I received a call from a florist who had a $3,000 day in flower sales. He explained that his business’s average daily sales were around $900 and that his annual sales were around $325,000.
He was deservedly excited about his best sales day ever and wanted to share the news. He explained to me that he “. . . now knows what it is like to run a million dollar business. After all, $3,000 a day, every day is a million dollar plus business, and [he had] no problem handling the extra orders.” He knows what it’s like? Bad assumption.
You only know what it is like to actually run a million dollar business, once you achieve an actual million dollars in annual sales.
One day of spiked sales can be serviced by asking friends to help with the surge of demand. One day of spiked sales can be covered with a quick credit card purchase for the extra supplies you need. One day of spiked sales can be addressed by working through the night.
But sustaining $3,000 a day, every day, is a different story. It requires employees, since asking friends for a little extra help each and every night gets old fast. It requires financial preparation, not maxed out credit cards. It requires systems, not brute force.
Don’t get me wrong, I am thrilled that he had such a nice sales day. I think he is on the path to a million plus dollar business, but he still has quite a distance to travel. A million dollar business is radically different than a momentary surge of sales. A day of something is radically different than a lifetime of something.
I asked him if he ever had a day with $0.00 in sales. He said, “Unfortunately, yes.” I then asked him if he knows what it likes to be hopelessly impoverished. There was silence.
Very good anecdote and solid point. Scale only comes with preparation, otherwise a business can grow itself to death. Few entrepreneurs think about that, focusing on growing sales but not implementing the required systems and plans to handle that growth.
I’ve met a few who wanted us to invest in their company because they were confident they could get into Wal-Mart and I had to ask them how they would manage a $250k order when they won’t get paid for 90 days after delivery. After the usual silent pause they look at me and smile, saying “you guys can give us the necessary capital” and I just stare back in silence then gently remind them we are not a bank.