How To Grow A Company Profitably
We’re always hearing people in business discussions talk about growth. And in our cultural pursuit of “bigger = better”, chasing higher numbers and more revenue, it might be easy to believe that our goal as business owners is growth at all costs.
But in a business context, growth can mean a lot of different things, and not all growth is sustainable, healthy, or profitable (in fact, a lot of the time, it isn’t). So how do we know the difference between growth that could hurt our business and growth that we can sustain over time? By understanding the intersection of growth, automation and scaling, and how these work together for a successful growth strategy, we can work towards a growth pattern that is both sustainable and profitable (and, frankly, pretty rare!).
The definition of business growth is “acquiring consistent increases in business revenue over time”. In other words, any time that our numbers are going up, technically we’re experiencing “growth” in our business. This could be happening organically in a short burst due to some unusual event such as a big PR or marketing push; or it could be happening on a more strategic, ongoing level.
Growth can occur strategically in three ways: a) adding a new product or service; b) increasing market share for the output of existing operating processes; or c) a combination of the two. When we optimize an existing product or service in a way that reduces cost and/or increases output, we are typically engaging in activities related to automation or scaling. Automation and scaling are core components of a successful, sustainable growth strategy.
Defining automation and scaling
Automation might sound like we’re talking about the “rise of the robots”, but it simply refers to any time we can lower the cost of decision-making, typically by documenting key criteria and then either training junior, less-expensive staff or some type of software or robot to follow the criteria analysis process.
Scaling refers to activities which enable a process to increase capacity, while maintaining, or even reducing, variable costs associated with running an operating process.
Automation and scaling are key to a successful sustainable growth strategy, because they allow us to reduce costs and increase outputs at the same time. This protects us from running at a loss, decreasing our profit margins, and increasing waste alongside the desired increase in output.
Balancing operations and projects…and other things to be aware of
Although understanding the mechanics of how automation and scaling interact with and support sustainable growth strategies is essential to success, these are not the only factors to be aware of when you begin to develop your growth plan.
Some other key elements include:
- Balancing operations and projects: sometimes when we begin to funnel energy and resources into something new, we can drain the resources needed to maintain necessary operational processes that keep our business alive. Make sure that you are keeping a healthy balance between supporting new projects and sustaining key operations.
- Ensuring that you know your business’s value chain: in order to decrease waste and optimize for value, we first have to know the value we actually are offering; otherwise, we could add a bunch of stuff no one wants, or compromise the elements of our process which are creating the value.
- Getting the whole team onboard: people are processes too, and without a cooperative team, you’ll find it an uphill battle to implement and integrate new processes to support sustainable growth strategies. Make sure you follow the principles of process transparency to help motivate your team to support the growth goals and execute the strategy effectively.
Was this helpful? Want a little more depth and detail on these and more aspects of sustaining profitable growth?
Learn more in our new Skillshare class, How To Grow Your Company Profitably!
When you sign up for a premium Skillshare account using this link, you’ll receive 2 months FREE access to our class, plus thousands of other courses on business, technology and more, taught by over 7000 expert teachers. And you can cancel any time, so your trial is risk-free.
Not sure if it’s for you? Here’s a sneak peek of what you’ll get in the class: