Growing a small-medium size business takes a lot of focus. You’re working hard, pushing the envelope, solving problems quickly as soon as they arrive. For many of these businesses, the top-line problem is the primary focus.
But sometimes the problem that companies work so hard to try to solve is not the problem. Here is a real scenario I’ve personally seen.
❗️To ensure they secure new work, teams make assumptions about delivery and potential profitability that are not very realistic.
❗️When the work is secured, they find themselves stuck in a cycle of low to negative profitability.
❗️At first, they can’t get out of it easily due to contract obligations.
❗️Eventually, because of the resources they have invested in, they convince themselves they have to commit further to accept more of such work, in the hope of eventually figuring it out.
❗️The company achieves top-line growth, but they are now stuck with a problem of vanishing margins that is even more complicated.
When the business is locked into low margins structurally, it can be quite tricky to change the picture retrospectively. It’s like spending a lot of time assembling a puzzle only to find out in the end that the final piece to complete the puzzle doesn’t fit at all.
So what were the real problems in the story above? Resources not proven to deliver such tight margins. Hidden costs not well understood. Alternative delivery methods too hard to consider laden with prior resource investments. Was this even the right kind of work to enter into? The problem was not so much the top line, as it was about strategy, execution and value.
It can be hard to see the actual problem when team perspectives are self-reinforcing. Leveraging the right external resources can help the discussions go deeper, understand the structural nuances of your business, and creating strategies that genuinely change the picture.
Are you prepared to find the real problems and solve them instead of the obvious one in front of you?