There is a dangerous moment in a growing business when everyone is flat out and the owner starts feeling successful.
The phones are ringing. The calendar is full. New people are being employed. Clients are chasing delivery dates and nobody has time to tidy the kitchen.
It certainly feels like growth.
Then the monthly accounts arrive and there is almost no profit. Or, even more mysteriously, there appears to be a profit but no cash.
This is usually when somebody says, “We just need more sales.”
Maybe. But pouring more water into a leaking bucket is rarely the first repair I would recommend.
Being busy tells you that people have work to do. It does not tell you whether the work is worth doing. A business can keep twenty people frantically occupied while quietly losing money on every job.
In fact, busy businesses can hide problems remarkably well. There is always another deadline, another proposal and another client emergency. Nobody wants to stop and ask awkward questions because stopping feels like the opposite of progress.
But the useful questions are fairly simple.
Which clients actually make money?
Which services have the strongest margins?
How much senior time is being given away?
How often are jobs being redone, overserviced or delivered late?
Are prices rising as quickly as wages and supplier costs?
And, most importantly, how much profit does the next dollar of sales produce?
You do not need a giant reporting system to answer these questions. You need accurate monthly management accounts, sensible timesheets where labour matters, and a clear view of margins by client, product, service or team.
The numbers should help you distinguish muscle from fat.
Muscle is the capacity that allows the business to produce more good work: capable people, useful systems, reliable processes and equipment that removes bottlenecks.
Fat is everything that grew because nobody had time to question it: duplicated software, unnecessary meetings, awkward clients, confused roles and manual processes held together by one heroic employee and a spreadsheet called FINAL-v17.
Cutting muscle makes the business weaker. Removing fat gives it room to move.
Sometimes the answer is more sales. Sometimes it is higher prices, a narrower service, better project management or saying no to work that never made sense in the first place.
Quite often, the fastest way to improve profit is not to make everybody busier. It is to give them less low-quality work and enough space to do the valuable work properly.
A healthy business should become easier to run as it grows. Not easy, obviously. Businesses are rarely easy. But each extra sale should strengthen the organisation rather than create another small emergency.
So by all means celebrate a full order book.
Just don’t confuse activity with achievement.
The objective is not to build the busiest business in your industry. It is to build one that produces good work, looks after its people and leaves enough profit and cash to keep doing both well.
Photo by Nadine Marfurt on Unsplash