Mike Andes warns companies that scaled from 600k to 5M about the dangers of fast growth: high overhead, debt, and thin margins. He recommends shifting to profit mode: accept lower revenue forecasts, cut fixed costs, and aim for 15% margins instead of chasing bigger top-line numbers.
We have went from 600k to 5 million in 2 years. Worried we will lose it all. I'm going to go on a limb and say you have put a lot in on equipment and financing. There might be some debt or just really low margins because worried we will lose it all means you've grown so big so fast, there's a lot of downside where there's somehow going to be threat to you losing it all. If that's the case, I would highly recommend going into profit mode. That's like based on what I have here, that's what I would say next year we don't do 8 million, we do 5,300,000, but we make an extra 15% in margin. 15% on a $5,000,000 business is $750,000 in profit. Game changer for if you have debt, if you have a lot of financial strain. The thing that you might be struggling with though is you have built the infrastructure of a $8 million business to facilitate the growth and you might need to lay off or cut some, some dead weight on the overhead side of things. Equipment, top space, especially if the equipment is not being used. Admin or salespeople that are not super efficient or not being hitting their numbers trying to cut that as much as possible. I would say go into profit mode is your, is your best hope. And if you're really, really bad, like it's bad, you're going to cut assets and people that are not fully utilized to reduce your overhead because what's going to kill you is your overhead. When, when you've grown that fast, you likely have depending on the industry, you likely have not solved your off season. And so you will lose it all almost always at that size of business. When you've grown that fast during the off season, because you have grown so quickly, you haven't been able to backfill any revenue during the off season. And that's almost always a result of building infrastructure to grow 5 million. So to be able to make like 800 grand a month during the peak season or $1 million during the peak season, but when it drops down 90% or 80% during the off season, you have built the infrastructure and the salaries of management and shop space and insurance of a massive business and that's what it catches up with you and grown so quickly.
