Growing sales and growing the business don’t always correlate.

I’ve seen them have a negative correlation.

It’s not that more sales is bad. It’s that for many small businesses, sales isn’t the problem.

And so sales isn’t the solution.

 

Find the Constraint.

Something is constraining growth. And if you don’t find it, you can’t fix it.

But many small business owners see themselves as salespeople. They’re sales hammers, and every problem is a sales nail.

Why isn’t sales a cure-all?

Because growth is measured with metrics like revenue and market share (customer count).

Take revenue, for example. Revenue depends on two things: how much each customer pays and how many times they pay it.

 

Consider two customers:

Customer 1 earns you $250 in annual commissions and stays with you for 1 year.

Customer 2 earns you $250 in annual commissions and stays with you for 10 years.

Both of them resulted in a “growth in sales.” However, only one of them contributed to the company’s growth.

For many businesses, the constraint on growth is their ability to hold onto recurring revenue. If you’re losing as many customers as you’re getting, more sales is not the solution.

You need to fix the constraint.

 

Root Cause

But then you need to go deeper and figure out where the constraint lives more specifically.

Here’s an example of getting to the root cause.

• Why isn’t sales growth resulting in company growth?
  • Because customer attrition is high.
• Why is customer attrition high?
  • Because customers are price-sensitive.
• Why are customers price-sensitive?
  • Because they don’t perceive compelling value.
• Why don’t they perceive compelling value?
  • Because the relationships are transactional.
• Why are the relationships transactional?
  • Because we don’t invest in getting to know them.
• Why don’t we invest in getting to know them?
  • Because we’re too busy.
• Why are we too busy?
  • Because we’re understaffed.
• Why are we understaffed?
  • Because people quit shortly after being hired.
• Why do they keep quitting?
  • To make $2 more per hour.
• Why don’t we pay $2 more per hour?
  • Because we can’t afford it.

Ok, now we’ve gotten somewhere. We can’t afford to pay $2 more per hour, so we’re not growing.

Then we can do the math: $2 per hour for a full-time employee is $4160 per year.

$4160 per year is preventing us from growing, so we’re investing tens of thousands of dollars to produce additional sales that aren’t resulting in business growth.

 

Conclusion

Figuring out your real constraint is how you unlock growth in your business.

Once you’ve found and solved your biggest constraint, you can start looking for the next one. Before long, your whole business will promote growth, not prevent it.