Episode 464: C. - Consistent Growth & Profitability

In week two of the five-part SCALE milestones series, Bradley dives into the "C" - why hitting $1M in revenue isn't enough if you want to become the architect of your business.

The Key Insight: Growth Eats Profit

Bradley breaks down a crucial misconception many business owners have: Growth does not equal profit. Growth eats profit.

Just like pushing harder on the gas pedal burns more fuel, aggressive growth requires more investment in two key areas:

• Team capacity (hiring more people)
• Marketing dollars

While growth can lead to more profitability long-term, in the short term it creates downward pressure on your margins.

The Rule of 40

Bradley introduces a simple framework to balance growth and profitability. The Rule of 40 is straightforward math:

Year-over-year revenue growth % + Net profit % = 40 or above

Real-World Examples:

• Venture-backed startups: 100% growth + (-60%) profitability = 40 (works for them because they have financial backers)
• Conservative client: 52% profitability + 2% growth = 54 (now reinvesting to grow faster)
• Aggressive growth client: 30% growth + 10% profitability = 40

Bradley's Guidelines

Minimum thresholds: Never architect your business for less than 10% growth or less than 10% profitability.

The "perfect" Rule of 40 number: Actually 51, not 40

• Target 25% net profit (fantastic profitability range)
• Target 26% growth (doubles your company every 3 years)

Bradley shares how 26% compounded growth works: A $2.5M company becomes $5M in 3 years, then $10M in the next 3 years - realistic but ambitious growth.

The Bottom Line

Getting to $1M is milestone #1 (Sustainable Revenue), but milestone #2 requires that million-dollar business to maintain Consistent Growth & Profitability. It's the balance between these two that separates true business architects from one-time winners.

Next week: Bradley reveals the "A" in the SCALE milestones.

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