More Turnover, Less Time: Is Your Business Growth Really Working for You?
Most small business owners want to grow. More customers, more sales and more profit are generally good things. But there's a point where increasing turnover doesn't necessarily mean your business is becoming more successful.
I was reminded of this recently while looking at the figures for my own business.
Revenue is growing, recurring income is moving in the right direction and, on paper, everything looks pretty healthy. Then I looked at the hours.
When growth starts taking up more than it gives back
Like any owner-managed business, there's only so much time available. Eventually, taking on another customer doesn't just mean more revenue. It means another deadline, another email conversation, another set of records to review and another demand on your time each month.
Of course, being busy because people want to work with you is a nice problem to have. But it's easy to assume that because taking on the last ten customers worked well, the next ten will be just as straightforward.
At some point, capacity needs to become part of your financial planning.
That doesn't necessarily mean employing somebody. It might mean reviewing your prices, improving processes, investing in better software, automating repetitive tasks or delegating work that doesn't require your particular expertise.
More often than not, it's probably a combination of these things.
Not all new business is good business
Let's say a new customer would bring in an additional £200 a month.
If you've got plenty of spare capacity, that's another £2,400 a year in turnover. Lovely.
But if you're already stretched, there are a few other questions worth asking.
How much work comes with that £200? Who's going to do it? What else could that time be spent on? And, perhaps most importantly, does taking on that customer actually move your business in the direction you want it to go?
These are questions that turnover figures alone won't answer.
A business that's increased turnover by 20% isn't necessarily 20% better off. If that growth means the owner is working every evening and weekend, customer service is beginning to suffer and there's no room to deal with anything unexpected, something eventually has to give.
On the other hand, a business could increase its prices, lose a handful of customers and see very little change in turnover, but end up making more profit with considerably less pressure on the owner's time.
Which of those businesses is really in a better position?
The hidden cost of your own time
One of the difficulties with running your own business is that your extra hours are remarkably good at hiding inefficiencies.
There's no supplier invoice for staying at your desk until 10pm. Your accounts don't show an additional expense every time you answer emails on a Sunday afternoon.
The work gets done, customers are looked after and the numbers might suggest everything is running smoothly.
Until you run out of hours.
And that's when the cracks can start to appear.
I'm certainly not suggesting I've got all the answers myself. Looking at my own figures was a useful reminder that growth brings its own challenges, and what worked for a business at one stage won't necessarily work at the next.
Perhaps it's time to ask a different question
Rather than simply asking "How can I get more work?", perhaps the more useful question is "If I get more work, how is my business going to deliver it?"
If your business is growing but your own time is increasingly becoming the limiting factor, it might be worth looking at things from a slightly different angle.
Not just how much you're earning, but how much time that income takes to generate, which customers and services are genuinely profitable, and what might need to change to create capacity for the future.
Because ultimately, a successful business shouldn't just be getting bigger. It should be working better, too.
These are exactly the sorts of conversations I enjoy having with business owners. If you'd like to take a closer look at your figures and what they mean for your business, I'd be happy to help.
