- I do know a very inappropriate joke that takes a little bit of
time to tell but always gets me an incredible laugh.
(upbeat music)
The three cycles of business growth.
If you feel like you're building a business,
you're growing really quick but you're not making any money or
you don't have a good handle on what part of my business do
I need to be focused on today, next week,
next month?
Or you feel like hey I've been building this company for a
while I don't even know if I'm a good operator or good
entrepreneur, a good executive than this video's for you 'cause
I just want to share with you guys the opportunity of
understanding what part of the cycle you're in so that you can
understand what do you need to do next, right?
Because I really believe that understanding these three cycles
will give you the clarity that you need to not feel like
things are going crazy.
I mean to know, the number one thing I do for my clients when
I coach them is making sure that they
understand that it's normal.
I think that most entrepreneurs are so freaking hard on
themselves, right?
They're going through the turbulence.
They're going through the growth.
They're going through the downsizing and the language and
conversation and frustration and lack of sleep and all these
things they do themselves is just not fair.
So, I want to give you context for the different cycles that
I believe exists in all businesses,
especially want to go really fast and kinda know how you
transition to the next one.
So, for me, I really learned this lesson watching a good
friend of mine.
He built, he was in business a little under 10 years,
built a $4 million+ a year business and what I noticed is
over the last 10 years is the business grew and then he gave
it back and he grew and he gave it back.
It's funny how many entrepreneurs they think they're
making progress because essentially what
they do, it's like a stock.
They make a lot of progress then they deal with challenges and
then they're here so they want to grow again so they grow again
but they pattern.
They kinda hit the top and then they lose it all again.
To me, business is not about making money.
Making money is easy you know if you know how to talk to people
and create value making money is easy.
The hard part is not losing it and that is the challenge and
why you need understand what cycle you're in so that you can
focus on next level so you don't go up,
down, up, down.
Don't give it back.
If you're in that cycle today that make sure you understand
these three cycles to get to the next one.
So the first one for me is going after sales.
If you're starting a business or trying to go into business you
gotta get the top line revenue.
Income and especially profits solve all problems.
So when you're like well should I create the systems or should
I hire more people or should I, you know,
buy this new machine to improve efficiencies those are all
really good options but to me if you need more top line revenue
you got a focus on going for sales.
Sales, sales, sales, top line revenue.
Make sure that the income's there because great businesses
work off percentages, right, and if you have a high enough top
line revenue, enough income and you have a decent profit margin
then that number is actually quite impressive.
Most businesses get in trouble because they're only doing a few
thousand a month, right?
10,000 if they're lucky.
You want to be doing a lot more so that when you look at the
percentage of profit you'll be able to expand it and improve
the economics of the business.
So, number one, is going after sales and really focus on the
top line revenue.
Number two, is building the cost structure.
Most entrepreneurs are really good at selling.
You know, if you're successful if you've been in business now
for almost 10 years, you probably a great top line
revenue but what you need to get great at is understanding the
margin structure, the cost.
Where do the expenses come from because again I don't want you
to give it back.
I want you to make the money build the business create the
profitability and don't give it back.
And a lot of entrepreneurs give it back in the margin structure.
They buy something for $10 they sell it for $12.
That's just crazy.
This happens all the time in the service businesses.
They're like, you know, I've got this team and I'm billing out
them at X rate and I'm getting paid for this.
It's like yeah but you know you're not considering the fact
that you've got overhead, you've got real expenses.
You have clients that you got a finance their growth because you
probably have outstanding receivables.
You have people that may not pay you.
You have the potential for lawsuits.
I mean at the end of the day if you don't understand your cost
to figure out your gross margin then that's where you go.
Top line revenue's number one.
Number two is understanding your cost controls really looking at
each project, each product that you sell,
each service that you sell and figure what's the profitability
or the margin so that least you know.
Then you go to the market and say customer I love you but
I know used to do this for this amount and going forward we have
to change it just so that we can build a great business 'cause to
me the frustration's not being able
to do great work, right?
You can't do great work if you're always putting out fires,
chasing receivables, not have the profit level to invest in
the team, to do things for culture,
to really just know that you got the ideas and you're holding
yourself back because you can't afford to invest, alright?
So you need to get the cost control.
Once you get the top line, you get the sales going
number two is get the cost.
Number three is making sure that you improve your market reach.
Right, which is essentially what I call,
you know, that I have a model called the growth engine.
It's demand marketing.
It's improving your ability to have a message inserted into the
market that attracts more clients, 'kay?
Sales is like selling, right?
You just going off, picking up the phone,
referrals etc. Market reach is actually building a
marketing program, right?
Increasing your offering.
So maybe you started here and you do this really well and got
half million revenue.
Now you want to go to the next level,
you need to figure what's the next offer or product or service
that we need to present to customers or segment a new
market to be able to grow the overall business.
Improving your market reach is number three so that is how
businesses go.
They expand, they contract, they expand,
they contract.
Growth is never linear, right?
I know that every time we sit there we're like oh let's
build a business plan.
I'm gonna start here and I'm doing X amount of revenue and
I'm gonna end the year up high.
It's never a linear, go look at your numbers on a monthly basis.
It's step functions of growth because it's always
expand and contract.
So what you want to know is
what cycle do you need to be in?
Do you improve your market reach?
Do you need to improve your cost controls or do you need to
improve your top line revenue, your sales?
And if you're there and you've done that then get the cost
controls get the profitability
then improve your marketing reach.
Boom, then go after sales again.
That's the cycle.
That's the way businesses work.
It's always about trying to find opportunities and turning those
opportunities into profit.
So those are the three business cycles,
real quick, going after sales, cost controls and three,
expanding your market reach.
I hope this video finds you incredibly well and as per usual
I want to challenge you to live a bigger life and a bigger
business and I'll see you next Monday, cheers.
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