Should I trade profit for growth?

Dear Aunty B,

The other night I was at a PwC dinner with SmartCompany editor James Thomson and I was greatly inspired by the three entrepreneurs who talked about whether it was the right time to invest.

Anyway, one of them said something that has got me thinking ever since. He said that if you are going to grow so much that your profit this year was less than last year, don’t do it. Now that was precisely what I was going to do!

I can see this is a great opportunity to go after market share and get the edge on my competitors who are limping around like they have been kicked in the nuts. But that will mean I make less profit this year than last, breaking the cardinal rule.

I have a dream to take my company from $15 million to $35 million in three years and given that I can’t get funding there is no way I can grow fast without a lower profit.

What do you think Aunty B? I will still be profitable, just not so much.

Leon,
St Kilda

Dear Leon,

What on earth are you doing wasting your breath talking to me? That is half an hour you won’t get back. And just think. You could have spent that last half hour whacking more competitors in the nuts and stealing their market share.

Now I was at that dinner too. And the great entrepreneur who runs that company is the leader in his field and has more than $100 million in revenue. How do you think he got there?

Well, he socked his competitors in the nuts, stole their market share, grew the size of the market and for years put up with a seesawing profit and probably a few losses as he got his company to the leading position it enjoys today.

So when you are the leader in your industry and invited to sit on the stage at PwC and share your wisdom, you too can talk about the perfect way to run your business and enshrine your cardinal rules in stone.

Until then, you are a disrupter, a challenger and not a mature defender. So you have to go hard, take more risk and grab those opportunities by the balls. And the fact that you now have those wise words ringing in your ears will also make you focus on maximising your profit!

Be smart,

Your Aunty B

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