Why You Must be Impatient for Profit and Patient for Growth
FACT: The relentless pursuit of business growth can kill your salon/spa.
There are countless examples of salons/spas that found themselves in dire straits — or have completely imploded — because they were hell-bent on driving revenues and expansion at the expense of profit.
Too often, the measure of a successful leader is based on the leader’s ability to grow his or her company. But compromising profit at the expense of growth is, and always will be, inherently dangerous.
As I detailed in my book No-Compromise Leadership, a leader’s ultimate responsibility is to maintain balance across The Four Business Outcomes:
- Staff Retention
- Customer Loyalty
Compromise one or more of the outcomes and the others pay the price.
Profit is proof that your business model works. Profit built on integrity, purpose, and high values is proof that you are worthy of being a no-compromise leader.
Profit shows that you’re paying attention to the company’s financial reality. A history of profitability shows that growth opportunities are consistently weighed against the potential risk.
Generating profit in tough economic times shows that the company is capable of making and executing tough decisions.
Here are FOUR No-Compromise strategies to keep you impatient for profit and patient for growth:
- Ego versus common sense: Great conquerors are consumed with expanding their territory. It’s all about how big they can grow it. But there comes a time when the great conqueror’s territory gets so big that it saps resources, becomes unmanageable, and starts to break apart. KEY: It’s one thing to pound your chest and proclaim how many locations you have or that your company does millions in sales. But if your salon/spa is crumbling because expenses are out of control — and you’re getting further into debt — it’s time to put the brakes on growth and get seriously impatient for profit.
- Driving growth versus good decision-making: The relentless pursuit of profit is fertile ground for making risky decisions. Every growth decision must be weighed against the potential risk. Entrepreneurs especially have a high tolerance for taking risks by applying the flawed practice of “ready - fire - aim.” KEY: When an owner/leader puts growth above profit, questionable decisions will be made in favor of high-risk opportunities. Yes, there are times when high-risk decisions have to be made that will take the company into the unknown. And when those decisions yield extraordinary success, it makes for inspiring books. It’s the failures you don’t hear much about after the lights are turned off and the door is permanently locked.
- Growth through financing/funding: Few if any companies can finance their way to profit. There’s nothing wrong with debt — as long as it’s manageable. But when your monthly debt service is consuming profit faster than the company can generate it, you’re stuck in the high-stress cycle of “driving growth to pay off yesterday.” KEY: When you’re looking for places to borrow more money, you’ve been in financial trouble too long already. You’re growing broke. It’s time to stop the bleeding because more growth is not the solution.
- It’s what’s in your fuel tank: Profit is an abstract. Profit is a measurement. Profit is not cash. I repeat, “Profit is not cash.” When a company gets impatient for profit and patient for growth, it is building cash reserves by turning profit into cash. This process is planned. It’s a discipline that many leaders, and especially entrepreneurs, shortsightedly avoid. KEY: If your salon/spa is not generating profit, it’s time to reengineer your business model. And the reengineering begins by shifting your thinking so that you and your company become impatient for profit and patient for growth.
Here’s my challenge to you: If what you just read poked some current reality pain points you’ve been stressing over, you must take some decisive action. Why? Because financial stress, excessive debt, and slim-to-no profit NEVER fix themselves.
FACT: You need to create and live by a cash-flow plan (budget).
FACT: You need to consistently live by your cash-flow plan with a disciplined commitment.
At the end of the day, growth is exciting — but profit will always be the key to winning the game of business.
Want help building your cash-flow plan? We can help. Click here to learn more about getting hands-on help with our Profit Projector Coaching.