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When everything feels broken in your business, deciding what to fix first can be paralyzing. I’ve been there — looking at multiple problems, all urgent, wondering where to begin.
After 25 years of navigating these decisions and watching other entrepreneurs struggle, I’ve learned there’s a hierarchy to fixing business problems. Understanding this hierarchy can mean the difference between thriving and barely surviving.
Revenue comes first
Here’s the reality entrepreneurs don’t want to hear: sales need fixing first. Mike Michalowicz covers this in his book “Fix This Next.” The majority of businesses have decent products and people, but they’re not selling effectively. This truth became even more stark during the pandemic. McKinsey found that 70-80% of small businesses experienced 30-50% revenue drops between 2020 and 2021.
This applies whether you’re funded or bootstrapping. If you’re a funded startup building a product that won’t launch for two years, you have the luxury of focusing on product development first. But for service businesses, bootstrapped companies or any business that needs revenue to survive, sales must be the priority.
Think about it: if sales aren’t working, nothing else matters. It doesn’t matter how efficient your operations are or how talented your team is if you’re running out of money. When profitability is negative and growth is stagnant or declining, you must fix sales. Without revenue, the company dies.
Understanding your business stage
I’ve developed a framework called “leap, grow, scale” that helps identify what to fix based on where you are in your journey.
First, you make the leap — you start your business, jumping into the void without knowing how it will go. At this stage, you need to generate enough revenue to survive and hire your first person.
Then comes the growth stage. You’ve found something that works, and now you’re adding people. The key is finding a formula that multiplies value — every person you add should generate more revenue than they cost. While 1.25x might be the minimum to stay viable, the real opportunity is finding ways to 2x or 3x your revenue with each strategic hire. That’s the difference between linear growth and exponential growth.
Finally, there’s the scale stage. You’ve found a working machine, and now you need to operate it at larger volumes.
At every single stage, revenue remains critical. But once revenue is stable, other problems emerge.
When revenue isn’t the problem
Let’s say your revenue is okay — you’re making enough to cover expenses with a bit left over. There’s no immediate panic about making rent. What’s next?
The answer is almost always people. When I look back at my own plateaus, people problems were the culprit. This challenge never goes away. Everyone struggles with it.
The Peter Principle captures one common problem: employees get promoted to their highest level of incompetence. Here’s how it played out in my business: we’d grow, need managers, so we’d promote good individual contributors. They’d do okay as managers, we’d promote them to directors — and that’s where they’d hit their ceiling.
Now you’re stuck. You can’t promote them, demoting feels wrong, and moving them sideways might not work. I ended up with people who weren’t right. Worse, when talented new recruits joined, the misplaced managers drove them away. I realized I had the wrong people when it was too late.
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The third priority: Operational efficiency
Once you have good revenue and the right people, operational efficiency becomes your focus. How quickly can you deliver your product or service?
For example, if orders take seven days to ship, can you reduce it to four? If customer onboarding takes 30 days, can you cut it to 15? If you can onboard customers in half the time with the same team, you’ve doubled your capacity. If you previously onboarded 24 customers annually, now you can handle 48. That translates to revenue growth.
According to McKinsey research, CEOs report that operational improvements through digital transformation can yield 40% efficiency gains, 36% faster time-to-market and 35% enhanced customer satisfaction. These aren’t marginal improvements — they’re game-changers.
Recognizing the warning signs
How do you know when it’s time to act? Sometimes the market tells you — loudly. A customer might refuse to pay because something that should have taken one month took three. Or you consistently miss your financial targets. These force you to confront reality.
In my case, we kept missing product goals and financial targets. Then we started going backward. That forced us to acknowledge problems that needed immediate attention. The forcing functions are always profitability and cash reserves. If you’re profitable, you’re building reserves. If not, you’re draining them. Eventually, you run out of runway.
The continuous improvement mindset
Here’s the truth: there’s always something to fix in your business. It’s just a matter of degree and urgency. Running out of money is obviously more critical than a minor reliability issue in your product.
Sometimes problems arise from strategic mistakes. We made a strategic error in 2023 that impacted sales. Now we’re fixing those decisions to restore revenue growth.
The key is being proactive rather than reactive. Don’t wait for profitability to turn negative before examining your business. Look at your metrics. Are you growing? Are your cash reserves increasing? Is your team delivering efficiently?
Making the hard decisions
When faced with multiple problems, use this hierarchy:
- Revenue/Sales – Without this, nothing else matters
- People – Wrong people sabotage everything else
- Operations – Efficiency multiplies the impact of good people and sales
Within each category, prioritize based on impact. A 10% improvement in sales might matter more than a 50% improvement in shipping speed. A toxic employee might be destroying more value than three operational inefficiencies.
You can’t fix everything at once. Focus on the most critical issue, resolve it, then move to the next. This approach produces far better results than trying to fix everything simultaneously.
The businesses that survive and thrive are those that can diagnose their most pressing problems and address them decisively. Use this framework, be honest about where your gaps are and tackle them. Your future self — and your business — will thank you.
