I’ve Seen This Mistake Bankrupt Too Many Businesses (AVOID IT)

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One operational mode separates businesses that keep growing from businesses that plateau and contract.

It’s not a strategy. It’s not a tactic.

It’s the difference between growth mode and survival mode.

Most businesses flip between these two modes without realizing it. That’s the problem. You don’t notice the switch until you’re already dealing with the consequences.

Results are not typical. Your results will vary and depend entirely on your individual capacity, business experience, expertise, and level of desire. There are no guarantees concerning the level of success you may experience. The testimonials and examples used are not intended to represent or guarantee that anyone will achieve the same or similar results. We don’t believe in get-rich-quick programs. We believe in hard work, adding value and serving others. As stated by law, we can not and do not make any guarantees about your own ability to get results or earn any money with our information, courses, programs, or strategies.

Why Adding Non-Revenue-Driven Expenses Forces You Into Survival Mode

A client account brought us in through their sales team. The previous advertiser wasn’t delivering qualified prospects who were properly framed for what the sales team was selling.

We fixed that problem immediately. The sales team knew we were the right fit, and we delivered.

This started what I call growth mode.

After solving the qualification problem, the next step was obvious: scale. The plan was straightforward. The sales team needed to hire new salespeople consistently, week over week.

The demand for what this business was doing was significant. I could fill a new closer’s calendar within about a day. The ads were working. The qualification was working. The sales process was working.

This is why we needed the sales team hiring consistently. I asked the business owners directly if they understood what we were doing and the implications of scaling this aggressively.

They said yes. They approved everything. We got started.

Three weeks later, maybe a month, the business randomly added expenses that didn’t produce revenue. These weren’t revenue-driven expenses like ad spend or sales commissions. These were bloated costs that didn’t generate income.

Because these expenses didn’t generate revenue, they had to be covered somewhere else. In this case, that meant me as the advertiser and the sales manager were now responsible for covering those costs through the revenue we generated.

We’re operators, so we weren’t opposed to working around it. But the real problem started here.

What Happens When You Start Cutting Revenue-Driven Expenses to Cover Overhead

Because they added these massive expenses, the business owners started looking at what they could cut. The biggest expenses in the business? Sales commissions and ad spend.

These are revenue-driven expenses. They’re fundamentally different from non-revenue-driven expenses.

If you don’t know the difference, you’ll make the exact mistake this business almost made.

They came to us and said they might need to limit ad spend for the next month. I shut that down immediately.

You just told us you need to make more money per month no matter what. Why would you tell us to spend less money? That’s how you flip the switch from growth mode to survival mode.

There are infinite ramifications when you make that switch.

How Cutting Ad Spend Creates a Domino Effect Across Your Sales Team

If we had let them flip that switch, the domino effect would have started immediately:

The sales team loses confidence in hiring. If they told us we could only spend a limited amount next month instead of scaling, all hiring processes would stop.

Hiring takes three to four weeks when you’re a sales manager. You can’t just instantly hire top talent. You have to recruit, sell the opportunity, staff them, train them, get them on the calendar, and fill their calendar.

If you turn off that process at any step, top talent leaves.

Word circulates quickly, especially when you’re hiring talented closers. It’s a tight-knit, community-oriented group. If this sales manager burns eight people over a month because the company cut ad spend, those eight people go out and tell everyone.

Next time the company tries to start growth mode again, the sales team won’t trust them. They’ll say, “Last time we tried this, you kicked us into survival mode and limited ad spend. We can’t confidently hire more people until you show us over a sustained period that you’re actually going to spend.”

This creates a delay. Every time.

According to research from Harvard Business Review, companies that cut growth investments during downturns take significantly longer to recover than companies that maintain strategic spending.

Why You’re Either Expanding or Contracting—Never Staying the Same

There’s no coasting in business. There’s no “things stay the same.”

You’re either expanding or you’re contracting. You’re either growing or you’re starting to die.

This is why most businesses experience ups and downs. They switch on and off between growth mode and survival mode, then get confused when they go through long periods of expansion followed by long periods of contraction.

I call this the bullwhip effect. When you take an action, it doesn’t immediately produce the result. It picks up momentum through time, like a rock going into a pond. The ripple gets stronger as it goes out.

If you tell your team you’re in survival mode and you cut ad spend, the sales team doesn’t confidently hire. They abandon everyone they were recruiting. Next time you want to expand, you immediately have a delay because the sales team won’t trust that you want to stay in growth mode.

Growth mode requires everyone in full trust, making decisions confidently that you’re growing and expanding. Survival mode puts everyone in a mindset of “I’ve got to watch out for myself and protect my reputation.”

Survival mode dramatically lowers the probability of sustained growth.

How We Showed the Business Owner Where Revenue Actually Comes From

In this case, both the sales manager and I educated the business owners. We made it black and white.

Show us where the revenue comes from.

If you cut off all paid ads to save money, you’re actually losing all the revenue. Paid ads produce a specific ROI within the credit card billing cycle. It produces even more ROI in the next 30 days. And even more in the 30 days after that.

Your money turns into more money within the credit card billing cycle to pay it off. It turns into even more money in the next window. And it turns into even more money in the 30 days beyond that.

Once the business owner saw this clearly, they made the right decision: spend more money.

That’s the right decision. That’s growth mode.

What Happens When You Stop Front-End Acquisition to Focus on Back-End Fulfillment

Another example shows just how destructive the wrong decision can be.

I’ve worked with businesses that were steamrolling everyone in their niche. One operator in particular was buying out competitors, which helped expand their revenue and delivery capacity.

They had a little over 800 clients and were delivering results. They had over 300 staff.

The business model worked like this: they charged an amount on the front end and had a rev share on the back end. They made money upfront, but they were also making money on the back end from these rev shares.

At a certain point, they realized they could make more profit and have less management overhead if they stopped expanding front-end acquisition. They wanted to focus heavily on back-end fulfillment and rev share income.

The plan was to make the business more attractive to sell. A buyer could immediately turn front-end acquisition back on.

So they decided to dramatically reduce front-end acquisition. They didn’t cut it off completely at first—it was a two-phase approach.

Why Laying Off Staff Without Radical Transparency Creates Chaos

Phase one: cut 60 of the 130 employees related to front-end acquisition.

This would lower overhead and allow them to focus on the back end.

But they made a terrible mistake. They failed to remove these people from Slack. And they failed to be radically transparent about why they were being let go.

They gave a shallow explanation with no transparency. Employees don’t want to lose their jobs or income. It creates instability in their lives. People became very upset, naturally.

All this aggression got directed at the company. And because they didn’t handle it well, all the fired employees started throwing shade at the owners in the company Slack channel.

In this particular business, the operational reality made things worse. Even after people bought, they remained skeptical. It’s like hiring a contractor to build a massive building. Even if you give them the entire bank loan upfront, you’re naturally skeptical until the project’s done.

Customers remain skeptical until they get the result.

In this business, it took a minimum of 12 to 16 months for a customer to reach the point where they felt accomplished and the result was achieved. At best, it was a 24-month period before they exceeded expectations.

So when 60 staff got fired and started talking in Slack about how upset they were, it spread. The company didn’t catch it until the next morning. A whole night of chaos in the Slack channel.

240 employees saw all of it. The cancer spread. Negative propaganda from internally in the company infected their minds.

How Internal Chaos Spreads to Your Customer Base

Clients started trying to communicate with the people they did the front-end acquisition deal with. Emails bounced back. “This person’s email no longer exists.”

Clients are technically skeptical until the result has been met. So when they see an email bounce back from a company they’re already skeptical about, they panic.

They hit up those employees via cell phone. “Hey, what’s going on?”

The employees started spreading propaganda to the clients.

This spiraled out of control fast.

This was an actually legitimate company. Not a scam. They were delivering, fulfilling, doing all the right things. But they did a horrendous job at maintaining growth mode.

One simple decision flipped the switch unknowingly into survival mode. That flipped the domino. And it led to a chaotic end result they didn’t anticipate or expect.

What Happened When They Laid Off the Rest of the Front-End Team

What do you think happened to the other 240 employees?

Phase two of the plan kicked into effect immediately. They let go of the entire front-end acquisition team—the other 60 people.

And they made the same mistake again. They forgot to remove them from Slack.

Can’t make this up.

The same thing happened again. The 60 newly fired people spread more negativity. Now they’re down to 180 staff. Everybody’s tweaking out.

Everybody’s in survival mode.

The executives and companies they hired—the CMO, the president, the operations manager—everyone except the business owners started going into “I’ve got to protect myself” mode.

They started scrubbing the fact they worked for the company. Everybody’s highly skeptical. People started spreading literal lies.

A business they acquired that was maintaining inventory put a lien on the inventory they were owed. It made no sense. People just started doing all kinds of irrational stuff because they were in survival mode.

Survival mode gets chaotic. Survival mode is everyone trying to protect themselves.

Research from McKinsey & Company shows that organizational trust is one of the most difficult assets to rebuild once broken, often taking years to restore.

How Fast Things Can Fall Apart When Everyone Enters Self-Protection Mode

It took about a month after that second wave of layoffs for infinite chargebacks to hit. Every government organization you can possibly report this to got mass reports.

Reddit threads popped up. TikTok videos. Facebook groups.

It was horrendous.

This company was considering a minority buyout in the summer. By the end of the year, they were using the word bankruptcy.

That’s how fast things can turn when you go into survival mode.

Why Growth Mode Works in the Opposite Direction Just as Fast

When you stay in growth mode, you grow the business tremendously fast.

That same business that got to a certain level didn’t exist a year and a half before. Within 18 months, they hit that level sustainably.

It wasn’t chaotic. It was a very clear “this is going to perpetuate forever” kind of feeling—until they made that decision to go into survival mode.

Growth mode equals high probabilities for sustained expansion. Survival mode equals high probabilities for bankruptcy, or at the very least, a lack of trust and enthusiasm to scale.

It’s almost like the boy who cried wolf. “Oh, you want to grow again? Really? You’re not going to tell me in a couple months that you want to stop everything because you want to cut revenue-driven costs?”

How to Tell the Difference Between Revenue-Driven and Non-Revenue-Driven Expenses

You have to understand what revenue-driven expenses are versus non-revenue-driven expenses. They’re drastically different.

If you don’t know the difference, you will make the mistake I just described.

Revenue-driven expenses include things like sales commissions and ad spend. These are costs that directly produce revenue.

Non-revenue-driven expenses are things like bloated overhead, unnecessary staff, or expenses that don’t contribute to income generation.

When you’re in growth mode, you protect revenue-driven expenses at all costs. You scrutinize non-revenue-driven expenses ruthlessly.

When you’re in survival mode, you start cutting everything—including the very things that produce your revenue.

That’s the kiss of death.

According to Bain & Company, companies that distinguish between growth investments and operational overhead make better resource allocation decisions during both expansion and contraction periods.

Why Your Sales Team Won’t Trust You After You Cut Ad Spend Once

Growth mode requires trust across your entire organization.

Your sales team needs to trust that you’re going to keep spending on ads so they can confidently hire new closers.

Your advertisers need to trust that you’re going to let them scale so they can deliver on the financial goals they’ve set.

Your fulfillment team needs to trust that the company is stable and growing so they can focus on delivering results instead of protecting themselves.

Once you break that trust by flipping into survival mode, it doesn’t just come back. It’s like cheating in a relationship. Can you expect that relationship’s trust to go back to what it once was when it was pure and untainted?

No. It doesn’t work that way.

Once you cross that line, there’s a general distrust and reservation in everyone from that point forward.

What It Actually Takes to Stay in Growth Mode When You’re Scaling

If you’re serious about sustained growth, you need to commit to growth mode and stay there.

That means protecting revenue-driven expenses, hiring aggressively when the numbers support it, and maintaining radical transparency with your team about why you’re making the decisions you’re making.

It means understanding the bullwhip effect and recognizing that every decision you make today will compound over the next 30, 60, 90 days.

It means building systems that allow you to scale confidently without second-guessing yourself or your team.

And it means surrounding yourself with people who understand what it takes to operate at this level—not beginners, not side hustlers, but established operators who are already generating significant revenue and want to scale intelligently.

In my experience working with Master Internet Marketing, our 7-week live comprehensive training, we focus heavily on the operational frameworks that support growth mode. We cover how to structure revenue-driven expenses, how to build trust across your organization, and how to avoid the survival mode trap.

Results are not typical. Your results will vary and depend entirely on your individual capacity, business experience, expertise, and level of desire. There are no guarantees concerning the level of success you may experience. The testimonials and examples used are not intended to represent or guarantee that anyone will achieve the same or similar results. We don’t believe in get-rich-quick programs. We believe in hard work, adding value and serving others. As stated by law, we can not and do not make any guarantees about your own ability to get results or earn any money with our information, courses, programs, or strategies.

Businesses I’ve worked with that have maintained growth mode have seen incredible results. The ones that flipped into survival mode? They’ve experienced delays, distrust, and in some cases, complete collapse.

The choice is yours. But if you want to increase your probability of sustained growth, there’s only one mode to be in: growth mode.

For operators who are serious about building the systems and frameworks that support this kind of operational discipline, Inner Circle, our flagship program, provides the premium mastermind environment where these conversations happen regularly.

Results are not typical. Your results will vary and depend entirely on your individual capacity, business experience, expertise, and level of desire. There are no guarantees concerning the level of success you may experience. The testimonials and examples used are not intended to represent or guarantee that anyone will achieve the same or similar results. We don’t believe in get-rich-quick programs. We believe in hard work, adding value and serving our. As stated by law, we can not and do not make any guarantees about your own ability to get results or earn any money with our information, courses, programs, or strategies.