Explosive Growth

Running a business can be incredibly complicated, especially during a growth phase. As the owner, you have multiple demands on your time and attention, such as:

  • Answering customer questions
  • Reaching out to new clients
  • Dealing with legal and financial issues
  • Working with employees
  • Managing cash flow

If you want your business to grow exponentially, all of these will require some of your attention. The problem, though, is that there are not enough hours in the day to deal with all these issues. Some of these, however, are more important to your business’ ability to undergo explosive growth than others.

I was reading an article the other day in which the author discussed why it’s hard to get investors into a business which provides hourly services. The basic issue was growth and expansion – the business would only be able to grow by hiring more people to bill hours. If there’s little to be levered, then there’s little to invest in.

This is a function of the same issue as how you grow your business, which comes back to the question of what your business priorities are.

If your business is involved in distribution, then the cap on your business is how many customers you can reach for as small an investment as possible. If you manufacture a product, then the cap is the production limit. If you’re in a service based industry, then the cap is the amount of service you can provide for a single time-investment.

Work Once, Get Paid Often

Think about the author of a book. They spend hundreds or thousands of hours writing their book, and then sit back and collect money as copies are sold. Once the initial job of writing is done, further time investment is not needed to get paid again. (For argument’s sake, I’ll ignore book tours, speaking engagements, and so on.)

In your business, you want to do something similar. You need to make it a priority to develop something reusable. Maybe it needs to be customized, but the core of the work can be reused as often as you want. As an example, if you develop some software, you want to be able to sell the same program to many customers. Since you can charge the same amount for the 100th copy of the program as you did for the first, the only remaining cost is customer acquisition.

Customer Acquisition

The one cost your business will always have is how it attracts customers. Whether you are paying for advertising, pushing your website through SEO, or cold-calling prospects, there will be some cost to acquire a new customer. In the perfect business, this is your only cost.

In the previous example of writing a program, the cost to distribute the new program is negligible. Finding a customer, however, can cost significant amounts of money or time. As such, another priority of your business is to reduce that cost as well, and to find ways to leverage your current customers to make future sales at a reduced cost.

Priorities

The priorities of your business are therefore two-fold. You need to leverage your business to bring down costs, both by reducing the cost associated with each sale or service provision, and by reducing the cost of customer acquisition. Only then will your business be able to undergo explosive growth.