Most SMEs talk about growth.
More customers. More revenue. Bigger markets.
But here’s the catch:
Growth isn’t free. And it often comes at the cost of profit.
At RJP Consulting, we’ve worked with dozens of businesses chasing topline targets—only to realise too late that their margins have collapsed or cash flow is strained.
So let’s talk about the trade-off that’s hiding in plain sight:
The tension between growing fast and staying profitable.
According to the UK Department for Business and Trade, SMEs account for 99.9% of the UK business population, employing over 60% of the workforce—but they also represent the majority of business failures each year, with poor financial planning cited as a leading cause.
📈 Growth Feels Good… Until It Doesn’t
Everyone loves a hockey-stick chart.
But beneath the curve, most growth stories hide things like:
- Discounting to win volume
- Extra hires to deliver inconsistent demand
- Complicated onboarding or delivery cycles
- Higher debt loads to fund expansion
And that all chews into margin.
According to a Xero SME Benchmarking report, over 60% of small businesses that scaled quickly saw a drop in net profit in the first 18 months. Worse—many couldn’t recover.
Because growth without margin = cash burn.
And SMEs don’t have the capital buffer that big corporates do.
🧮 The False Logic of “We’ll Make It Up Later”
We often hear this:
“Let’s focus on revenue now—profit will come when we hit scale.”
Sometimes that’s true.
But most SMEs never hit the scale they imagined.
- CAC (customer acquisition cost) doesn’t fall fast enough
- Churn offsets growth
- Complexity grows faster than income
- Teams are firefighting, not building efficiency
You can’t bank on “eventual scale” unless you’ve proven you can get there with margin intact.
🔍 So Why Do Businesses Chase Growth Over Profit?
Three big reasons:
- Vanity metrics – Revenue feels good. It attracts investors, headlines, and award entries. But margin is harder to celebrate.
- Sales-led culture – The loudest voices push for targets, and few challenge the commercial logic.
- Misaligned incentives – Bonuses and KPIs often reward topline performance—not sustainable profit or delivery cost.
Add a board that wants “aggressive growth,” and the pressure builds fast.
⚖️ You Need a Clear Growth Thesis
We always ask clients:
- Why grow now?
- What will it cost us to grow?
- Where is that growth actually coming from—new markets, new products, or deeper share of existing ones?
- Are there real economies of scale to be had—or are we just adding complexity?
- Can any part of that growth be automated or made scalable through technology?
- Do we know where the margin really is in our portfolio?
- Are our internal processes ready to handle more customers?
- Are we growing outside our core competency?
- What are competitors doing—are they coming after our space?
- Do we have the cash to support growth that doesn’t convert to profit immediately?
If the answers are vague—you’re gambling, not planning.
🛠 What You Should Be Doing
✅ Know your true unit economics
Get forensic about:
- Margin by product/service
- Cost to serve each customer segment
- Discounting behaviour
- Operational load created by growth
✅ Stress-test your delivery model
Growth usually means:
- More onboarding
- More support tickets
- More service variability
If your ops team is already stretched, growth will expose the cracks.
✅ Align incentives with sustainable performance
Rewire targets to reward profitable growth—not just activity.
- Reward margin retention, not just revenue
- Link bonuses to customer lifetime value
- Build shared KPIs between sales and delivery teams
✅ Make space for profit-led decision-making
Some customers aren’t worth winning.
Some products shouldn’t scale.
You may need to slow down to fix underlying cost models before ramping back up.
“Revenue is vanity. Profit is sanity. Cash is reality.”
(Old CFO saying that still hits hard in 2025.)
🚀 How RJP Consulting Helps
We support SMEs to:
- Model the real trade-offs between growth and profit
- Rationalise portfolios to focus on high-margin offers
- Align go-to-market and operations to reduce delivery drag
- Build growth plans grounded in financial sustainability—not fantasy
- Restructure incentives to prioritise margin, not just movement
Final Thought
Growth is exciting.
But profit pays the wages.
If you’re chasing volume without understanding the cost—you’re not scaling.
You’re leaking.