Is Your Business Hitting a Growth Ceiling? Here’s How to Triple Your Profits in 3 Years

Is your business facing challenges? You’re not alone. Most small and medium-sized businesses face growth ceilings at some point. But here’s the good news: you can triple your profit in just three years by adopting the right strategies.

How? Let’s dive in.

Most small businesses are founded by individuals who feel passionate about a commercial idea or the very idea of running their own business. At times, necessity forces people into entrepreneurship after they got laid off and struggle to find a suitable, well-paying job. When I started 15 years ago, I needed a job that paid twice as much as any I could qualify for—and I wanted to build something bigger. For me, it was a simple decision to take the leap.

In the early stages, success depends more on technical skills, passion, and the ability to attract good talent, than on best practices. However, this initial success will inevitably plateau. Talent, grit, and charisma are no longer enough to push growth when your business reaches a ceiling.

The Opportunities of Reaching the Ceiling

Larry Greiner, in Evolution and Revolution as Organizations Grow (1968), describes how all businesses will inevitably hit a ceiling. Whenever this happens, it’s crucial to figure out how to break through to the next level. Gino Wickman’s Traction offers a guide to overcoming these growth barriers, focusing on five key leadership skills:

1. Simplifying
2. Delegating
3. Predicting
4. Systemizing
5. Structuring

As a business owner, you will likely encounter moments when you feel stuck. I’ve seen many entrepreneurs who, instead of finding a way to scale, decide it’s easier to sell their business when they hit a growth ceiling. In my past career as an investment banker, I helped many of these entrepreneurs sell their businesses, often missing out on significant potential. I wish I had the tools back then to help them break through that barrier.

Often, these companies were acquired by private equity (PE) firms that specialize in scaling businesses. They apply business leadership practices learned in MBA programs or from strategic consulting firms like McKinsey & Co. to take the business to the next level.

Triple Your Profits

So where does the tripling of profits come in, as I promised in the title of this article?

I’m just getting to it… Private equity groups, especially in the lower middle market where companies with $5-200 million in sales revenue reside, aim to double or triple the value of their investments over a 3-5 year period. This is necessary to meet the demands of investors looking for 20%+ returns, compensating for the risk of investing in small, private companies.

To achieve this, the PE fund will often need to generate more than just that to cover fund management expenses and the costs of mistakes from bad investments.

In most cases, tripling the value of a business requires a similar growth in profits. In fact, PE funds are after the same 3X profit objective that we’re discussing here.

Now, if these financial experts can triple profits in just 3 years, why can’t we, as entrepreneurs, learn how to do the same? Why can’t we implement strategies that increase sales, elevate margins, and optimize business operations to hit the same 3X profit target?

The Power of EOS® (Entrepreneurial Operating System®)

You absolutely can—by using tools like the Entrepreneurial Operating System ). EOS helps unify your leadership team around a clear company vision and instills the discipline, structure, and processes necessary for execution.

Here’s the math behind tripling your profits:

To achieve 3X profits in 3 years, you need 44% cumulative profit growth per year. This can be achieved by increasing sales and margins, respectively, by just 20% each year. This isn’t just possible; it’s highly achievable for most small and medium-sized businesses. With clarity, focus, and accountability, you can align your entire team to grow in the same direction.

Don’t Sell Yet—Scale Instead

Before you consider selling your business, take a moment to explore the possibility of scaling. By implementing EOS, you can unlock new potential, boost sales, and improve team performance.

According to Axial.net, several private equity firms, such as Evolution Capital Partners, now encourage their portfolio companies to implement EOS as soon as the acquisition contract is signed.

Final Thoughts

Tripling your profits in 3 years is within your reach, but it requires the right mindset, the right strategy, and the right tools. By simplifying, delegating, predicting, systemizing, and structuring your business, you can overcome the growth ceiling and accelerate your business’ performance.

What’s your biggest challenge right now? Let me know in the comments—I’d love to help you start your journey toward 3X profits!