Doubling your revenue while going broke

Revenue growth may seem great on the surface, but if you’re running a business where the gross profit margin on that revenue is marginal, you’re just growing a small problem into a bigger problem. If it’s because you have large fixed costs, you should look at reducing those fixed costs before you grow revenue or you are not reducing your risk adequately.

The reason revenue is important is that it supplies the cash–flow. Without revenue you will have no incoming cash–flow. So it’s still important that you grow that revenue to maintain a healthy cash–flow.

You need to monitor the profitability of every product, service or transaction. A simple way of looking at this is asking yourself: “how much will this add to my bottom line?” If you realise you’re adding less than you need to pay your fixed costs and a good income for yourself, then you need to seriously adjust what you do.