Bizjournals.com tells the story of the Westbrook family artisanal masonry business called QuarryHouse. A lesson to learn from this business is how they have approached growth. They have taken it slowly and conservatively, and it has paid off.
“Westbrook discovered that unexpected business issues cropped up after his company broke the million-dollar revenue benchmark. Westbrook had to relinquish the role of field supervisor and take a strong lead in business roles. Even more pressing issues came in the form of cash flow and payroll, as the company found itself paying employees without having been paid for the jobs they did.”
This transition takes place for almost every growing business, and it usually happens around $1-2 million in sales. Things start to happen that are symptomatic of growing pains that, without attention, can doom a business to failure. Bankers will tell you that this growth period is probably the most dangerous period for the survival of a small business.
“Today, Westbrook sounds like a seasoned financial manger: ‘Learn to grow and survive on the profits you earn. You can’t get into too much trouble if you stick with that.'”
Indeed, and growth should be focused on those profits, not on sales. Growing sales is irrelevant if they don’t also grow your profits.
“His three-prong approach to meeting a goal of $15 million to $20 million in revenue in five years includes continuing to emphasize training and continuing to reinvest in the company….QuarryHouse has had never had outside investment, but as it approaches revenue of $6.5 million, Westbrook is in talks with banks about adding outside capital to the mix. Said Westbrook, ‘They’ve done all the numbers and I don’t believe we’re done growing. There is a lot of work yet for us to look at.'”
No outside money until they hit $6.5 million in sales? Now that is prudent growth.
Previous
Next