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

Profit Systems

In the eighties, management expert Michael Gerber coined a phrase that became popular across the world: "Work on your business, not in you...

Whose Bright Idea Is This?

It is no secret that far too many business people, salespeople and leaders, hold training in low regard. In this short leadership session, real es...

Why You?

Salespeople spend a lot of time trying to convince sellers how good they are. They talk about the advertising they do, the awards they've won, the res...

Smart Goals Aren't Enough

If you have received even a modicum of real estate training, you know about SMART Goals: specific, measurable, achievable, realistic, and achievab...

When Salespeople Won't Do the Actions

In my work as a real estate agency profit consultant, I have heard all the excuses. It's twenty years since I heard a new one. The com...

Break Even Early

"If you want to boost your real estate agency's profit, put more focus on your agency's Break Even Point", says real estate agency profit consulta...

Studying in the 21st Century

Any person who wants to succeed in their career must study their craft. Self-improvement isn't a luxury. Winners realise that every dollar they inv...

How To Enjoy Your Work

Sales can be a tough career. We face rejection daily, doing most of our presenting in unfamiliar territory. We know that we are only as good as ou...

Less Selling, More Leading

Multi-tasking is a myth. While performing two straightforward chores at the same time is easy - you can stir the custard while talking on the...

What is a Result

The best leaders Pittard works with NEVER allow their offices to close unless their agencies have at least one real result for the day. But what i...

There's More To a Good Sale Than Just Closing

Everybody wants to be a better closer. Of all the skills salespeople say they want to improve, it's closing. But there is more to a GOOD sale than...

No Bad Days

In this short sales session real estate agency profit consultant, Gary Pittard, says that, for most salespeople, a typical month is a string of ba...

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