You deserve all the credit for your growth and are to blame when you don’t

Business growth is undeniably important – especially as companies crawl out of the pandemic crisis into recovery, but many business owners share some common misconceptions about what actually makes sales grow.

If you see growth around you and expect to be swept up in the momentum, you might be tragically disappointed. That is exactly where many companies find themselves as they emerge from the ashes of the 2020 Pandemic and Recession.

Growth – even word of mouth – is earned. How we earn it now is different from how we grew pre-pandemic.

Before the pandemic, a coaching prospect might call me and say, “Hey, we’ve been growing for five years and, all of a sudden, the faucet cut off. Business just stopped.”

This is actually an urgent problem because the issue started weeks or months before. Business growth is not a wait and see game. Growth stems from actions you take, and some of those intentional efforts require months to generate measurable results.

Today the conversation starts a little differently. “We suffered a huge downturn in 2020, but we expect to be back to 2019 numbers as soon as the economy opens up again.”

There is a lot of false optimism built into that sentence. Let’s unpack the misconceptions and learn what to do instead.

Misconception #1: The Economy Will Pull You Along

The economy is up, the recession is over, business is good… so, why are you not growing?

The owner that says to me, “Everyone else seems to be busy,” is assuming that he should be doing well too. But that’s not how it works.

A strong economy will not make you successful.

You can benefit from the economy, but you have to be intentional with your strategy in order to reap those benefits. Don’t expect the economy to be the driving force behind your success.

Management’s job is to amplify market demand with a marketing and sales strategy that allows you to focus on the right leads and opportunities.

In 2020 many companies needed to pivot their strategy and in the meantime, ALL opportunities were welcome. Strategy had to be set aside while companies scrambled for ways to stem losses. Gourmet Restaurants had to sell takeout, Meetings and Event companies had to go virtual, and retail stores moved to online sales.

Doing the work is not the same as embracing it. The word ‘pivot’ became the word of the day to describe adaptive strategies.

If these forward-thinking enterprises had relied on the economy alone, they would have tanked during the pandemic and struggled to regain market share when demand started to come back.

Now that the pre-pandemic version of those industries is starting to return, do not expect restaurants to abandon takeout, event companies to walk away from virtual, or retail store to stop selling online. Those strategies still make sense.

Stick with your customers, and you will be better prepared to weather economic ups and downs outside your control.

Misconception #2: Growth Is Permanent

Growth doesn’t happen automatically, and it takes even more energy to maintain it. There are very few types of business that can rely on last year’s revenues to reappear this year.

Remember my prospect? He began our conversation by saying that growth had suddenly stopped after five years. He expected growth to be a permanent fixture and that if he kept doing the same thing, he would get the same results.

I asked him, “Do you think all of your competitors thought the same thing? Or did they try to find market share and make intentional moves to win business? Maybe you are where they got that new business from?”

You can’t forecast the coming year based on the growth factors from the past year, because growth is not automatic. Growth is the result of momentum — it’s not the momentum itself.

Coming out of a difficult year, you are restarting from where you are now, not simply returning to where you were before. Yes, your old customers could come back, but I would not bet my business on that.

Especially if you are not doing anything intentional to assure your old clients return.

Misconception #3: All Revenue Is Equal

All revenue is NOT equal. A dollar of retail sales is not worth the same as a dollar of services.

This mistake strongly affected my coaching prospect because he didn’t recognize the different value of different sources of revenue. As we dug into the inner workings of his company, we discovered that the business had actually stopped growing three years earlier.

He thought they had continuous growth for five years because revenue had increased during that time. But during those years, the revenue increases were related to transactional, low-margin projects. His core business had actually been shrinking for three years, but the windfall jobs providing revenue hid the revenue losses.

Why did it matter?

The windfall jobs weren’t as valuable as his core business. They provided a 10-12% profit margin while his core business provided a 30-50% profit margin. Because he was only keeping score with top line growth, it took much longer to recognize that profits were plummeting.

Hard Work + Market Response = Healthy Growth

We need a healthier understanding about growth if we are to recover from the losses of 2020 (or anytime your sales don’t meet expectations). Healthy growth takes a lot of hard work and a willingness to respond to the marketplace.

Growth plans that rely on a booming economy, last year’s results, or low-margin revenue aren’t healthy.

Counter-intuitively, a sudden resurgence in revenue after a major recession is not necessarily healthy either. During the rebound, expect short-term inflation in pricing when demand ramps up, but prices will soon drop again as supply reactivates. These fluctuations will trigger a lot of tactical errors, but once the economy resets to marginal growth, your strategy will become easier to execute.

Remember, strategy is engineering what you want to happen based on what you think will happen. My message today is to take positive steps towards regrowing your sales funnel instead of waiting for the phone to ring.

Note: This article was originally published in March 2019 and has been updated for accuracy.