{"id":157409,"date":"2025-03-26T09:01:54","date_gmt":"2025-03-26T09:01:54","guid":{"rendered":"https:\/\/peraltafinancing.com\/business\/internet-business\/why-growing-your-business-doesnt-guarantee-growing-your-wealth\/"},"modified":"2025-03-26T09:01:54","modified_gmt":"2025-03-26T09:01:54","slug":"why-growing-your-business-doesnt-guarantee-growing-your-wealth","status":"publish","type":"post","link":"https:\/\/fivemor.com\/?p=157409","title":{"rendered":"Why growing your business doesn\u2019t guarantee growing your wealth"},"content":{"rendered":"


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Want to know why growing your business doesn\u2019t guarantee growing your wealth? Many people make the assumption that the bigger a business is the more personal wealth the business owner will have, but that isn\u2019t true at all. In reality it is easy as a business increases revenue for expenditure to increase as well, which ultimately means the business become less profitable. And for many business owners it is the profit a business makes that determines how much money they take out of the business and can use to build their own personal wealth. So if your goal is to be wealthy and you are running a business you\u2019ll want to keep on reading so you can learn why growing your business doesn\u2019t guarantee growing your wealth and what you can do to ensure your business and your wealth grows.<\/p>\n

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This page may includes affiliate links, which means that if you choose to make a purchase, I may earn a commission. This commission comes at no additional cost to you. The content of CharelleGriffith.com is for informational and educational purposes and should not be construed as financial advice.<\/i><\/em><\/p>\n

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WHY <\/b><\/span><\/strong>GROWING YOUR BUSINESS DOESN\u2019T GUARANTEE GROWING YOUR WEALTH\u00a0<\/b><\/span><\/h2>\n

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Revenue vs Profit: More revenue doesn\u2019t always more profit<\/strong><\/h2>\n

If you follow other business owners online you\u2019ll have likely seen people sharing about being a six-figure business or seven-figure business owner, having a 30K month or doubling their revenue this year. And whilst they are all things to be proud of it is only showing part of the picture.<\/p>\n

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Ultimately revenue is a vanity metric. It shows how well a business is doing in terms of sales and in that sense it is a valid metric to track. But it gives no indication about the financial health of a business or how well the business owner is doing from that business.<\/p>\n

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The most important financial metric is actually profit because that shows how much the business is left with after all expenses have been deducted. And if you aren\u2019t a business strategist and mentor like myself who gets to see the financial numbers of lots of businesses it might shock you to see how a busines with a high revenue actually has low profitability due to all of the costs. .<\/p>\n

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For example, the profit margins between running a marketing agency and being a marketing consultant are wildly different. A marketing agency could be generated 500K in revenue. However, a boutique marketing agency often has a lot of costs, such as team, office, software etc, which means it\u2019s not unusual for an agency to have a profit margin of 20% or less. That means of the 500K generated in revenue the business would only come out with 100K in profit. Whereas a marketing consultant that works solo has a lot less costs and therefore a higher profit margin. They could generate 200K in revenue, but with a profit margin of 70% they\u2019ll leave 140K.<\/p>\n

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In this example the marketing consultant is make 300K less in revenue, but 40K more in profit. That\u2019s why many marketers, even when successful, will decide to stay as a marketing consultant rather than \u2018grow\u2019 and become an agency. Because whilst become an agency might look better on the outside, many marketers know in the reality they\u2019ll end of worse off.<\/p>\n

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As you\u2019ve seen from this example more revenue doesn\u2019t always equal more profit. This is why some people will grow their business but not their wealth. Because as their business grows (a consultant turning into an agency) more costs occur and profitability shrinks. So if you want to grow your business and grow your wealth you\u2019ll want to keep eye on the costs of scaling.<\/p>\n

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WANT TO INCREASE YOUR BUSINESS\u2019 PROFIT ?\u00a0\u00a0<\/strong><\/p>\n

A Strategy Day will help you to do just that!<\/span><\/p>\n

I have a tried-and-tested planning process that I\u2019ve used for years that ensures that in just one day I can help business owners to create a plan to increase income and profit over the year ahead.\u00a0<\/span><\/p>\n

All you have to do is fill in a questionnaire beforehand and then turn up on the day. I\u2019ll then lead you through the whole process and write everything down \u2013 making it super easy for you!<\/span><\/p>\n

For more information and to book a Strategy Day click here.<\/strong><\/a><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

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The most common scaling costs that reduce profitability\u00a0<\/strong><\/h2>\n\n

When it comes to scaling a business there are some common costs will increase. There is nothing wrong with them increase per se, but you\u2019ll want to keep a close eye on them to to ensure that the additional costs don\u2019t overtake the additional income<\/p>\n\n

Building a team<\/strong><\/p>\n

It\u2019s common when scaling a business to need more help from other people and so you build a (bigger) team. Every person comes with the cost of their salary\/fee, but there is more than that. You could be recruitment fees, onboarding and training costs, equipment and softwares costs, additional taxes to pay, pension contributions and more.<\/p>\n\n

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Increased software and operational expenses<\/strong><\/p>\n

As your business grows your might need to get new software or upgrade to the next plan. There might also be additional operational expenses<\/p>\n\n

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Marketing and advertising budgets<\/strong><\/p>\n

Another expense that can easily increase is marketing and advertising. In order to generate more sales it can make sense to spend more on marketing and advertising. But you\u2019ll want to keep a close eye to understand the return on investment (ROI).<\/p>\n\n

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Tax implications<\/strong><\/p>\n

Depending on where your business is registered it may be that as your revenue increases there are additional tax implications and more tax has to be paid.<\/p>\n\n

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How to increase revenue without drastically reducing profitability\u00a0<\/strong><\/h2>\n\n

It\u2019s easy when growing your business for profitability to decrease, and in awful situations it can be that your business has created more revenue, but actually comes out with less profit. But that doesn\u2019t have to be that way. If you want to grow your business to grow your wealth and therefore you are focused on increasing profitability here\u2019s what you should focus on.<\/p>\n\n

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Pricing<\/strong><\/p>\n

Review the prices of all your offers and calculate the profit margin of each. Understanding the profit margin of each of your offers is key if you want to increase revenue and increase profit. It might be that from your review you find an offer with a bad profit margin. You can then decide to stop selling it, to redesign the offer for better profitability, or you continue as is, but at least you are aware now. At the other end of the spectrum if you have an offer with a great profit margin it would make sense, if possible, to focus on selling that more.<\/p>\n\n

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Lean Operations<\/strong><\/p>\n

Given that the majority of operational costs and fixed and ongoing this should be an area you play close attention to. Do you need to get an office or a bigger office? Do you really need that extra person? Are you using of the software and technology you are paying for? Is there a better solution?<\/p>\n\n

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Profit-First Mentality<\/strong><\/p>\n

If your aiming to increase profit then you\u2019ll want to adopt of profit-first mentality. The most important metric in your business should be profit over revenue.<\/p>\n\n

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Scaling<\/strong><\/p>\n

If your business is current only selling one-to-one services it might be time to switching and looking at one-to-many solutions, which will allow your business to scale. I\u2019ve written more about going from one-to-one to one-to-many services here <\/a>but by adding one-to-many or scalable offer into your business you could be able to drastically increase revenue without many additional costs, thus improving the overall profit margin of your business.<\/p>\n

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GET A PERSONALISED STRATEGY SO YOU CAN INCREASE YOUR REVENUE AND PROFIT ON YOUR TERMS \u2013 BOOK A STRATEGY DAY.<\/strong><\/p>\n

When you book a Strategy Day I\u2019ll review and refine your offer suite and pricing to ensure you have made the right choices to achieve your\u00a0 lifestyle and financial goals.\u00a0<\/span><\/p>\n

And then I\u2019ll create the marketing and sales strategy so you can sell everything in your revised offer suite and ensure those profit goals become a reality.<\/span><\/p>\n

For more information and to book a Strategy Day click here.<\/strong><\/a><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

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Don\u2019t forget growing your profit won\u2019t automatically grow your wealth\u00a0<\/strong><\/h2>\n

Fast forward and you now have an offer suite that means the overall profitability of your business has improved, and at the same time you are making more revenue. You\u2019ve kept your operations lean and have a profit-first mentality. You are seeing your profit going up and up, but that doesn\u2019t mean automatically you are going to be wealthier.<\/p>\n\n

Given that most online, service-based, business owners don\u2019t have an exit plan aka they aren\u2019t building a business to sell it on you need to be growing your wealth outside of the business. You\u2019ve done what needs to happen inside the business to increase profit so you can \u2018pay\u2019 yourself more. But now it\u2019s up to you. You need to work out your strategy for growing wealth and follow it.<\/p>\n

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That\u2019s it. You know know why growing your business doesn\u2019t guarantee growing your wealth.<\/b><\/h2>\n

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I really hope by reading this you\u2019ve realised that if wealth is your ultimate aim you need to switch your focus from high revenue to high profit, and then have a plan in place for what to do with the money once it is in your \u2018hands\u2019.<\/p>\n

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If reading this has got you rethinking how you grow your business so you can make more profit and increase your personal wealth then I\u2019d love to help you.<\/p>\n

A Strategy Day<\/a> is perfect if you are looking to get your business growth and profitability strategy created fast \u2013 and you know once you\u2019ve got a plan you\u2019ll hold yourself accountability for implementing it.\u00a0<\/strong><\/p>\n

Or if you\u2019d prefer the strategy and then ongoing support check out my 1:1 Business and Marketing Mentoring.<\/a><\/strong><\/p>\n

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