You Can’t Grow Your Business If You Don’t Do This
Ok, that title was clickbait-ish, but that doesn’t mean this article isn’t accurate.
I’ve spoken to a couple of business owners lately and one recurring theme I hear is that they want to grow their business.
Who doesn’t, right?
But the problem is they want to grow their business — generate new leads and customers and eventually revenues, hire new team members — but don’t want to do the work necessary for that growth.
Here’s a conversation I had with a business owner a few weeks ago.
“I want to grow my current sales by 2x so I can cover my opex [operating expenses].” I then reply with, “I totally understand. Everybody likes more sales, right? What are you currently doing to grow your revenues?”
“Nothing,” the owner replied. “I don’t want to ‘advertise’ yet nor do any marketing activities because I’m afraid if I do so, my current team can’t handle it.”
Let’s step back a little bit. What do you think about the business owner’s answer?
Look, any person who’s not invested in the business — emotionally — will clearly see that there’s a disconnect.
The business owner wants to grow while doing nothing.
You don’t do anything but the business just keeps growing.
In a perfect world, that’s the dream!
But in reality, that’s just not going to happen.
Growing Your Business Requires Two Things from its Owners
If there’s a magic formula for success, then every business would be successful.
But that’s not always the case.
According to one study, 20% of businesses fail within the first year, 30% on the second year, and 50% of fail within 5 years.
Growing any business means you have to spend more and do more. Let me explain…
1. You will spend more
Accept the fact that you will spend more. Whether that’s for hiring new people, advertising, or other activities like developing your product or buying a bigger inventory to avail of lower prices.
It’s the most basic idea in business (or in investments).
You buy/produce something at a lower price only to sell it at a higher price to achieve profits.
Sales – Expenses = Profits.
The only thing you have to keep in mind is when you spend, you do so with the expectation that the return will be higher than the expense itself.
So, instead of simply thinking that shelling out money is simply an expense, think of it as an investment.
Of course, there are ways to use that money wisely, and we’ll get to that in a minute. But at this point, treat every expense as a learning opportunity.
If the outcome is good, meaning the return is at least equal the expense (breakeven), improve on it so the same activity will lead to a bigger return in the future.
If the outcome is bad, learn from it so you don’t make the same mistakes again. If you don’t learn from it, and do the same thing again, that’s not a wise use of your money and other resources.
2. You will do more
Fact is your business will not grow with status quo.
If you have one store with 10 people, open from 9am – 9pm, how do you expect to grow 10x if you don’t hire more people nor do any marketing activities, nor invest in productivity softwares and apps, nor open new stores?
You spend more because you do more. You do more because you spend more.
Again, there are better uses of resources (in this case manpower and your time). But the fact remains that in order to grow, you have to do more things.
Don’t expect that your brilliant idea will get you where you want to go. You have to do a lot of experimentation — from testing your main value proposition to the smallest details like CTA copy.
This is actually one of the things I mentioned in my private newsletter (which you can subscribe to here, by the way). I worked with another consultant for a client and it’s been 7 weeks of planning and spreadsheets but nothing is coming out.
How to Grow Your Business Effectively and Efficiently
1. Don’t put all your eggs in one basket
I’m sure you know this already, but you don’t invest everything in that one brilliant idea of yours and leave nothing for yourself or as a fallback.
Now, this isn’t to say that you don’t go “all-in” when you execute on your idea. What I meant by not putting all your eggs in one basket is you have to do this smartly.
If you have a secured full-time job and you have a brilliant idea and want to pursue it, don’t just jump the ship and resign from your day job to focus on your side hustle.
Build out your side hustle first while still working full-time. When you see actual profits coming in — positive cashflow — then that’s the only time you start thinking of resigning from your job.
Not everyone has access to investments like the ones we constantly hear from the news where they got millions to fund their growth.
For normal people like us, we have to rely on how regular businesses survive in the market — earn revenues from customers.
Hustle — that’s the proper term. Work on your side business after your full-time job. Work on the weekends. Once it starts growing, that’s when you consider going at this business full-time.
2. Continuously get market feedback
Having started my own consulting practice, I always tell business owners that the market is the best source of feedback for your business.
Most of the time, business owners want to spend resources building out this awesome product/service without getting feedback from the market.
All they did was casually ask around and thought this idea is perfect. They now want to pour in money to build this thing. New website, hire new team, new company, even. All the works.
While it’s an unfortunate story, a lot of business owners go through this. Especially the ones who are “serial entrepreneurs” and have other working businesses. So, it’s okay for them to lose money.
To them, it’s part of the game.
But for most of us, we can’t afford to lose money.
For most of us, investments towards businesses are entire life savings.
So, what do you do instead?
Don’t rely on assumptions
When you have an idea, there are always underlying assumptions behind it. The biggest one is this: when you put your products/services out there, customers will both want and have the capacity to buy it.
But those are two different things.
And the best approach is to test your assumptions (or hypotheses) using market feedback (yup, not market research).
There are already countless tools and frameworks you can use to do this. And I plan on writing more about them in the future. If you want to receive updates about testing your ideas in the market, you can enter your email here.
For the record, I’m not against asking around. In fact, it’s the first step in market validation. If everyone says it’s a terrible idea, don’t proceed. Move to the next one. But if they say it’s great, you have to go to the next step of validation — are people willing to buy it.
Sample testing: e-commerce store introducing a new product/product line
Here’s a brief example of how you can get early market feedback before spending (wasting) a lot of time and money.
Let’s say you’re an existing e-commerce store and you want to introduce a new product or product line.
There are two ways you can go about this:
- Develop it first and go to market
- Refine the idea, get feedback
- if positive, develop it and go to market
- if negative, scrap it and move on to the next
After everything I said so far, you know the correct answer is #2, right?
Here’s how you do it.
And you can do it in two ways:
- Ask your existing customers
- Ask others
I recommend doing it both ways. First, ask your customers to see if it’s the right idea in the first place. After all, your customers already bought from you so they are most likely to tell you how to improve.
And if that still isn’t a good benefit, remember that existing customers are easier and costs less to sell to. So, if you include them early on about your journey and plans for the business, they’re more likely to become advocates.
Next, use the information you got from your customers to further refine your idea, then either ask them again, or ask the market — people who don’t know you.
The easiest way to do this is through a survey. Or, if you’re further along the development, you can already ask for pre-orders.
This is the main idea behind Kickstarter. Instead of building your own product upfront, you create a campaign and ask feedback from the market. Based on that, you can go ahead and proceed with it, or move on to the next idea.
Pro tip: Do you advertise on facebook? You can use this same approach of getting market feedback early. What you do is post organically. If it gets more engagement than the others, that’s what you promote.
3. Use an iterative implementation approach
This was already implied in the previous section, but it’s worth mentioning it here again.
You don’t need to create elaborate 100+ page business plans no one will read.
But there’s no need to reinvent the wheel as well.
There are tools that you can use that allows you to easily “write down” your business and test it against the market.
For example, a favorite tool of mine is the Business Model Canvas. I use this to easily understand how my clients’ business works. I also use this to plan out new service offerings.
There’s a lot of tools within it — like the value proposition canvas. I particularly like this because it really helps you get in the mindset of your customers. You can download both tools here for free.
Then, to make the process of testing and learning easier, there’s also some tools provided, and named so sophisticatedly that you won’t forget them — the test card and the learning card.
Here’s a video on how you can use these tools…
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So, What Are You Going to Do Next
There is no “right” path for business owners. There is no playbook in the market that allows you to easily navigate your way around. There’s no manual that teaches you how to register your business to finding your first customer to hiring and firing people.
The best you can do is learn from what you’re doing and learn from others. Both the successes and the mistakes.
Growing your business means you will do more and spend more.
As the saying goes, “what got you here won’t get you there.”
Expect a lot of bumps in your journey. But if you continuously test your ideas against the market — those small, unconscious adjustments you make on the wheel — you will reach your destination.