We all know the axiom, “less is more.” It refers to efficiency, often regarding a design aesthetic. The corollary, “less is less” (or less is a bore), “more is more,” that is what I am talking about here.
Entrepreneurs often start with near zero (I certainly did). Any revenue constitutes growth. Entrepreneurism and growth are inextricably joined at the hip. For many years, I thought entrepreneurial meant creating from nothing. It is a way of life, a business philosophy.
We’ve all seen or known the type who is happy to cruise along without making waves. They think the status quo is fine. That’s not me. Success is almost always allied with growth. I admit it is an imperfect analogy. Keeping in mind, one can only coast downhill. A gliding plane loses altitude.
When I was young and early in my business career, I loved the expression, “The hell with controlling costs, just increase income even more.” I can’t say it’s great advice to follow, but I turned out OK.
Unbridled growth can wreak havoc. Here’s an example from my youth:
- ■ Year one sales $140,000.
Profit $40,000. - ■ Year two sales $300,000.
Profit $40,000. - ■ Year three sales $800,000.
Profit $40,000.
Then I woke up and realized growth alone is not a panacea. Someone needs to pay attention to the remaining details. Balance is good.
I have often experienced similar imbalances during high-growth episodes. It seems like growing sales and production simultaneously and at the same rate is difficult. Competencies in one always seem to outpace the other.
Another example of unbridled growth is when the team seems to be working like rented mules. There is usually a fun element of excitement, but a high propensity for burnout comes with it.
In my little manufacturing company, I recently experienced the high-octane spirit of growth. We had a very big month on the top line, accompanied by a near-record bottom line. Why? A partial answer is, we were “fully absorbed.” After we broke even, the OH&P all flowed to the bottom (not literally, but you get the idea).
No discussion around growth can be had without mentioning its “crazy uncle in the attic.” That is inflation. When I was young, I took our books to our accountant and told him what great growth we experienced. We did $100 (for the sake of illustration), the prior year we only did 90! Ten percent growth, right? Nope. He said we actually shrank. Then he explained inflation to me. It was the late 1970s. I have friends in the metals industry now; they’re experiencing 30 percent top-line growth, but only shipping 5 percent more metal. But that is beyond the scope of this column.
I have to admit, big growth is fun. It attracts the best and brightest, and who doesn’t want that? It also makes the company more valuable to all, including its stakeholders, colleagues, suppliers, customers and the whole community. Indeed, to paraphrase, “growth is good.” ●
Steve Peplin is CEO of Talan Products
