You can grow your business. You can increase your profits. You can accomplish these two goals together, but you’ll likely receive advice that these two objectives run in contradiction to each other because of what it takes to do both at the same time.
In this video, I’ll explore the differences between a profit– and a growth-driven objective and discuss some steps on how to accomplish both at the same time.
Oprah famously said, “You can have everything, just not at the same time.” Another way of putting this is that you can do everything that you want to do and accomplish everything you want to achieve—just not all at the same time, every time.
What this means is that you need to take things one step at a time, even if you want to achieve two business objectives that seem to run contrary to each other, like profit and growth.
Growth vs. Profit
In economics, maximising your profits entail minimising your costs. This means making the best use of resources so that everything goes to profit, forgoing unnecessary costs and using only what is needed for production.
Growth, on the other hand, requires making investments: buying better equipment or moving to a space to increase capacity, increasing spending on training, or hiring more people with the knowledge and expertise you need for growth. What this means is that growth requires increasing your spending. This is why, for many businesses, phases of aggressive growth often lead to temporary losses in profit.
How can I grow and increase profitability at the same time?
You can grow and be more profitable, but you need to take one careful step at a time.
You need to focus: what do you want to achieve first?
Your focus will depend on which stage of the business you are currently. If you are just starting, your goal should be to increase your profit first to the point of being sustainable. As you establish your business and find that there are opportunities for growth—such as attracting more customers or expanding your product or service line, you can begin spending again to expand, using your profits to finance your growth.
You need to plan.
Your business goes through cycles, so you need to plan. And you need to revisit and revise your plan as you go through these cycles because what worked in the past may not necessarily apply today. Remember, your plans are determined by your goals and objectives, both in business and in life. As goals and objectives change, so should your plans.
Ultimately, your business plans will allow you to take things one step at a time. This allows you to make the best use of resources that you have. When you’re in the early stages of your business, this is crucial to your profitability. Furthermore, the more profit you make, the more money you have to fund your growth and expansion.
So yes, you can set out to be more profitable and grow. The link between profit and growth isn’t consistent or linear—but with careful planning and ensuring that you take things one step a time, these are two goals that you and your business can achieve.
If you wish to explore how your business can be profitable and grow, send me an email and we can have a chat.
If you are interested to know more about what a business has to go through when facing exponential growth, you can download the first chapter of the book, ”$20K to $20 Million in 2 Years” absolutely free here. The chapter talks about the differences between a good and a great business and puts out questions that make you consider how you can turn your business from good to great.