Five Counter Intuitive Rules For Small Businesses Who Want To Grow

This blog post might get some harsh criticism but I thought I should honestly share some counterintuitive ideas that I’ve used at the early stages of my businesses. These rules are reasonably good until a business hits seven figure revenue:

1. Getting good at spending is more important than saving

When building businesses, we focus on how to spend as much as we possibly can as fast as we can. We want to spend more on marketing, promotions, product improvements and team. We want to find every possible way to responsibly use cash to drive the businesses revenues up. Our whole lives we get taught to fear spending money and to focus on saving – which makes sense on a fixed income but not when a business has growth potential. Until a business is turning over £500k+ there’s little point in cost cutting or saving money; any gains will not be worth your time – It’s easy to waste 5 hours figuring out how to cut a bill by £150. Your focus is better spent spending money on things that help generate immediate revenue.

The savings mindset will kill the expansive energy your business needs to reach ‘escape velocity’ where it can pay reasonable costs of doing business.

2. Revenue is more important than profit

There’s an old saying “revenue is vanity; profit is sanity and cash is king”. I agree that cash is king and you must never let your business run out of cash BUT I don’t agree that profit is sanity until you hit a certain size. In the early stages of business, revenue matters more than profit.

Let me stress, you have to be able to pay your bills, however if you have the chance to take on new business but you know it’s probably not very profitable, take it on. You’ll figure out the profit later – hopefully. Honestly, who cares if you’re making 40% profit margins on £50k of total business, you’d still be better off going and getting a job at Starbucks. It’s far better to be making no profit on a £1m and then try and figure out how you can improve by 5%. The profit seeking mindset will stop you from growing to a viable size. I like the quote from billionaire investor Peter Theil, “Profit is what you have when you’ve run out of ideas.”

3. Improving cash at bank is better than keeping accurate records

In the early days of business, the only real number that matters is cash at bank. Spending too much time on detailed reports isn’t worth your focus. Do anything to improve your cash at bank but don’t sit around analysing your early numbers. Get on the phone, have more meetings, send more invoices. Once or twice a year, you can sit down and take a closer look at the numbers but in the early stages of business your entire operation is barely a rounding error on where it needs to be. Detailed reports are for businesses that have £1m+ revenues. The detail seeking mindset will take your eye off the ball.

4. Bandaid solutions are better than well thought out systems

What’s actually wrong with a bandaid? It’s fast, it’s cheap, it works; great, job done! People give bandaids a bad name, how ridiculous – imagine remodelling your house every time you stub your toe! Sometimes bandaids are the perfect solution.

In the early stages of business, an Excel spreadsheet that’s working, is better than a CRM system that takes up time and money. A shoebox full of business cards is perfectly acceptable if it means you spend more time on the phone and less time on data entry. A brochure with a spelling error is better than a brochure that took an extra 3 weeks and £500 to remove every mistake. There’s nothing wrong with solutions that are fast, cheap and do the job for now – if anything they are the best for a business that’s just starting out.

5. A brochure is more important than a website

A small business doesn’t get inbound enquiries, it doesn’t have people Googling it or trying to buy online. Every sale is won on the phone and face to face. A good brochure is more valuable to a small business than a great website because it helps in the sales process. A brochure is perfect over a coffee meeting to explain the business or the product. It also beats an iPad because people often associate an iPad with an idea whereas a printed brochure has a sense of commercial reality about it.

I know these five ideas fly in the face of conventional wisdom but conventional wisdom has 70% of UK businesses earning less than £100K revenue each year. These are some of the ideas that have helped me to build several multi-million pound businesses fast. I hope they help.