To start us off
Over the past few years, number of businesses in many industries are focusing their attention on how they can attain 10- 20 times growth in their businesses as opposed to being satisfied with a 10-15% growth per annum.
When we unpack why and how businesses grow at such exponential rates, a few things stand out:
1. End Game
You need to define what the end game looks like for you. Set a goal you wish to work towards and structure your business towards achieving that goal. One of the first things to do would be to add a zero or two to your current profit goal and then work backwards from there. This ensures that your team are all focused on that goal, as well as putting you in a position to structure your business around that big goal. If the nett asset value you set previously is at x-amount, what would the new end goal look like if you added those extra zeros to that value?
This is how you determine how to 10x your business: Take your current goal, add a few zeros and assess what needs to happen at all levels of the business and in all departments to reach that new goal. Think about what you want your business to be valued at in the next 5-10 years and work towards that.
2. Financials
Know your financial numbers. Your numbers are your best guide to tracking and understanding your progress. This includes: keeping a tight reign on your cash flow as well as knowing what your profit margins are at any given point. In addition, knowing your financials across a number of metrics is extremely important to navigate from one milestone to the next as you build your business to achieve that 10x goal.
3. Five-Ways Numbers
All business owners are always looking for three key things in their businesses; namely, they want more customers, revenue, and profit. That said, these results come from activities that have preceded the achievement of these. Here it becomes very important to focus on what we call the 5 -Ways Numbers in your business:
1. Lead Generation X 2. Conversion Rate = Customers
X 3. Number of Transactions X 4. Average Transaction Value = Revenue
X 5. Margin = Profitability
Tracking your 5 Ways Numbers in your business and increasing each of these numbers by just 10% will result in a 46% increase in revenue and a 61% increase in profitability. This goes to prove that one does not have to focus on one large change in your business, but that small and regular intentional increases in the 5 Ways Numbers will result in exponential growth for your business. Keep tracking your 5 Ways numbers and implement a plan to systematically increase each of these areas will result in exponential growth.
4. Cash Flow
There is an old saying that Sales is Vanity, Profit is sanity but Cash flow will always be king. Cash flow drives and funds growth and allows you to invest in the growth elements of your business, be it Marketing investment, better systems, better people or better equipment; it is the growth serum that ensures that businesses can take advantage of any acquisitions or opportunities to scale their business. There is value in using other people’s money (OPM) in the form of loans from banks or other financial institutions although it is important to find the right balance between financing growth through debt or cash.
5. Future-Focused Restructuring
Knowing what you know about your industry and the technology available today, what would you change about your business structure to achieve your future nett asset value? How would you re-focus your teams, investment decisions and technology given what you know about the industry currently? Many, if not all industries are facing accelerating disruptive changes that if ignored will mean you might be out of business if you did not take advantage of these rapid changes in the market. The restructuring that takes place from this as a result of this exercise will fundamentally transform the trajectory of the business moving forward and ensure that you are positioned for rapid growth.
In Conclusion
Building your business to achieve 10x growth requires that you focus firstly on the end game, have a clear grasp on your key financial metrics (cashflow is critical), implement a plan on your 5 Ways Model to achieve compound growth and take advantage of any appropriate technology that will ensure that you stay ahead of any disruptive changes that your industry might be facing. These are just some of the ways to build a business that will achieve 10x growth.
