Growth Isn’t Always Good

Growth appears to enjoy good press, but is it always a good thing? I don’t think so. Here are two examples.

A person contacted me saying that he was thinking of opening a real estate agency. He and his wife had another business that still required a good deal of input from them both and would for the foreseeable future. I advised him not to open just yet – wait until the other business was profitable, established, and didn’t need input from the one who was going to run the real estate agency. They opened anyway. Now they are nearly broke.

Another couple has a real estate business and wants to move into another town. Their first business still needs work to make it consistently profitable and it needs a lot of input to get the team right. Some people need to be terminated, some need to lift their game, and others need to be hired and put on a path to peak performance.

The last thing these leaders need is the distraction of a second office. We advised them to get their first business right before worrying about a second. They went ahead anyway. I hope I am wrong, but the road ahead will be far from smooth.

Growth funded by debt

Growth is a good thing IF it is funded by profit and not by debt. Going into hock to fund a business may be acceptable if the business paying back the debt is making a profit in excess of $500,000 per annum, but much less than that and you could be headed for trouble. You need a good profit buffer for the fall in profit that will be inevitable while growth is occurring.

Yes, I know you think the new venture won’t affect your current profit, but it almost always does. The reason is distractions.

Growth and the high cost of distractions

Seldom factored into growth plans is how the new venture will distract the leader from the current business. Too many distractions have sent people broke.

Never underestimate your input into your agency’s profit. Take your eye off the ‘profit ball’ while you focus on growth and almost certainly your profit will fall. Add the fact that your expenses are climbing as you invest in the new venture and you have a distracted leader with falling profits. Not a good combination.

Planned growth

I am not saying that you should not grow your business, but you should be careful how you do it. If your present business is not profitable, your second one will not be either. If you require debt to fund your growth be sure that you can afford not only the repayments, but the inevitable loss of profit due to distractions.

Plan your growth. Let reason and accurate figures guide you, and not ego. It is good to look wealthy and successful, but appearances can be deceiving. I’d rather be wealthy in reality than look wealthy while in reality struggling financially, wouldn’t you?

Don’t be quick to buy into the growth myth. It’s not always good.

Gary Pittard
Recent Articles

Why Do We Do It To Ourselves?

There would not be one business leader who doesn't know that it is easier to lead the right people than it is to lead the wrong people. Despite th...

Stop Slumps Before They Occur

Any real estate agency leader can tell when a salesperson is in a slump, but according to real estate agency profit consultant, Gary Pittard, the re...

Visual Aids

An age-old question for presenters is, "Should I use visual aids?". While I agree that people can become overly reliant on visual aids...

High But Not Out Of Sight

Goal setting needs to be done properly if it is going to work. Statistics show that only five percent of people set goals. Those five percent earn m...

Getting the Team to Focus

One of the top three complaints from agency leaders is that they cannot get their teams to focus on actions that produce results. Some have been compl...

Make Them Feel Important

Sometimes being a real estate salesperson is hard slog. There is pressure to bring in results, rejection to be faced on an almost daily basis, and t...

Has Sales Changed That Much?

We often hear about disruptive change. Uber for taxis, Amazon for book stores... Now people are saying that a new player in the Australian market,...

Habits of the Greats

Habits are a foundation of success. As you progress through your sales career, your results will improve as you replace bad habits with good habit...

The Changing Face of Adult Education

As an educator in the real estate sector, I have seen the face of adult education change radically. Agency leaders should change their view of trainin...

Keep The Team Busy

Idle hands, idle mind, so the saying goes. School children who are kept busy with sport and similar extra-curricular activities are less likely to...

Can Booming Markets Conceal Mediocrity?

The real estate agent's prayer goes like this: "God grant me another boom and I promise I won't stuff it up this time". Such is the prayer of...

Group Your Tasks

'Task Hopping' is a time management trap that causes huge productivity losses. Real estate profit consultant, Gary Pittard, says that multitasking...

Want to reach your profit potential? Contact us now.

Pittard


Suite 71, Level 4
330 Wattle Street

Ultimo NSW 2007
Australia


Mailing Address
PO Box 2045
Strawberry Hills NSW 2012


: (02) 8217 8500
Fax: (02) 9281 4198
AUS Free call: 1800 663 600
NZ Free call: 0800 448 065
International: +61 2 8217 8500

: info@pittard.com.au

Contact Us