The following is excerpted from “Entrepreneur to Millionaire: How to Build a Highly Profitable, Fast-Growth Company and Become Embarrassingly Rich Doing It” by Kent Billingsley (McGraw-Hill Education, Feb. 2, 2021).
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A smarter and faster path to entrepreneurial success
Kicking off a speech to several hundred entrepreneurs at a global summit in Montreal, Canada, I asked the exuberant attendees these questions: “How many of you run companies that offer great products and services and deliver exceptional value to your customers and clients?”
All hands shot up.
“Perfect.”
Money—more sales, revenue and profits—and especially creating company wealth or your personal fortune, must never be your sole focus, but the byproduct of the value you and your company bring to your clients and the marketplace.
“To achieve business growth, who has done or is doing the following?”
- Spend more money on marketing: advertising, SEO, social media or digital marketing
- Hire more employees like salespeople
- Spend more on training
- Lower prices to win new clients
- Add more products and services
“How many of you are spending every waking hour and every dollar to achieve greater business growth? Is everyone working harder and smarter, too?”
Each question raised more hands. Soon every attendee had an arm raised. No one wanted to be left out. Several entrepreneurs looked around to proudly confirm their unanimity.
I paused to let the hands slowly lower.
“If you want to become embarrassingly rich from your business, can I ask you to stop doing ALL of those things – immediately?” I stated slowly and clearly.
Confusion and doubt overcame the audience. Each trying to remember the questions they had just agreed they were doing. Didn’t we all agree, they wondered? How can we all be wrong?
“Remember a few minutes ago when everyone raised their hand? Meaning what they are doing, you are doing. You’ll never have radical results if you walk the same path as your competitors.
We—you and me—have all been lied to and taught to religiously execute those business growth strategies I just asked you about. It’s been pounded in our head. To be successful, you had to go out and aggressively market, sell and promote your products and services and achieve business growth.
You’ve been sold to do what it takes (just do it) and spend what it takes. I’ve been starting and building companies for over four decades and I read those messages when I first started, and I still hear them today. There are thousands of speakers, books and websites all designed to help you grow your business. I receive about a dozen unsolicited emails a week from companies wanting to help me with leads, marketing, social media and digital efforts.
Do you think I’m going to tell you that to be successful, you have to stop focusing on growing your business? Yes. Transformational success requires radical change in how you think and act,” I advised.
We’ve all been living myths about entrepreneurial success. I’ve worked inside – physically in the offices and boardrooms – of several thousand organizations, many in foreign countries, who are growing fast and slow.
Want to know the real behind-the-scenes performance in most firms? Growing or not?
The majority of companies barely make any real money.
They struggle with cash, cash flow and working capital.
And 99.9% of entrepreneurs and small business owners eke out a living, sacrifice their lives, grind out their employees, work through nights and weekends, and neglect their health. They fight anxiety for years to decades, clinging to hope that someday they will become rich. Few will. Most won’t. Entrepreneurs end up settling, quitting, going back to work for a big company, retiring, or even selling their venture at a loss.
Why do most entrepreneurs live lives of quiet desperation?
Because of this amazingly simple premise: Entrepreneurs are spending too much time focusing on how to start, run and grow a business. But they’re not learning how to make serious money – huge sales, massive revenues, and ridiculous profits – from their company.
Billions are spent by trainers, coaches, consultants, and speakers convincing you to increase your spending and activities to grow faster. They sell the continuous myth that spending more money, especially with them, will increase your success. Let me share a secret: that’s how they make their income, by taking some of yours. The lie perpetuates because entrepreneurs mistakenly conflate that a growing business makes more profit. Believing growth and profitability go together. They don’t.
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Fable: Business growth will create wealth
Where does the “business growth makes the entrepreneur a lot of money” fairytale come from? It starts with a flawed measurement of business success. You’ve been taught and told to have a successful company, you must accomplish these objectives. Adding more clients and customers, adding more contracts, adding more employees, adding more products and services, adding more locations, adding more SKUs, adding more salespeople and sales transactions. Adding more of everything.
And that is the giant flaw. When you add a good thing, you will most likely add a bad thing. When you add all of those items listed above, you will have to add more expense, add more overhead, add more costs, add more infrastructure, add more management, add more time, add more resources. And you’ll also add more headaches, more people issues and more stress. What’s the common denominator – adding.
I know what you might be saying. “Well, that’s just understanding what it takes to run a growing firm.” You might be saying, “Well, that’s how you grow. Or, yes, it’s the nature of business – you have to take the bad with the good.” Or maybe you’ve bought in to the lie that to add top line you might have to accept less bottom line.
Or do you?
This paradox is what scares entrepreneurs and small business owners of fast or explosive growth. No matter how fast they run, they’re still in the same financial squeeze they were before. Except now they have increased headaches, stress, frustration, and fewer hours for life. That is the failure of trying to survive with the “hope for profit” business growth philosophy. Eventually dying from exhaustion or burning out your entrepreneurial spirit.
More from more
The classic business model for success I just discussed can be summarized in this phrase: more from more. This philosophy is good for incremental results. It’s a universal practice from last century, but not a superior approach to making huge profits against the current destructive market forces. Ninety-nine-point nine percent of companies and their leaders execute to this paradigm and sadly count on greater business growth for making more money. However, this approach can never achieve optimized profit production.
Here is the counter. A bigger business might produce more overall profit but at what cost? It’s usually incremental growth with incremental profits. Nowhere near the maximum profit potential of a well-designed company.
If you’re happy with slow to average growth and just earning some income, then you can stop reading right now, and stay on your current slow money-making path. However, if your competitors learn and perform my approach to revenue growth, as I’m going to explain, they will make every day you’re in business harder, more frustrating and less profitable. Ironically, many entrepreneurs believe their businesses are stable or growing when in reality their business is dying. Google the fable about the boiling frog to understand this point.
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Why focusing on business growth is flawed
If you and your team have the insatiable drive and burning desire for fast or even explosive growth, with huge profits, then you must think and act in a different way. We need to shatter some common and classic paradigms and clichés that will keep you locked in last century’s thinking and mediocre results. Have you ever heard this business saying?
You have to spend money to make money?
That’s why most entrepreneurs have money problems or their companies fold. They either justify wasting money to try to achieve growth or they unconsciously burn money – profits – hoping for success. Listen to the argument – you can’t grow without spending money. I don’t know about you, but I love hearing someone tell me I can’t do something.
For a split second, did you just start to question your current business growth belief system? Or maybe you instantly experienced an “aha” epiphany that maybe you can achieve higher levels of success without spending any more budget or increasing headcount? Congratulations. Your business profit making transformation has begun.
More from less: Superior concept misapplied
Now you know the business paradigm “more from more” only produces incremental success. It can never achieve the highest growth levels using the fewest resources. What’s a smarter and superior path to maximize profits? To become embarrassingly rich from your business, you must follow a more modern philosophy.
More from less.
Have you heard that maxim before? “More from less”? The theory and thinking aren’t new. However, most leaders misunderstand the “more from less” philosophy and get it backward. Entrepreneurs who misapply this concept can make short term gains but create long-term pains.
For example, I’ll never forget one of the frustrating years in my corporate life. The company I worked for was led by a CEO whose first name was Lester. The enterprise was in cost cutting mode as expenses were rising too fast. I had been complaining to my manager, after shattering my quotas for several years, why my salary wasn’t increasing? His response, “Don’t forget, we all work for Les.” Meaning the corporation needs to keep more so I had to accept less. Frustrating.
Being cheap, or a fiscal freak, is just one-way of misapplying “more from less.” However, it’s sadly played out in companies every day. As an excuse to be more successful, entrepreneurs and leaders become overly tightfisted, cut costs, or abuse relationships with employees and vendors.
For example, employees who used to have one job now have three roles to lower costs. In other situations, team members are burdened with old or outdated equipment to save money. Other ways of misapplying this principle is consistently cutting back on compensation benefits or other employee perks to reduce costs. Abusing your people hurts all stakeholders. It lowers morale, increases the talent turnover and repels the high performers you need.
Another misapplication is when business owners beat down their vendors prices or terms to increase their own margins. Or, leaders drag out accounts payables to where suppliers are forced to use factoring to receive a fraction of their money. The belief that “more from less” means someone suffers, couldn’t be further from the positive intent and potential power of this idea.
More from less: Scaling revenue growth
You’ve just learned two important points. First, “more from more” will take forever to become wealthy. Second, “more from less” is a superior approach, but usually misapplied. Then how are hungry entrepreneurs exploiting “more from less” to create millions faster? And keeping their employees, suppliers and clients smiling?
If you had to choose growing faster or making more money, which would you choose? Many entrepreneurs would say growth. Believing that profits will come from larger size. They don’t. An extraordinarily successful company is not measured by the revenue it makes (unless valued by market share) but the money it can keep. Are you rich if you can pay your bills? Or, are you wealthy when you have 10 times more after covering expenses?
I know what you’re saying. “We use our profits to ‘spend more to make more.’” Great. You’ve completely missed the point of the principle. And besides, that’s why entrepreneurs waste money and burn their profits. If they make it, they spend it. What if you could achieve explosive growth and still generate embarrassing amounts of profit?
This is how to achieve amazing top line and ridiculous bottom line results consistently. Instead of focusing on business growth – you must learn to focus on “revenue growth.” By that I don’t mean just “growing top line.” Mistakenly, too many businesspeople just interchange the term business growth with revenue growth. But it’s right here where the subtlety and unique application of “more from less” will make your company, your employees and yourself a fortune.
If you noticed, the name of my company isn’t the Business Growth Company? Instead it is branded and trademarked The Revenue Growth® Company, LLC. It’s the subtlety and counterintuitive application of the term revenue growth as the method to making so many entrepreneurs and employees wealthy. Let me explain.
Revenue growth – more from less – is when your business produces more of all the good things without adding the bad things. Revenue growth, as you must learn, master and apply, is when your business can produce more revenue from every company asset.
For example, more revenue from every:
- Contract
- Client
- Employee
- Sales pursuit
- Product or service
- Store location
- Asset
- More revenue from everything…
Periodically, you must look at the results of areas of your business to see how much revenues increased. Did you spend more money, yes or no, driving up the top line?
You should be ready to jump out of your chair, unless you’re on an airplane, to go measure your organization and revenue growth in different categories. This will show if you’re enterprise is getting bigger and more profitable. However, a warning first. The right way to apply this principle – more from less – has enormous challenges.
First, it’s not culturally accepted because most businesspeople mentally live in last century. Second, it’s not supported by third parties who support you because they need you to increase your spending with them. Third, its rarely ever measured. The few times, I see this principle applied is with retail locations, “same-store sales” year over year. But SSS is only a measurement. The secret to “more from less” success, are the strategies that increase top line while improving bottom line.
Here is a quick example of “more from less” being applied. In one startup situation, a team applying these principles helped a salesperson carrying a $750K quarterly quota, sign a new contract valued at over $13M. That’s 18 times her sales target. Using the old business growth “more from more” paradigm, to generate $13.5M, the company would have needed 17 more salespeople. Each of them working several additional sales cycles to win 17 more sales contracts. But that doesn’t include the enormous costs of all these extra salespeople, sales expenses, support expenses, etc.
Across all industries, around the world, the average sales win rate is about 25 percent. Meaning if a salesperson works four opportunities, they win one. Which means this group, to generate $13M, would have to multiply 17 times four, which equals 68 unique sales cycles.
Do you know the costs of a typical but complex and lengthy sales pursuit? Do you know that every time you add a salesperson you have added eight categories of profit-eating costs to your business? Do you know the length of time it would have taken this organization to work through another 68 sales cycles? An entrepreneur following the classic business growth approach would have spent millions to make millions, leaving little profit. This company generated over $13 million in revenue with the costs of one salesperson, with a quick four-month sales cycle. That is “more from less.”
“Entrepreneur to Millionaire” is now available for purchase and can be purchased via StartupNation.com.
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February 2, 2021 at 05:02AM by Kent Billingsley, Khareem Sudlow
