How do you grow in a healthy way? And should growth always be the goal? Let’s talk about that today. Good afternoon, Thomas Joyner with the Business on Purpose Podcast here.
We get this question all the time when coaching. Thomas, how do we grow the right way? It’s a great question. Because what it implies is that there is a wrong way to grow.
Too many businesses only focus on topline revenue. Bring more in, bring more in, bring more in. And that is most certainly part of it. But top line revenue fails to set you up for responsible, long-term growth. Often times when revenue is the sole focus of growth, you can sacrifice long-term success for short-term spikes in sales.
So how do we grow in a healthy way? Well, here are the 4 ways we encourage our clients to move towards sustainable, long-term growth.
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1. Figure out if you even should grow and by how much.
Now this sounds counterintuitive, right? But I had a conversation last week with a client and we discussed just this point. With more sales typically comes more employees to manage that growth. That, in turn, means more training, more overhead, sometimes taking on more debt for service vehicles or machinery. It means more administrative work and billing, more estimating and invoicing. It means 25% of all of that! So where does that time come from? Are you staying late, hiring more of it out? If you try to take on that with your current team it means paying overtime and that shrinks your margins! So is this what you want?
It’s a valid question to ask. So often we think if revenues aren’t growing we’re a failure as a business. And yet I applaud businesses who turn away more work as they realize more is not always better.
No, decide if you want to grow…AND BY HOW MUCH! I can’t tell you how many businesses just throw a number out without every understanding why they came up with that percentage. It sounds good, but it hasn’t been thought through. So know why you want to grow by 5%, 10%, 20%, or if you even want to grow at all and then move forward to the next step.
Once you’ve decided you should, in fact, grow and understand how much you would like to grow, it’s time for the second step.
2. Revisit your ORG Chart to see if your current structure can support the growth
Most people have no clue why you build an Org Chart. It’s just a picture of the structure we have in place. WRONG! What it should be is a picture of what the business should look like to hit your sales and profitability goals.
So, look at it. Break it down into monthly numbers. Can your current team support the growth? Do you need another salesperson? Another admin to help with collections or scheduling and material ordering? Do you need a Project manager to take some strain off you so you can do more estimating and keep the jobs booked out and work coming in?
What do you need as a business to grow? Because here’s what too many businesses do. They add and add and add to the workload of their employees, expecting them to do more, yet never realizing they’re at capacity! You can’t always expect your employees to take on more. Sometimes, you have to change it up.
So, if you change your Org Chart by hiring, re-run your numbers to make sure you can maintain your margins. Make sure you have the cash and begin setting it aside for those hires in a separate account. Get a few months ahead to make sure that you won’t be going into the red each month after the hires are made.
Your Org Chart has to reflect a business that can support the amount of revenue you want to do. Otherwise, you are looking at burnout for employees and they will begin to leave for greener pastures.
Ok, once you decide on growth, and review your Org Chart. It’s time for step 3.
3. Build in short term metrics to measure growth and progress
Here’s where the magic starts to happen. It doesn’t all change at once. But what does progress look like? How can you measure it? What are the Key Performance Indicators that you can measure along the way? Revenue may not grow month 1, but is the team in place, and are we making progress? How many more jobs do you need to estimate? How many more hours do you need to bill?
Are you hitting those? It’s why we push so hard for the 12-week plan. Build it out. Build out the 3 main goals you need to hit and then if you’re missing the mark, you can adjust accordingly every 12 weeks! You can retrain and add support as necessary to make sure you are on track! Break it down into monthly goals and weekly goals to reach your numbers. It’s not rocket science, but if you don’t put a step-by-step plan together you WILL NOT HIT IT!
Put the plan in place to measure growth and progress…and adjust as needed.
4. Build in margin before your next growth campaign
This is a must! Don’t fall into the trap of realizing 15 or 20% growth and then immediately jump into your next period of growth. Give your team some time to adjust. Some margin to make sure they’re ready. Everyone wants their growth curve to look exponential…but in reality, it should look more like a set of stairs. Some years the growth needs to be intentionally less, to make sure the foundation is in place for the next period of growth. Some years it will be intentionally bigger!
But when you give your team a chance to breathe, to celebrate, and to prepare, you give them the gift of margin. To retrain and make sure everyone is owning their role before expanding and hitting a higher mark.
Alright, so you have the 4 steps, but here’s what it looks like in real life as I just did this with clients last week.
“We want to grow by 25%, we really think we can hit that!” They said as we were talking through some Vision for them. Now immediately in my head, I started to poke holes in that dream, but I just asked questions.
“How did you come up with that number?” “I don’t know, that’s just what we want to do and I think we can do it.” “Ok, let’s look at the numbers and see what that means.”
I went into all of it, that means you have to do $10,000 in revenue a month. Can you do that with your current team (again, going back to the org chart).
No, we’d need another crew and another van. Ok, great what do we have to pay them, how much is the van, how much could that crew produce? Can you manage another team with your management structure?
No, we would probably need a PM to go around since I’m going to have to estimate more. That’s right…you’re getting it now.
“OK, so what do you need to estimate a week and how many jobs does your service team need to hit to reach this goal?”
We went back and forth until we had real metrics to make sure they were on it and had a realistic plan for how to hit their growth. We built in time to make adjustments and they were on their way.
But they had a plan! Now they may hit it, they may not. But I can tell you they wouldn’t have stood a chance had we not walked through those 4 steps.
- Decide if you should grow and by how much.
- Review your org Chart and hire to build the foundation if needed
- Build in short term metrics to check on progress
- Allow for margin in between growth initiatives
That’s it. That’s the way to grow long-term in a responsible, healthy way. So go do it! Put your plan in place today and please let us know if we can help.
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Thanks for tuning in!
Thomas Joyner is a business coach in the Lowcountry of South Carolina specializing in liberating business owners from chaos. He is a weekly contributor to The Business on Purpose podcast and can be found at mybusinessonpurpose.com