Sales Growth is Good...But It Doesn’t Solve Everything
If you are in the camp that believes sales solves everything you may not care for the following, however this is written specifically for you. Because, unfortunately, sales does NOT solve everything. If you are not properly managing cash flow and profitability while prioritizing sales then you are probably “growing broke”.
Think about this...let's say you prioritize sales before you have adequately determined how to provide a higher volume of products/services efficiently or even run your business effectively. How does sales solve the problem of losing customers because you cannot maintain quality, or losing profits because you are not efficient, or losing good people because you cannot provide a proper framework or a healthy environment? It doesn't, because sales does not solve everything, only some things. What solves these types of problems is systematization - structure, processes, and operations that are in line with vision and culture.
These things do not solve everything either, but they do enable entrepreneurial companies to manage the nuance and details required to scale a business. Sales volume often stretches small companies thin when they are growing, meaning people are asked to do things outside of their area, work long hours, and overproduce from what they were originally hired to do - and that is okay. But it is not sustainable and eventually things break down.
The reasons they breakdown are often related to lack of clarity and efficiency that come from proper structure and workflows. Without these, it is nearly impossible for lean and agile teams to scale production properly. This leads to lower quality products and services which tends to lead to customer attrition. Then, as revenue decreases and new sales are prioritized once again before improving systems and processes, companies are faced with high employee turnover. Which in turn is costly and difficult to manage in and of itself, but when there is no real organizational frame or efficacious operating procedures, new hires cost even more to on board, train, and retain which diminishes profits. Even if employees aren't leaving (yet), inefficiency in process is eating away at profits.
Even when a small business has established a proper structure and developed efficient methods for production, they often neglect establishing an effective way to run the business. Processes across the customer journey combined with an overall operating system allow a company to strategically grow and seek out revenue with proper mechanisms in place to manage growth. This enables profitability which allows for a healthy cash flow, which obviously requires strong revenue, but it’s more about stable management of both operations and capital.
If you cannot maintain a healthy cash flow, but are still impetuously prioritizing revenue growth over profitability, chances are you are “growing broke”. It’s highly recommended you focus on cash flow first and the primary driver to improve cash flow is profitability. In addition to healthy top lines, profitability requires labor efficiencies only possible through appropriate systematization across your business, including organizational structure, continuously improving processes, and an effective business operating system.