Growing Your Business & Ending Up Worse Off (Yes, This Is A Thing And It Happens More Than You Think)

Growing Your Business & Ending Up Worse Off (Yes, This Is A Thing And It Happens More Than You Think)

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Growing Your Business Without Ending Up Worse Off

How Hasty Growth in a Business Can Lead To Lower – Or Zero – Profits Overall

Sometimes clients come to me with a very peculiar problem.

They grew their business. They increased their sales. But somehow they are making less money. Where did all the cash go?

And since this a surprisingly common occurrence, I’m going to share the three main causes so you can either:

  1. See if any of these apply to you already, and what you can do about it, or
  2. Plan ahead so you avoid falling into one of these three traps.

Sometimes we focus on the wrong measure.

Sometimes we get caught up in hitting a target INCOME level, we forget that business income does not equal take-home pay.

High revenue is not necessarily an indication of a healthy business.

Plenty of six-figure entrepreneurs are making next-to-zero profit.

The measure you should be focusing on and striving to increase is profit!

So before you start creating a strategy to hit your next target income goal – ask yourself whether you’re focussed on the right performance indicator.

Is your time your product? Do you sell hours of your time, for example by providing consultancy services for a daily or hourly rate.

You can increase your revenue by taking on more clients, but once you run out of hours to sell them, you’ve capped your income.

What can you do to grow your business?

You could work more and more hours. So your income goes up at the expense of your well-being.

Or you could outsource some of the work to another expert. So you income goes up, but so do your costs.

This is not scaling.

To successfully scale your business, you need to find a way of adding more value to your clients, without you (or your associates) having to work more hours.

So if you’ve got plans to grow, you might want to consider adding different ways for your business to make money.

Not sure how that could work for your business? That’s exactly the kind of help you could get from a business coach.

As your turnover increases, different taxes kick in.

If your revenue is just into a new tax bracket – for example just above the VAT threshold – you can actually have less money available to you, than if your revenue had been lower.

Build yourself a forecast so you can see the additional taxes that will need to be accounted for.

You can try out different models, with different staffing options and income levels, and forecast whether or not you will be better off after all taxes are paid.

Avoid All Three Traps With These Three Simple Tips:

  • Don’t ASSUME that you personally will be better off if your business is making more money
  • Use forecasts to predict the financial and personal impact of growing your business
  • Focus on profit not vanity metrics, such as revenue, number of clients, or how booked-out you are.

If you’re ready to grow your business the smart way, head here to find out more about how I can help you.


Thanks for reading! I’d love to hear your feedback and future topics you’d like me to feature. You may also enjoy The Seven Figure Consultant Podcast, the show that takes you from booked up and burned out in your consulting business to THRIVING as the CEO of your 7 figure enterprise.