You’ve heard it before: 90% of startups ultimately fail, premature scaling is said to kill a business in 70% of cases, and countless entrepreneurs give up their business due to the lack of capital or insufficient profitability. And as if that wasn’t enough, over three-quarters of founders have faced existential problems due to Covid-19.
But let me break some news to you: after over 40 years in business, I’ve realized that money is everywhere. You only need to reach out for it and let it flow on the path of least resistance. The truth is that if you build the right business, sell the right product to the right customer, at the right price, and in the right way, you can build up a successful million-dollar company in just a few months.
Let’s take a look at how to do the magic.
You simply need an additional product
One thing many businesses forget on their path towards growth is that they won’t get there without the support of their existing customer base. A close focus on retention is essential to successful scaling. Acquiring a new customer is at least five times more expensive than retaining an existing one, and increasing retention rates by 5% can drive profits by 25-95%.
Naturally, all businesses need to charge enough to reinvest in customer acquisition, but it doesn’t end there. You need to have an additional product to offer your customers to be able to grow rapidly. Let me explain why.
A million-dollar business corresponds to a revenue of over $80,000 per month. So, imagine a company that is just getting started and chooses to charge $2,000 for its basic product and $5,000 for its premium version that is aligned with its clients’ long-term needs.
In the first month, let’s say that the business sells its basic product to five people, bringing the revenue of $10,000. Out of those, one (20%) decides to buy the premium version, giving the company $5,000 in the second month.
With initial customer feedback, the company starts to understand the audience better and is able to welcome 10 more clients, leading to another $20,000 in revenue.
If 20% of those upsell next month, it gains another $10,000. At that point, the business can start spending on additional acquisition efforts — such as ads — so that in the third month, it secures 20 new clients. In the fourth month, the upsell rate being around 40% with 20 new clients would be enough to secure a revenue of $80,000.
Million dollars is far from unattainable, and while it may take longer, balancing acquisition with upselling is the plain recipe for business success.
Scrap that to-do list
Now that we have outlined your roadmap towards growth, it’s easier to distinguish between the things that really matter — and those that will only slow you down on the way.
I get it… with all the business books you’ve devoured, the podcasts you’ve listened to, and the articles you’ve read, you have likely built up a database of concepts and equations to success. But let’s shake that up a little.
You don’t need blogging, because that only attracts content consumers. You don’t need a big audience, because building it up takes mountains of work. You don’t need lead magnets, because freebie-seekers won’t buy anyways. And most importantly, you don’t need a website — at least not until you have a few clients that are already paying (you need to know who you’re building it for).
If you’re one to chase leads on Twitter, LinkedIn, and Facebook at the same time, burn the midnight oil to craft the perfect white paper, and spend time practicing your podcast voice, stop everything you’re doing right now. Most of that stuff won’t make a difference.
Instead, tear up that to-do list and reverse the revenue needle upside down. Value your time and give your all to what really matters — once you find out what works, double down on it.
Likewise, don’t overthink data — yup, I said it.
Being ‘data-driven’ is the new buzzword across industries; instead of jumping on the trend without a proper plan, focus on being results-driven. The only data you should care about in the early stages is that in your bank account.
Don’t fall in love with your product
Success isn’t an intangible goal — there’s a blueprint you can follow. It all starts by figuring out who you’re selling to, what their problem is, finding a solution for that problem, and delivering it to them.
On top of that, like an umbrella, those people must be able to pay for that solution and you need to make it worthwhile. I know, it’s quite simple — so why do so many businesses still fail?
Well, first of all, they don’t go through the thought process outlined above. For example, in 2018, 42% of companies that failed listed a lack of market needs as the most prominent factor.
Ironically, this doesn’t mean you should drop everything and go invest in market research — from my experience, I can tell that it’s often the single biggest waste of money. I say it because I’ve seen entrepreneurs have their vision clouded by speculations, ultimately leading them down a path of one bad decision after another.
Just think of the donut hole as a product… it works because it’s simple, tasty, and mouth-sized. But were you to initially pitch it to investors, you’d likely fast become a laughing stock. So, work hard and trust yourself.
However, there’s one key mistake you must avoid at all costs: never, ever fall in love with your product.
Trust me, if you become uncritical of it, it’s the beginning of the end. Almost 60% of startups actually change their whole business plan to prevent business failure. So, you may not need market research, but you must listen to clients obsessively. Seek feedback, develop quickly, test. If it works, double down on it.
The world is constantly changing, and if your business isn’t keeping up, you can say goodbye to income, clients, and profits. If you don’t aim to transform your business to find the right clients, the right market, and the right offering, you may as well stay exactly where you are — and just wait to be crushed by the competition.
Be a generalist, not a specialist
Now, listen closely. Success is found in the intersection of three things: where the market opportunities are, what you enjoy doing, and what you’re actually good at.
If there’s no market for whatever you’ve got, there’s no point in building a business. No matter how many Facebook ads you pay for, it’s extremely difficult to educate people to buy something that they don’t know they want.
Know that entrepreneurship is bound to consume a big part of your life; it’s going to get in the way of things — so you’ll need to enjoy the ride.
You also need to be good at what you do, otherwise, you won’t make it far. But this doesn’t mean you need to become a know-it-all. Instead, invest in a team that can fill in your gaps.
If you have a strictly educational background, you might find yourself too specialized to see the bigger picture. But in a fast-paced world where the way we understand things is being challenged every single day, leaders and successful executives need to become generalists once again.
Ideally, you want to take the book knowledge and make it valuable, while absorbing practical, day-to-day insights.
Ultimately, remember that running a business takes both being curious and pragmatic. Luckily, I have that with my co-founder: he is the professor, I am the geek.
Understanding your operations from accounting to analytics will get you far, but don’t let that take a toll on your creativity and vision. Be open to constant learning, because the deeper you dive, the simpler it gets.
Today, I have one simple message for you. Success is not only attainable, it’s waiting for you just around the corner — that is, if you reach out for it. Do the work and you’ll get there.