Tell me if this sounds familiar. ABCO was growing each year. Leaders were excited about the top line growth, even though their bottom line was anemic – but hey, they were growing and reinvesting in equipment and inventory etc. etc. As sales went up they needed more people, so they hired them. More and more people and payroll grew anf grew – but hey, sales are and would continue to grow, and we need those people to grow.
One season sales did not grow. Leaders fought to make them grow. A level month here, a couple down months there. External conditions, low demand, or just high market share from earlier successes were against their continued growth. The leaders continued to fight for sales expansion optimistically.
Year end came and they see that sales were down 19% from the year before, and not only did they not make any money, they lost some.
They still had the same number of people and payroll, the number one expense at most firms. While sales slumped, they had the staff of a company that was 19% larger – and that’s all it took for the group as a whole to lose money for their 12 months of collective effort.
The leader’s mismanaged the company with optimism instead of realism.
Don’t do that.
I have ridden that exact same ride and it was no fun. It is a constant challenge to balance growth/staffing demands with profit goals. The lesson I have learned is never hire “ahead of the curve” Stretch everyone as far as you can before you make the next hire.
Also just started listening to “The Power of Now” by Tolle. Very good stuff but it makes my head hurt a bit!