Want to profit? Do the un-scalable [TMR #52]

Want to profit? Do the unscalable.

Do you realize that the largest companies in the world are only 8-12% profitable? Some companies even lose money for years on end until they turn things around.

In the digital business world, profits aren't that much better on average. Most agencies I speak with sit at around 20%-40% margins tops while working nearly 20 hours a day.

It blows my mind that everyone is so focused on "scaling" their business when:

They have nothing to scale

They are diminishing their profits

Scaling is a two-edged sword. First, it can help you become more profitable by repeating the same process (and outcome) over and over again. But also, the service becomes so watered-down and commoditized that the value diminishes and clients pay less.

Agencies and most digital businesses would do better by focusing on being "unscalable" at first.

Being unscalable will allow you to offer a better service, with higher profit margins, but not allow you to take on as many new clients.

Is that necessarily a bad thing? More money, more profit, and fewer clients... not a bad mix.

Here's what being unscalable really means:

• Customized solutions instead of templates

• Deep relationships instead of surface-level management

• Quality over quantity

• Higher prices, better margins

• Fewer headaches, more impact

The math is simple:

10 clients at $1,000 = $10,000

3 clients at $5,000 = $15,000

Which would you rather manage?

Everyone's chasing scale because it sounds sexy. But profit is sexier than revenue.

Look at the numbers:

• Amazon's profit margin: 3.2%

• Apple's profit margin: 25%

• Most small agencies: 20-40%

• Premium, unscalable service providers: 60-80%

See the pattern?

The less commoditized your service, the higher your margins.

It depends on your goals, of course, but don't fall into the trap of "scaling" just because it's flashy.

Go back and read last week's TMR. Slow down.

Get rich for sure should be the motto -- not "get rich quick."

Want real profit? Do the unscalable first.

Build something worth scaling before you try to scale it.

That's how you win long-term.