Is Your Hockey Stick Chart Lying to You?

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Every founder dreams of the “hockey stick” chart. 

Sales climbing up and to the right, customers piling in, Slack lighting up with new order notifications.

But there’s a less glamorous chart hiding in the background that shows costs climbing even faster than revenue. This chart is the reason your net profit looks suspiciously flat no matter how many sales you make.

You’re not necessarily bad at selling. It’s just that scaling sometimes creates a side effect: 

Operational drag. 

And if you don’t keep it in check, every new sale carries a little more cost than the one before it.

In this email, we will break down:

• The sneaky costs that grow faster than your sales

• How to spot them before they show up in your P&L

• A margin protection process that plugs leaks early

Let’s dive in:

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The Compounding Cost Creep

The systems that felt “good enough” at $1M start showing their limits at $5M. 

Processes buckle under higher order volumes, teams get stretched thin, and decisions start leaning toward “just get it done” instead of “get it done right.”

This is when costs begin to creep in from every angle:

• Paying extra on freight to fix last-minute stockouts instead of addressing the root cause in inventory planning

• Hiring new people before fixing workflow inefficiencies which often adds complexity instead of removing it

• Letting manual processes in customer service, finance, or operations pile up because “we’ll automate later” turns into “we’ll deal with it next year”

The danger is that these cracks rarely stay small. They compound. 

And because they are spread across multiple departments, no one sees the full picture until the margin erosion is already eating into the bottom line. 

By that point, fixing it often means unwinding months or even years of bad habits.

The Margin Protection Audit

Plugging leaks can be pretty “un-glamorous.”

There are no fireworks, no big announcement post, no “we just fixed our freight inefficiencies” party.

But this is the work that keeps your hard-earned money from slipping quietly out the back door.

A simple quarterly “Margin Protection Audit” can keep your unit economics healthy and your P&L under control.

Here is how to run it:

1. Pull the last 12 months of COGS and OPEX by category so you have a clean, detailed view of where every dollar went.

2. Compare each category’s growth rate to your revenue growth over the same period. This is where you’ll find the problem areas.

3. Circle any category growing faster than sales. These are your prime suspects for operational drag.

4. Map the workflows or vendor relationships in those categories so you can see what is actually driving the cost increases.

5. Fix what is bloated. That might mean automating a process, renegotiating with a supplier, consolidating tools, or replacing an underperforming partner.

Even small gains here compound quickly. Protecting just two or three margin points through operational improvements can have the same bottom-line effect as adding hundreds of thousands in new sales.

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Final Thoughts

Revenue growth looks great in a deck. Margin growth is what keeps the lights on, pays the team, and gives you the breathing room to make smart decisions.

If you’re going to celebrate the hockey stick, make sure it is not balanced on top of a leaky bucket.

Start small. Run your first margin audit this quarter, fix one operational inefficiency, and track the impact. Then do it again.

The goal is simple. Make every new dollar of revenue worth more than the last.

Want to learn more? Connect with me on social 👇
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Thank you for reading! I appreciate you.

Until Next Time ✌️
- Kody

Disclaimer: Special thanks to Patrol & QCK for sponsoring today’s newsletter.