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In Business, Sales Volume Isn’t Everything

CEOs, company presidents and business owners often tell me how they want to grow their business. They may have an idea of how to go about growing the business but I find they often may not have thought it completely through or what the unintended consequences could potentially be. Then they may go ahead with the concept they have only to find out that growing a business doesn’t always result in the ultimate objectives of profit and sustainability within the conditions of the current economy.

Because of inflation and additional costs and taxes, it is important to grow your business every single year. If you don’t grow your business, if you don’t grow your profit, because of rising costs you will be going backwards financially. Soon you will go from the profit column to the loss column.

You need to be careful and understand exactly what it means to grow your business. When you grow your business you also grow your expenses. You need one more: One more employee. One more computer. One more round of office supplies. One more delivery run or route. One more benefit package. Maybe even a larger office. When you add up all the one mores, even though your volume has gone up, your profit can go down.

When you think about growing your business, look at the whole business and understand what the increased volume will cost you. Determine the optimal level of business you need to do to increase the profits you are looking for.

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