The ulitimate goal of every business is to make money but unfortunately most businesses are busy surviving. In order to grow and flourish as a business “wealth creation” is essential.
Kent Billingsley, author of Entrepreneur to Millionaire has a lot to say about this topic through his book. Let’s dive in.
Why is it a mistake for entrepreneurs to focus everything on growth or survival?
Too many entrepreneurs are focusing on simply surviving and waiting for things to go back to normal. But normal is long gone, and the choices are either adapt or die. The other entrepreneurs who aren’t mistakenly focused on survival are too focused on “business growth ”- getting bigger. Which means that even if their company stays alive or grows bigger, it’s not creating all the company wealth that is possible with their products and services. The reason for not creating wealth – maximum profits using minimum resources –is they are following a stale but still too common approach to business growth: “more from more.”
Unfortunately, an adage from last century is still popular today is that “you have to spend more to make more.” The problem with this thinking is that even if your company grows, you still spent too much of your profits achieving that growth. At best, you have a bigger company but not a richer company. And at worst, you will never achieve the highest level of business success – creating significant wealth with your business in the shortest possible time. Which means, quite sadly, that 99% of all owners and leaders struggle with cash issues – too little cash on hand, poor or inconsistent cash flow, and no working capital. Instead of designing a company to trade products and services for dollars (last century) entrepreneurs and leaders today must design their business to create wealth. Money can solve almost every problem in business. With no money, everything in business is a problem. The inability to create wealth within a business is the reason why tens of thousands of businesses, hundreds of thousands around the world, are closing during the pandemic and why most will never open again.
When you say “create wealth” for a company and stakeholders what do you mean?
The majority of entrepreneurs and business leaders are burning a fortune of time, money and resources trying to survive or be more successful. That burn is pure profit and cash or potential wealth. They never learn how to make money without spending money. Wealth creation, as taught through this recipe, is when you can generate more sales, profits, revenue without spending any resources or money doing it. Creating wealth means you’re making more money – revenue growth – from every asset – contracts, clients, products, services, sales pursuit, location, new service, etc. Wealth is making money that you can keep. Then you can spread the wealth out to employees and stakeholders, put it in the bank or donate it. Wealth is money you don’t have to have or need to use in the short or long term. Too few people in business ever learn or know how to create serious wealth with their businesses and they have no margin for error or can’t survive a single disaster.
Isn’t that really just showing business people how to work harder and smarter?
That is another myth because “the people” are still working. Inside every company are dozens sometimes hundreds of areas of a company that should be doing the work. The work of creating more new client demand and turning that demand into cash, contracts and customers faster. Examples of that are bundled packaging methods, tiered pricing strategies, power messaging tools, strategic partnering, sales conversion systems, demand-based marketing, pipeline acceleration, etc. When those areas and many more are “woken up” they can turn products and services into wealth, faster, better and in many cases with no additional costs.
How exactly can a business be designed to grow revenue and profits?
Instead of looking at a business as something that makes, sells and delivers, you must look at your business as a system to create maximum new client demand and quickly turn that demand into new contracts, clients and cash. Making sure all the parts and pieces – soft and hard areas – are focused and measured by how well those parts help created new client demand and then how fast they help convert that demand in to new contracts, clients and cash.
For example, in the last 1000 entrepreneurs and clients we worked with in our programs every one of them had failure points, disconnects, and impediments in their structures, strategy and models. Meaning the employees would have to work harder or be hired and more profits were burned or wasted. It meant the entrepreneur, leaders, and the employees were the system – and that doesn’t scale and isn’t highly profitable. In addition, by following the books formula, embarrassing amounts of profit can be made by stopping the waste in marketing and sales. We have hundreds of cases studies proving 67% of marketing spend and sales efforts are a total waste of time, money and effort. But which ones? The book provides all kinds of examples where to cut or stop and turn that waste into profit.
How can companies create wealth with fewer costs and resources?
There are two ways that every chapter in the book help explain and set up. The first is to sell bigger and high margin contracts so a company is making more money on each transaction or sales. Every company using my principles of packaging, pricing tiers and revenue streams can sell higher margin agreements or transactions. The second way and can be added to the first is to dramatically reduce the costs, time and resources necessary in the marketing, selling and client acquisition efforts. Making more money and saving more creates huge profits and cash. The chapters on sales conversion system, marketing demand creation and pipeline acceleration are all designed to accelerate converting contacts into clients saving huge amounts of time money and resources – all going to the bottom line.
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