Business owners often believe their biggest problem is visibility. They think, If only more people knew about us. If only we could get in front of more prospects. If only we had a better funnel. Then, everything would be good!
In an attempt to fix the problem they think they have, they pour money into ads, hire marketing agencies, and launch elaborate campaigns. They do all this without ever considering if they can actually handle the increased business. And when those ads and campaigns work, they work in the worst possible way. The business gets more customers, which means there are more orders the business can’t fulfill profitably, more cash flow problems, more operational chaos, and ultimately, more debt.
The issue isn’t marketing. Marketing did its job. The issue is that these business owners scaled a flawed business model.
More Sales Doesn’t Always Mean More Success
The business world loves to focus on marketing and increased sales. What it doesn’t talk about enough are the casualties, the businesses that followed all the advice, got the growth they wanted, and collapsed under the weight of their own success.
In these situations, the negative impacts come crashing in almost faster than the new sales. First, your unprofitable service becomes even more unprofitable. The product or service you’re selling for $500 that actually costs you $600 to deliver means you just multiplied your losses. Additionally, more sales mean more money going out before money comes in. If you’re already tight on cash, this type of growth will strangle you. You’ll be profitable on paper while scrambling to make payroll.
Your operational bottlenecks also become disasters when you scale a flawed business model. The process that barely works when you have 10 customers completely breaks when you have 100. Customers coming to you faster than you can serve them well destroys your reputation in the process.
Finally, this doesn’t just impact you, it impacts your entire team. Throwing bodies at a broken system doesn’t fix it. It just means more people are drowning together. High turnover becomes your new normal, which tanks your margins even further.
This happens all the time. I have seen a consulting firm triple their client roster in six months, then realize they couldn’t deliver quality work at that volume. They lost their reputation and half their clients in the following quarter. I have watched an e-commerce company blow up on social media, fulfill thousands of orders at a loss because they hadn’t calculated shipping costs correctly, and shut down completely within a year. And I have witnessed a service business hire aggressively to meet demand, only to discover their pricing couldn’t support the team they had built. They had to let people go and start over.
These aren’t random occurrences. It’s exactly what happens when you prioritize growth over sustainability. Think of it this way, marketing magnifies whatever you already are. If you’re profitable and efficient, it makes you more profitable and efficient. If you’re chaotic and underwater, it makes you more chaotic and more underwater.
The real irony here is that successful marketing can kill your business faster than failed marketing ever could.
Fix the Fundamentals First
Before you can scale, it’s important to build something worth scaling. That means:
- Know your numbers cold. Not just revenue, but margins, cash flow, cost of delivery, customer acquisition costs, and lifetime value. Understand what each product, service, and customer actually contributes to your bottom line.
- Get your pricing right. Think about whether your pricing covers your actual costs and leaves enough margin for the business to be sustainable. Calculate your true cost of delivery and include labor, materials, overhead, the time you’re not billing for, the mistakes you have to fix, and the customers who take forever to pay. Now add a profit margin. This may mean raising prices, which will feel uncomfortable. It may mean you lose some customers, which will feel scary. But it is better to lose price-sensitive customers now than to scale yourself into bankruptcy later.
- Fix your operations. Document your processes. Eliminate bottlenecks. Build systems that work without you. Test them at higher volumes before you actually have higher volumes. Make sure you can deliver consistently and profitably.
- Stabilize your cash flow. Change your payment terms and build reserves. Stop taking on clients who pay slowly. Get your timing right so money comes in before it has to go out. Cash flow kills more businesses than lack of sales ever will.
- Build margin into everything. Your prices need to cover not just today’s costs but tomorrow’s problems. You need a buffer to absorb shocks such as a key employee quitting, a supplier raising prices, the economy shifting, or a client not paying. There should also be room to invest in growth and have actual profit that stays in the business.
Only after you have fixed these fundamentals can you realistically think about scaling.
The Bottom Line
Marketing is a powerful tool. It can transform a good business into a great one. What it can’t do is fix a broken business model. In those cases, it will only expose the cracks faster and more expensively.
If your margins are thin, your cash flow is negative, and your operations barely work, the answer isn’t better marketing. The answer is better business fundamentals, no matter how tempting those Facebook or LinkedIn ads may seem. Fix what’s broken. Build something that actually works. Make sure the math adds up. When your business is operationally and financially solid, marketing doesn’t just bring you more customers. It brings you more profit, more stability, and more freedom to build the business you actually want.
About Agile Planners
At Agile Planners, we provide strategic guidance and outsourced CFO services to companies of all sizes. We can help provide the strategy your organization needs for the growth you want. We understand that no two organizations are the same. And with our experience and financial knowledge, we can help develop the right strategic plan for your business to grow and reach its goals. Simply, we’ll be your trusted partner, so you can focus on running your organization. Contact us today to learn more about how we can help.