When I talk to entrepreneurs about this approach, they often think I am anti-growth. Let me assure you that I am not. What I am against is growth for growth’s sake. Instead, I would like you to think of it like a staircase. It’s a more metered approach, where you reach breakeven or some form of homeostasis before taking the next growth step. That next step is with an eye clearly on returning to profitability quickly. For example, you might start with a regional Last week, I ran a quick poll on LinkedIn asking a question I’ve often asked. What surprised me was the answer. I asked what was most important now: attracting investors, being capital efficient, achieving sustainable growth, or getting profitable faster. I’ve run this poll on LinkedIn many times, and in every instance, the vote heavily favored attracting investors. Last week’s was different by a wide margin. Getting profitable faster was the clear winner. This is a heartening result.
While not easy, achieving profitability equals freedom. It supports self-determination and fosters resilience. Interestingly, it is aligned with other poll answers. To get profitable, you must be capital-efficient and be focused on sustainable growth. If you do all these things, you’ll attract investors. The difference is where the priority lies, and when I see the pendulum of focus swing toward profitability, my heart soars.
The success rate in this industry improves as more founders focus on getting profitable faster. The big question is how is that accomplished. While every brand and path differs, I can offer some basic building blocks.
Profitability is built on strong unit economics. From day one, you must get your cost of goods and selling price to work for you and not against you. A common mistake is to target a specific SRP and hope economies of scale afford you the long-term margin you need. This rarely happens; even when it does, it often takes too long. You need to give yourself a chance at profitability from the start. This might limit where and how you sell, but that is an acceptable trade-off. Search for the outlets, channels, and geographies that allow you to charge what you need to return a contribution margin that gives you a path toward a positive bottom line.
This approach takes discipline. It often means saying “no” to opportunities that you desperately want to say “yes” to. You may need to walk away from the opportunity to launch in a large-scale retailer or to invest heavily in customer acquisition to drive revenue on your website. Your growth rate might be slower than what you see from others, and what you are being told is indicative of a “hot” brand. But discipline ensures you get profitable faster, and temptation is the road to ruin.
approach to retail and grow into your first fifty stores served by a local distributor or a single DC of one of the larger ones. Once you figure out how to succeed and make money in those fifty, you then start looking to expand geographically, but only if you can confidently identify how and how long it will take to return to breakeven or better. You do the same for eCommerce and other channels. You rinse and repeat this process, climbing the stairs of growth each time, pausing long enough to achieve profitability each time, confidently knowing what it will take in time and capital to make the next growth step.
If you start with solid unit economics, discipline and approach growth like a staircase, you’ll reach profitability faster. Do this, and you’ll have dramatically increased your odds of success and shifted the locus of control in your favor. Profit is freedom. Get there as quickly as you can.
