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The Quickest Ways to Go Out of Business

Most entrepreneurs love sales. The more sales the better. They use words like scale and velocity and other fancy terms for growth.

But in the “real” day-to-day world of starting and running a business, sales are sales, no matter what you prefer to call them. And chasing sales for sales sake is a sure-fire way to quickly go out of business.

Here are 2 reasons why:

1. Sales don’t mean jack unless you have profits. I would much rather have a $5 million revenue business with a 20% profit margin than a $20 million business with a 1% profit margin. It’s not rocket science, think about it.

2. Although counterintuitive, the faster you grow sales, the less cash you will have. This is because you will have to invest heavily in the infrastructure of the business to support those sales. If you grow too fast, you will have to invest a lot of money before some of the cash comes back to you. I have seen many businesses have to shut down because they grew too fast.

So, before you get sucked into the “sales-only” tunnel vision that most business owners get sucked into, remember that, at the end of the day, the only thing that matters is cash. And managing that cash should be your primary focus.

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