Without fail, every business has areas where they’re struggling and that impact their ability to grow.
If your marketing is inefficient or ineffective, it will also be unprofitable. So not only will you not be growing your business as quickly as you’d like, but you’ll also be heading towards a cash flow crunch that could kill your business entirely.
Similarly, if your operations and fulfilment are inefficient or ineffective, that can act as a handbrake on the marketing so that you also slow down your growth.
This situation is so common and can happen to businesses at any stage, from early stage to mature businesses that have been around for a long time.
The issue is this: brands miscalculating how much they can and should spend in advertising in order to acquire a new customer.
Brands mis-calculate this in two ways, or rather they don’t actually calculate it at all and make one of the following two errors as a result:
Either they over-spend on advertising in an effort to scale and grow really rapidly.
Or they under-spend on advertising out of the fear of running out of money.
Either way, they end up in a cash-flow crunch.
Spending too little means you don’t grow revenue quickly enough to actually make a profit over and above your fixed expenses.
Spend too much and you end up converting new customers at a price too expensive to be profitable.
In this episode, I go into detail about the critical scaling error brands make that absolutely kills profits, and what you should do about it!
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