In a number of recent conversations with clients I’ve been reminded of old adage, “Be careful what you wish for. You may get it and find it’s not what you really wanted”.
Most organisations come to us because they want to grow revenue.
However, a lesson I learned a very long time ago was that revenue does not equal profit. And while cash-flow is king and keeps the wheels turning, if you don’t actually get to keep any of it in terms of profit, why are you in business?
Another lesson is your costs and problems go up exponentially with the number of employees you have.
So as your organisation grows, you find yourself in the invidious position of having to feed the monster. You find you’re working harder and harder to pay everyone else. But where do you figure in this equation?
One client who runs a medium sized business lamented to me that he just wanted to go back to being technical. The stress of running a large operation was doing his head and health in.
We spoke about options.
Handing over the reins to someone else so he could concentrate on going back to the technical aspects he loves.
He could downsize, keep a core staff who would allow them to concentrate on delivering superb products to a niche market.
Each choice obviously has consequences for the people working there.
Another client used to have a large organisation and did just this. Now a husband and wife team, they have a few staff and no intention to grow to the mammoth previous size. To them, lifestyle and profitability is king.
The irony is small organisations often want to grow into large ones. And large ones often yearn for the old days when they were small, nimble and could take advantage of opportunities quickly.
A couple of years ago I read “Rework – Change the way you work forever”. By Jason Fried & David Heinemeier Hansson, the founders of Basecamp project management software, Highrise CRM and a host of other products, it completely debunks some traditional beliefs around business.
If you haven’t read it, do so. You can pick it up on Amazon.
Jason points out…
You don’t have to be big to be successful. The worldwide team consists of 43 people. Over 15 million people (as of February 2014) have Basecamp accounts.
While they’ve created numerous other products since 1999, and are highly profitable, they’re now consolidating and coming back to only providing Basecamp to stay lean and customer focused.
Which leads me to another point.
You cannot be all things to all people.
Whatever your business, decide where your profit really comes from. Which products/services and customers bring in the bucks. Not just revenue, but profit.
The 80/20 rule applies.
20% of your products/services will produce 80% of your profit. And 20% of your clients will be the most profitable.
The skill is to know which 20% of each and concentrate on those.
The same can be said for tasks you do. 20% of your effort will produce 80% of your results. So do what’s important and delegate the rest.
And if you take it one step further, 20% of the 20% will give you 64% of your results or in other words get you to 96% of your desired outcome – which anyone would be happy with.
So figure out what really matters and concentrate on doing more of that.
While growing in size might be good for your ego, decide what it is you really want. Growth for growth’s sake is not something I’d recommend. Growing profitability absolutely is.
And finally, if you’d like help to grow the right way for you, our Accelerated Business Growth Program will provide a level of guidance and implementation second to none.
You can check out the program here or call us on 0414-913334.
Remember, every path has consequences so be careful choosing.