Bad Revenue is Worse Than No Revenue (It’s a Trap)

There’s a business trap that looks exactly like growth.

More revenue coming in, but you’re getting paid less.

Most business owners have the same default move when things feel tight.

“I need to get more sales.”

I’ve seen this a lot and I’ve been guilty of it, too.

The urge is to go get more sales, more marketing, more push. It feels like moving in the right direction. It feels productive, like you’re doing the most important thing.

But it needs to be done carefully, otherwise it won’t fix the actual problem.

Rather than believing revenue solves everything, we need to be a bit more discerning.

This is the part most people miss: not all revenue is good revenue.

Some revenue is low margin. Say you spend $1,000 on ads and get $10,000 of revenue. On the face of it, great return. But if it costs you $9,999 to deliver what you just sold then, combined with the ad spend, you’ve actually lost quite a lot of money.

Some revenue creates complexity. In one of my previous businesses, we had a very standardised service and decided to test going after bigger, more custom clients for bigger monthly fees. I’m glad we ran the test, but the extra complexity wasn’t worth it. It kept me too involved in delivery instead of growing the business.

Some revenue quietly drains more than it adds. Like working with a difficult client, supplier, or joint venture partner that’s draining the motivation and joy from you and your team. Just not worth it.

Bad revenue is a trap.

When you’re bringing in bad revenue, you end up working harder, things don’t actually improve, and you’re too busy to go after good revenue.

It’s a vicious cycle.

You accept bad revenue, it prevents you from putting in the effort to get good revenue, and all you have time for is accepting more bad revenue. You can end up really busy and still don’t have enough money to properly pay yourself or grow your team.

Bad revenue can be worse than no revenue. It can be a trap.

So when things get tight, don’t just rush out and get more sales. Make sure you’re selling the right thing. Make sure the product or service you’re selling is profitable enough. Otherwise you’ll get stuck in the bad revenue trap.

That’s one of the things I help my clients with. Like Kevin.

If you want some help with this, get in touch.