by Mike Biwer, Cavallo CEO
Most executives are laser-focused on revenue growth because they assume it’s the quick path to profit. But you don’t fix a leaky bucket by further opening the faucet; you fix the holes.
In distribution, those holes are the everyday exceptions, unrecovered freight and inconsistent pricing that leak margin transaction by transaction. Adding more water—revenue—doesn’t stop the leaks. It just increases pressure on an already broken system.
In reality, growth doesn’t fix fundamentals—it magnifies them. Adding new customers and higher order volume increases labor demands, freight exposure and the number of decisions made under pressure. Any inefficiency that already exists will show up more often, in more places and at a higher cost.
That’s why revenue growth, by itself, is an unreliable path to higher profit. It creates more activity, not necessarily better economics. Margin improvements, on the other hand, may be quieter and less celebrated, but they deliver a far more predictable impact on profitability.