Do You Know What You're Really Building?
“We need more sales.”
This is probably the most common phrase we hear from business owners.
Speak to a marketing person. The conversation will be around building a pipeline that brings you more sales. Speak about growth. It will somehow include increasing sales. Simply discuss selling a business one day. Year-on-year increases in sales could be part of that conversation as well.
There is nothing wrong with increasing sales. It is, in fact, a necessity for every business. But increasing sales alone is not enough.
Often business owners tell me, “I don't understand what's happening in the business.” Most times, they're specifically referring to the numbers in their business. A reasonably new but growing trades business with a team recently told me, “Don't ask me anything about the numbers. I know nothing.” In other conversations I have heard, “That's the role of my accountant and bookkeeper. I don't need to know about the numbers.”
But if you know nothing about the numbers in your business, how do you know what you're building? How do you know that you're building a business that will give you an appropriate return today and into the future?
I've come across business owners who pay their staff, pay their bills and make sure everyone else is paid, but don't regularly pay themselves. They may take money out of their business along the way, but that's not really the point.
Every business requires an investment of time and money. What are you getting back for that investment, and is that the business you intend to build?
Do you know the whole story?
Being familiar with the numbers in your business can mean different things. Some business owners keep a close eye on one or two specific numbers. But a few numbers don't tell you the whole story. They only tell you part of it.
For instance, if you track the invoices you raise each month, that does not tell you how much it cost to generate that income. It doesn't tell you how much cash you generated during the month either.
More sales may mean more profit, but they can also mean more costs, more people, more work, more complexity and more pressure on cash flow.
What are today's decisions building?
As business owners, we make decisions all the time. We take on new customers, employ new staff, invest in equipment, change prices, introduce new products and services, and decide where we are going to spend our time and money.
Many of these decisions deal with something that's happening today, but what are the implications for tomorrow? How often do you consider all the options available to you and the consequences of the action you're about to take?
We can learn from decisions other business owners have made in certain circumstances, but those decisions may not necessarily apply to our own.
Having options gives us choice
Over the past few months, I've been thinking about choice a lot. Part of the reason is that I've seen business owners reach a point where they have had to take a particular course of action because there was no other option available to them.
If you have several options available, you can choose. If you only have one option, are you really choosing? Or are circumstances determining what happens next?
Choice in business isn't only about selling a business or retiring from it. It might be the choice to continue growing, to bring someone else in, to step back from some of the day-to-day work, to take some time away, to do things differently, or eventually to pass the business on or sell it.
But those choices don't suddenly appear when we need them. They are influenced by the business we have been building and by the decisions we have made along the way.
So perhaps instead of only asking, “How do we increase sales?”, we should occasionally stop and ask, “How do I know what I'm really building?”
Is the business giving me the return I expect from the money, time and effort I'm putting into it?
What are today's decisions making possible, or perhaps making more difficult, tomorrow?
Is the business I'm building creating the choices I want for the future?
These are questions worth considering as we build our businesses.
Because choice isn't something we need to start thinking about only when we want to make a change. It is something we build into the business along the way.
Build for Choice Masterclass
We'll be exploring these questions further in our Build for Choice Masterclass on 30 September.
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Towards Growth is a strategic business advisory and mentoring practice.
The ideas, insights and client stories we share come from our own work and practical experience, with AI used for editorial support.
The Revenue-to-Value Model™ is a proprietary framework of Towards Growth.
