Revenue vs. Growth

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revenue vs. growth

We’re growing, but what does that really mean?

We have heard so much over the past five or 10 years about the concept of growth. Everybody talks about it, but does anybody really knows what it means? What does growth mean to you?

That is the topic of this week’s video with Brad Malone and David McNutt.

“Especially in the last three years, with the economy opening up, integrators are seeing double digit growth and they’re really proud of it,” says Malone. “But what they’re usually meaning is top line revenue. We sold X or we hired 10 more people. We used to be 16, now we’re 70 people so we must be growing. Or sometimes they talk gross profit, but rarely. Most of the time it’s top line revenue and they get fixated on that and it’s kind of like they’re in a club with other people. We now pass those four over there so we must be better.”

Navigate has seen some exponential growth with some of its customers. But there are dangers that come with rapid growth when it happens too fast.

“Just like a balloon, it pops. Or you start to get bigger and bigger, and the cracks get wider,” says Malone. “It is a myth that a rising tide lifts all boats, but a lot of the senior people will say, ‘well we’re obviously successful because we’re growing,’ but if you start to look underneath, the handoffs are starting to get dropped. People are getting busier and busier. Processes that weren’t home standardized and really locked in, in a disciplined way, start to lose the discipline because now we have to hire new people so are we training those new people? Or are we just saying go baby go, you know, burn baby, burn. So the challenge that I see is that the internal operations of a company actually get worse as we grow.”

Often when companies are growing, they don’t want to really look at themselves. What’s the real benefit of conducting a good assessment of a company when things are really growing?

“First, can a company sustain that growth, and am I growing my next level of management,” Malone asks. “What we often see is that we grow, but we don’t have the underpinning to keep it up. So it’s an unsustainable growth. One of the things we attempt to do is build the next generation of leadership to really own the next layer of that organization as it grows.

Watch the video, Revenue vs. Growth, for the full discussion:

If you are interested in talking some more about assessing your company or how to manage the impact of your growth, call us and let us know.

Related: Managing Growth

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