Ryan Vaughn explains that real business growth means profit increasing with revenue, not just expenses rising alongside income. He outlines three pillars: documented processes that teams can improve, cash-flow systems like Profit First that allocate percentages to profit and taxes, and hiring plans tied to revenue thresholds. A service provider who hired aggressively without systems ended up in cash-flow collapse.
Hey, the question today is, how do I plan for real business growth? I love this question. I mean, it's better than how do I plan for fake business growth? And there is such thing as fake business growth, just so you know. When your revenue and expenses increase at the same pace, uh, that could be fake. Um, but anyways, let me answer the question that was posed to us. How Do you plan for real business growth? So we need a foundation of a couple things so that as you grow, that foundation is strong and sturdy. If you don't have this in place, and as you grow, you can of course go back and, you know, fix some of the pieces. So it's not to say that, hey, stop trying to grow if you don't have this stuff in place, but maybe if growth is happening really quickly and you feel like things are getting out of hand, Dial it back a little bit so that growth is still happening, but you're also giving yourself time to fix some of these things if it's a thing. So first thing is you want a structure of processes, a framework of how do you create and maintain processes. It's one thing to say, hey, let's have a book of standard operating procedures, SOPs as some people call them. But people create those and then they get set aside. And usually when they're set aside, one, they're never updated, and two, the team doesn't even utilize them. They just ask questions as things happen instead of referencing something. So have a structure, a framework, basically a process to your processes, and make sure that if they're, you know, That you're telling your team where those are and reminding them frequently. That also means processes should be updated. What I know now is so much different than what I knew 10 years ago, even what I knew a year ago. And if I was waiting, or if I should say, if I didn't think about updating my processes, I could still be using a very bad model. Give Your team members, the ones who are in the day-to-day based on whatever the process is, give them autonomy or at least comfort to come to you and say, hey, I think this is a better way to do this now. And that way your processes continue to evolve and you're always doing best practices. So in order to plan for growth, you got to make sure you have something like that in place, because if not, you're going to be 10x the revenue size Using processes that helped you get to a 1x. And so then you're gonna have a bunch of quality problems and upset customers there. Because as your business grows, there's different stages. You know, a $100,000 business can get away with certain things, but as you get bigger, you do need more processes and systems in place just to keep the thing humming at the same it was when it was just you and a smaller team. Um, another foundational thing we need is a cash flow management system. Our tendency as revenue increases is that our expenses will increase at the same pace, if not faster, than our revenue, and that's without a plan. So we want a plan. We want to create boundaries around our cash flow so that as we spend money— or I should say, as we increase revenue our spend on that money is still in control and we're only spending money on the necessary things. We're not letting ourselves get financially fat. Profit First is a great system for that because it's based on percentages of revenue. Anyways, there are some exceptions to that, but Profit First is a great system that we teach, but definitely want that as a foundation so that as you grow, your profits are growing with your revenue. And then the last thing I'll talk about, a way to grow or plan for real growth is have a resource plan. And by resource, I mean either material if you're creating products or a hiring plan if you're service-based. When will you need to hire the next person or when do you need to make the next order of materials that you use to deliver your product. Um, I've seen this countless times. One example comes to mind where this guy was offering a service where he helped people book, um, sales calls. So he kind of did the marketing. That was his, his sales pitch. I do the marketing for you, I get the sales calls booked, so all you have to do is show up for the sales call. Um, we were actually a client of his at the time, and he was kind of failing miserably on our In fact, in the 3 months that we used him, we got zero scheduled sales calls. Yet during that time period, he's like, hey, we're growing really fast. We're having really great results. I guess other businesses had better results than we did. And so he hired $30,000 worth of new employees to handle the processes that he thought. So he invested in expenses, which isn't a bad idea, but the amount that he invested in was very reckless. And guess what? Within a year, his business was closed. He had 3 months of massive cash outflow, which then meant he had to dial it way back and even get rid of team members that existed before he overhired. And then he never recovered despite, you know, you know the type, they're super fake to you up front. They love to see you, but every time you see them, they ask the same questions and you have to give them the same answers. So they don't really care about your answer. I hate that. I really do. Don't be that person. Okay, so what you do then is you need to know based on your service offering, And your revenue price point and your team cost. Based on us adding 5 more clients for our service, that— no, that means I need to hire a person. It could be 10 clients, it could be 1 client. I don't know what your model is, but you want a plan so that as you do grow, you know when to plan to hire. Because without that, you run the risk of putting an overburden on your team. And when you do that, they get burnt out faster and they're gonna start looking for other jobs. So we don't wanna do that. Okay, so that's kind of the idea there. So the question is, how do I plan for real growth? Have a foundational system and framework around your processes, have a cash flow management system, and have a resource plan. Know when I gotta buy the material to create the products. and know when I need to hire new people. Hope that helps. Remember, profit is a choice. Have the courage and wisdom to choose it.
