Ever felt like your company suddenly stopped growing?
Growth is always an interesting subject and I feel like I talk about it all the time. Why?
Growth is undeniably important.
Not too long ago, a prospect called me and said, “Hey, we’ve been growing for five years and, all of a sudden, the faucet cut off. Business just stopped.”
They were in a panic — as they should have been.
As we explored his situation further, I discovered he had three basic misconceptions about growth — three misconceptions I think we can all learn from.
Misconception #1: The Economy Will Pull You Along
If everyone else is doing well, you should be doing well too, right?
The economy is up, the recession is over, business is good… so, why are you not growing?
A strong economy will not inevitably make you successful.
When this prospect called, he said, “Everyone else seems to be busy.” He assumed business should be good for his company because it was good for everyone else. But that’s not how it works.
You can benefit from the economy, but you have be intentional with your strategy in order to reap those benefits. The economy isn’t going to pull you along — you have to paddle. Don’t expect the economy to be the driving force behind the success of your company.
Accompany it with a strategy that helps you succeed no matter the economy.
Misconception #2: Growth Is Permanent
Growth doesn’t happen automatically. The fact that you’ve grown in the past doesn’t mean you’ll keep growing.
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, but it’s not.
You can’t forecast the coming year based on the growth factors from the past year.
That’s because growth is not momentum. Growth is the representation of momentum — it’s not the momentum itself.
Just because your company grew last year doesn’t mean you have the same momentum to grow in the coming year. Instead, you need a strategy to build the momentum that makes your company grow.
Misconception #3: All Revenue Is Equal
All revenue is NOT equal.
This mistake strongly affected my 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 it 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, revenue increases were related to transactional, low-margin projects — not his core business.
His core business had actually been shrinking for three years, but the windfall jobs providing revenue disguised the loss.
Why did it matter?
The windfall jobs weren’t as valuable as his core business. They provided a 3% profit margin while his core business provided a 30% profit margin. The margins on these forms of revenue were completely different but because he didn’t see the difference, it took much longer to recognize that profits were plummeting.
Hard Work + Market Response = Healthy Growth
We need a healthier understanding about growth. Growth that’s reliant on a booming economy, last year’s profits, or low-margin revenue isn’t healthy.
Healthy growth takes a lot of hard work and a willingness to respond to the marketplace.
Growing your company with a healthy strategy is a lot like keeping yourself healthy. Diet and exercise are always the answer… but most of us don’t want to do both.
Growth is the same way. You have to be willing to put in the hard work and respond to the market with an effective strategy. Otherwise, growth is slippery and deceptive. It can trick you into thinking you’re successful when you’re not.
(If you’re wondering about the guy who called me, he’s a client now. After correcting these three misconceptions and assessing the real value of their growth, we’ve been able to implement a strategy that has them on their way to healthy growth in their organization.)