the sock, but not the director's salary, the rent, the agency fees. But you do need to know your cost of goods sold, because you need to know how much money you're making for each thing you sell. So, an e-book's great, because there's not really any cost of goods sold other than maybe a subscription or something. But if you're selling shoe polish, what does the tin cost, what does the polish cost, what does that little catch on the side cost, what does it cost to get them printed and manufactured, what does the shipping cost, all these things. And sometimes I don't think people get enough clarity on that. The other thing we're talking about is agency fee. I think it's really important we factor that in for people listening. In this case, we're going to talk about a two and a half grand agency fee, which at Codebreak is our middle monthly package. Just complete transparency. You do have to take that into account. There's nothing worse than an agency saying, well, you've had a 20x return on this. Yeah, but once I factor in your fee, I'm a grand dad. What's the point? You've got to be open about that. And then knowing what your ad spend is, what your profit per sale, all that kind of stuff. So, why is this important, Martha? Why am I going geeky today? Because I think we have, there are so many people who are on the cusp of amazingness. Pull the plug. Yeah, pull the plug, because they haven't got the black and white in front of them. Well, they have, but they don't know how to read it, look at it. They don't have the mindset for that kind of monotony. So, I think when you say to someone, look, for every pound you put in, you're going to make five pound back, that feels quite slow and steady compared to when they were grinding the streets and just knocking on doors. And for every time they knocked on a door, there's a 50% chance they'd make a big sale. Very, very different. But the reality is, when you're scaling to seven figures, it is about what's repetitive and what's consistent. So, what can we do that's predictable and that we can repeat? Not the same as the happy-go-lucky period of scaling from five to six figures, which is a totally different ballgame. Yeah, because when you start, you've got people who know you, you've got a pool of warm audience that you immediately go to, and then there's people outside of that who kind of know you. But when you're in a scaling area and everybody is cold, or not everybody's cold, because obviously those cold people become warm, but if we're talking about the cold people that are coming in, it's a completely different ballgame. And so it's going to be a lot harder to get somebody who's never heard of you to buy your thing than it is your mum's auntie who's like... Yeah, so we'll often meet five-figure businesses who've scaled to six figures who will be like, I close 90% of my conversations. well, that's great. When you're scaling to seven figures, that number's gonna dramatically drop. Yeah. No, it won't. Yes, it will. All the people you spoke to before knew you. No, they didn't. Yes, they did. They knew you, either via someone else, through some of your content, but they felt like they knew you. Now we're going after people who've never heard of you. Totally different ball game, which is why we need to make sure it's profitable and make sure it's scalable. And that's where people get stuck. So the maths, I've tried to make it as stupidly simple as possible. So in this case, the product we're selling is 20 quid. The cost of goods sold in that product is a pound. So there's 19 quid to play with. But we have to factor in our two and a half grand a month agency fee, and the ads are running at a ROAS of 5.5. Now, when you run the numbers on that, to break even based on the numbers we've got available, is actually not as bad as you think. You only need to spend 478 quid on ads. So how did you get there? Tell me how you got there. So basically, you spent 478 quid on ads, times that by 5.5 to see what the return on ad spend was. The return would be 2,629 pounds. Which would cover? Which makes up 131 sales. Now, we know that for every product you sell, it costs you a pound, cost of goods sold. So you've got to deduct 131 pounds from that 2629. That leaves you with 2498. And our agency fee is 2,500, so we're at minus two. That's the break even point to round into the nearest decimal, basically. That means that any more money we spend on ads, we're making 19 quid every sale. Yeah. But most people bottle it at this point, because they feel like, well, I'm over three grand in. I've spent all that money on ads, I've spent it on your fee. And I'm like, yeah, but if you spend another three grand on ads right now, it'll be three grand times 19 profit. Yeah. So long as the ROAS stays the same. Won't be three grand times 19, it'll be three grand times 5.5 times 19. It's even better. Yeah. So. But you've got to send out 131 widgets before you get to that. Well, yeah, but that's factored into the cost of goods sold. You'd hope that the business that sells widgets knows how to ship widgets, otherwise you've got other problems. So what would happen if this business scaled to five grand of ad spend? Well, revenue would go from 2629 to 27,500. And you will have sold 1,375 units. So you've got to deduct 1,375 from that 27,500, which leaves you with 26,125. And then you need to subtract our fee. That still leaves you with a net profit of 23,625. Fucking hell. Which is a lot better than minus two. Yeah, you don't need a new funnel. Once your ROAS and your margin are proven and you know what breakeven looks like, you just need to spend more. And it's not like, I'm not being selfish. We're not seeing any more of that money. Our fee's our fee. This is how you know when to scale. And in the scheme of things, if you're trying to hit seven figures, 5,000 pound isn't a lot of money. And suddenly that 5,000 pound has made you 23 and a half grand. Like, that's pretty fucking serious. What if it was 50 grand and it made you a quarter of a million pound? Yeah, then you've got a completely different business. Yeah, and obviously it comes with a whole load of different problems. But this is how you scale ads. And I think everyone exists in a certain amount of scarcity. There's a scarcity mindset. So they're like, well, as soon as you start scaling, that ROAS is gonna drop. Maybe, but there's plenty of examples here where when we've scaled, the ROAS has got better because Meta or Google has got more information to work with. Yeah. And so it could be that the ROAS gets better. The other thing is, even I did A-level business studies, which is basic business. The race is always to get to break even and that's your starting point. But it is usually where most people drop off because they've kind of stretched themselves to get to that. They're not fully, I wanna be a seven figure business. Are you truly operating at multi-six figures right now? Or are you just saying you are? And then, and I'll be able to tell. Like, I'll dig your numbers. Like, this is what I do. If you're not getting that from this podcast, you've not been listening. Yeah, I mean, we have a marketing calculator on our website for this exact reason, don't we? Like, how much do you make per sale? How many do you need to make? Like, it's made super simple. And if you go to codebreak.co.uk and do it now, you'll be able to see what your numbers are. And if like, because you might not be ready for an agency, you might be better suited to like a freelancer or, you know, that there are options out there to get to agency level, but you have to, you're ready. And I think if you wanna work with an agency and work with them seriously, if they ask you what's your cost of goods sold on any particular product, or if you sell a service, what's your cost of delivering the service? If you can't tell them, that's not good. Yeah, you need to be, know those numbers. Even if you can't do that, because I can't do it as well as you, like off the top of the head, like as well as you can. But you don't have to be able to do that. You just have to know what the numbers are. I'll give you this calculator. Yeah, oh yeah, it does exist. If you become aware of this, I'll give you this. Like, it's not too much rope to hang myself with. This is me being transparent. And like, if you're an accountant, you need to know, and you charge an annual fee, you need to know how much of that fee is cost. You need to know that. And accountants obviously should know, but I bet many of them just kind of wing it based on what other people are charging. Yeah. And I drum into you guys all the time about what our hourly cost is in the business. So that whenever you're doing a task or coming up with an idea, you're aware of what it costs the business to do that. Yeah. And it's really important that people get really clear on their numbers. And any business that genuinely wants to scale never says things like, let's wait and see. Yeah. Let's see how this pans out. They take charge of the situation. So they're like, right, give me the baseline data. Here you go. Okay, I can see where my break-even is now. I can see what I need to put in to smash past that. Can we trial that for a month? And then can you give me the data again and we'll go again? It's a much healthier conversation than, oh, I'm not sure if this is working. why aren't you sure because we're sure on the number so why aren't you sure because you should be yeah like you should know what's going on at your end there are variable costs and and things that can happen but it's all within a scope and so i think it's really important and i wanted this to be a really practical episode of like get really clear on what the ROAS is on your campaign get really clear on how much revenue you need to break even get really clear on the number of sales that means and the cost of goods sold get really clear on what your gross profit and net profit is and then get really clear on what how much ad spend you're going to need to do that because it's the only way to successfully scale yeah and if you're working with an agency then you don't have to be in the ads all the time which is probably not the best thing for you to be doing as the business owner energy anyway all you need to know is okay what's my rest this week what's my rest this week what's my risk this week or my risk is better or worse yeah and track it track your ROAS and track your margin if your margin does vary track it so you can do average margin across the month average margin across the quarter average margin across the year so that you're looking and like have a trigger in the business so when you know are we in or around break even now we need to quadruple our ad budget know when to press that button don't just sit there waiting for your ad agency to tell you because they don't know your variables unless you communicate them well and like getting really clear on what your break even on ad spend is so it's going to be your agency fee divided by ROAS times margin percentage that's a difficult thing to comprehend when you're driving in the car listening to a podcast but jump on this afterwards download the transcript bang it into chat gpt like start figuring this stuff out for yourself because it will really help you scale your business and there's nothing more rewarding for an agency than a case study like if if it works with a client and they want to keep working with you and they're an amazing case study it's win win all round they're not like highly unlikely that they're just trying to take money off you they want the success yeah and the hardest bit is is that is like you said get into that break even point and so to obviously there are other factors like refreshing creative which would have nothing to do with you as the client apart from maybe approval but the hardest bit is that first part and so we want you to be successful not only because it makes us like feel amazing about the work we do but also because that bit is really difficult and so we don't want to be getting everybody on that bit every month like we want to keep you yeah stop making us restart your campaign and try and get you back to break even when we got you there in the first place and now it's time to scale and everyone to enjoy the fruit of our labor yeah yeah okay now so yeah don't get stuck in that almost profitable loop know your numbers back your results if you if you want us to run the numbers for a campaign or run the numbers for your business get in touch more than happy to help