Want to know more?   Contact us today.

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

Great Expectations

In this short leadership session, real estate agency profit consultant, Gary Pittard, explains that a team will never exceed its leader's public e...

The Impossible Gap

Agents who inflate the likely selling price with sellers in order to win the listing - who 'buy the business' - might get away with it during ...

Before the Close

In this short sales session, real estate agency profi...

Four Steps to Turn Around Struggling Salespeople

Struggling salespeople - we've all had them. They can be frustrating, and they can cost your company a lot of money. So how do you know whether to per...

Great Leader or Pretender

In this short leadership session, real estate agency profit consultant, Gary Pittard, points out the difference between great leaders and great pr...

Self-Management

Do your results fluctuate? Are they persistently low? Have you ever found yourself blaming outside forces, such as the market or difficult clients, fo...

Doomed to Fail

In this short sales session, real estate agency profit consultant, Gary Pittard, says that salespeople who will not train are doomed to fail. T...

Talent Scout and Coach

To maximise profit, two of the leader's most important roles are Talent Scout and Coach.

Leadership: Not Just Bossing People About

In the 21st century, employees work with leaders, and not for them. "Generational differences have changed the face of employment" says...

Pipeline of Prospects

"The30-Day Rulestates that the prospecting you do in this

Price and Time

In this short sales session, real estate agency profit consultant, Gary Pittard, discusses the danger in allowing sellers to stay on the market ov...

Marketing

When the market turns down many agency leaders wisely cut expenses. But there is a right way and a wrong way to do this. Cut the wrong expenses and yo...

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