Ep. 154 - Grow Your Business Into Bankruptcy
Business growth is on the minds of most entrepreneurs. Unfortunately for many, they approach growth in the reverse order that it should be done. Most will focus on driving sales and then play catch up with any operational needs that is sure to appear when the workload increases.
Similar to building a housing development. The infrastructure like sewage, water, and electrical is installed in the neighborhood before you start building homes. Without it, there will be a lot of unhappy homeowners. Without the proper infrastructure in place to support the increased workload from more sales, you will have a lot of unhappy customers.
This will cause you to work more and intrude upon your personal life, marriage and family time. Tune into this week’s episode to avoid growing your business into bankruptcy.
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Key Takeaways:
Increasing revenue does not guarantee success
PG&E $71 billion, GM $82 billion, Lehman Bros $691 billion
Chasing revenue causes you to work a lot harder, increases stress, and causes you to make poor short term decisions that can negatively impact the business long term.
Getting loans or investors doesn’t guarantee success
You can increase faster but if you don’t have good profit margins, it can create more pressure on the business and lose more
Extra expense plus interest
There is a big difference between sales vs profits and assets vs equity
Michael and Kathryn Redman in episode 36 grew their business by 400% and it almost killed them
Episode 74 will help you scale up your business
Catch 22. Do we grow sales so we can hire more people and invest into infrastructure? Or do we invest into infrastructure before we need it or afford it?
Increased sales creates increased work like customer service issues, returns/refunds, administrative work,
Can your business handle more? What do you need in place to handle the additional workload and maintain superior service? Personnel, software, hardware, equipment, etc.
Warning signs
Sales are up but net profit margins are not budging
Your to do list for you and your staff is growing (wearing a lot of hats)
Spending more time in the business.
Thinking about business all the time
Little time for Rest
Customer service issues are falling through the cracks
Stress
Workload is up
Growth should lead to increased profits which will allow you to hire and bring on more resources to make the business more efficient
