For most, business growth is obviously a positive thing. A business owner can do more in their business, they are confident it will succeed, and they will be able to pay themselves an increasing amount or possibly sell the business for a greater profit.
But business growth can stall for many reasons. This article covers the really important one that most business owners don’t know about.
To make it easier to follow, I’m going to use the “keep asking why” technique to dig down to the core issue while addressing each layer along the way.
But first, let’s agree on what “business growth” is.
Business growth usually means revenue growth.
Even if you focused on profit growth, there are two ways to do that: keeping costs lean or improving revenue growth.
There’s only so much you can trim with costs without killing your business, so your profit growth will mainly be from revenue growth. I suggest focusing on 70-90% on the revenue growth side.
Now let’s look at why your business growth might stall.
Why is business growth stalling?
There are many reasons why revenue growth stalls:
- Your competition does something that draws attention and potential customers away from you.
- You’re not investing enough in marketing, so it’s hard to attract leads and hard to convert them into customers.
- Your marketing needs a refresh. No marketing campaign will work forever, so keep tweaking.
- You aren’t providing enough value, or your potential customers don’t understand the value. Make sure you offer what they want and use their words to describe it.
- You are too busy to focus on revenue growth, such as working on the above points. This is usually the main problem for business owners.
It’s important that you make time to focus on revenue growth.
You as the owner have ultimate responsibility over everything, and when your business is small, there’s probably no one on your team to help you.
Too busy to focus on business growth?
Maybe it’s a personal productivity challenge, i.e. you’re not getting your work done quickly enough. Here are some tips :
- Block out big enough blocks in your calendar in order to get tasks done without distraction or multi-tasking.
- Put on some music that helps you focus and blocks external distractions. Switch off notifications, at least for a time.
- Work during the time of day when you’re most productive.
Maybe your work hours are filled with tasks that don’t need to be done at all. Stop doing these, despite how tempting they may be or how much you might want to procrastinate instead of working on important tasks.
Or maybe your work hours are filled with tasks that have to be done, but they’re not very important and/or someone else could do them. Delegate these! You need to free up your time to get core tasks done.
Why haven’t you delegated?
Maybe you’re not sure how to delegate, or it hasn’t worked in the past. FreeeUp has some excellent resources on their blog to help with this. Start with these posts:
Obviously, it’s not possible to delegate if you don’t have the help you need.
Most people stop here, thinking that hiring help is the answer. But we need to dig a bit deeper.
Why haven’t you hired the help you need?
FreeeUp makes hiring pretty easy, so “it’s hard to hire” is probably not the problem.
If you’re like most other business owners, you haven’t hired the help you need because you don’t know if you can afford to hire, or you’re too busy, or both. A lot of business owners tell me that they’re really busy and not earning enough and that they can’t hire help.
We’re almost at the core problem now!
Why are you *really* too busy and not earning enough?
Despite what I wrote earlier, it’s not usually a personal productivity issue that’s the root problem.
Being in business is hard work. There are lots of tasks to do, and there is always more you could be doing. Most business owners eventually get pretty good at working efficiently and not wasting time on tasks they don’t need to do.
You may find this is true for you too. But no matter how hard you work, you’re still not earning enough or hitting your revenue growth goals.
The reason has to do with your pricing and your costs.
Your pricing is not high enough to cover all your costs, or your costs are too high for your pricing. Either way, the gap between them isn’t big enough.
This gap – the main problem – is called a margin.
That’s a pretty big topic in itself, but for now, here’s what you need to know:
The gap needs to be big enough to pay for your time, to pay for help, to pay for marketing, to pay for growth projects, to pay for managers to run parts of your business for you, and still have profits left over.
Let’s talk about the solution next.
Why is your margin not big enough?
There are two sides you could work on: your prices and your costs.
Like I mentioned earlier, there is a limited upside to trimming your costs. However, the effort could be worth it. I’ve seen $100k+ in extra profit within a year doing this.
Here are some tips for working on the cost side of the gap:
- Software subscriptions can snowball without you noticing. Reduce the number of users, downgrade to a plan that has only the features you need, cut software you’re not using and switch to better software.
- Improve your costs by having the right people working with you and by improving productivity. This point even applies if it’s just you and you’re not paying yourself a market rate.
- Don’t waste money on marketing that isn’t working.
- Before paying a bill, ask yourself: “Is this really necessary?”
The side you’re probably avoiding working on is your prices. Most business owners undercharge out of fear that their revenue will go down as customers flee. That’s actually not always a problem.
Have a look at what your competitors are charging, raise your prices a little each year, and test price rises on new customers or a small segment of your existing customers.
So, why is business growth – or revenue growth – stalling?
Usually, it’s because you’re too busy to focus on it, and don’t believe you can hire help.
Ultimately, this is because there is not enough of a margin between your prices and costs for you to have the time and afford to hire help.
Do you feel too busy and that you’re still not earning enough for all your time and effort?
Are you having trouble improving one or both sides of the gap?
Start focusing your efforts on fixing your margins so you can start seeing some nice business growth.
For a free, 10-minute exercise to quickly find profits in your business, click here.
Ben McAdam is a Profits Coach and Virtual CFO. For over a decade, he has helped hundreds of business owners grow their profits and free up their time. He has also grown and sold two of his own businesses, not just advised others.