Part 2: Get Big, Stay Lean: A How-To Guide For Clean Bulkers

Before looking to grow you need to get lean first.  Once you have downsized until the marginal costs of outsourcing exceed the cost of doing it internally, you are ready to get big.

Contrary to popular belief, you can get big without becoming inefficient. Here’s how to get the best results from your bulking plan!

Spend more!

Most people focus on cutting costs, but since most people are unsuccessful, logically you should do the opposite.  In the case of a scalable business, spending more money should result in you earning more money.  Proper scale dictates your earnings increase exponentially as you increase your spending anything that saves you time (employees & outsourcing everything where you don’t have the greatest competitive advantage).

Other than payroll, the only other costs that are worth your brain cells is optimizing your taxes and mortgage interest with your corporate draws.

Target 1 or 2 niche markets and hit it hard!

Spend more specifically targeting paid advertising to dominate niche markets.

  1. Influencers
  2. Word of mouth – referral program
  3. Facebook/Instagram
  4. Google

Choose similar markets 

It is important that when you scale to adjacent sectors, that you are “selling” to the same type of customer you dominated earlier.  Our biggest mistake in business was at the onset of Alberta’s downturn we aggressively marketed our high-end service to the mass market customer.  Mediocre customers are looking for motivation and a magic pill to cure their predicament rather than dealing with the cold truth – that they alone are responsible for their situation. Similarly, our clients that have had success selling to the masses would not be able to upmarket their product with the same marketing and pricing.

Both our new target sectors, together with the first 3 sectors we dominated, have the ability to scale to more employees and more capital assets.  Scaling compounds in favour of these 5 segments since the fixed costs of creating the output are being spread over higher and higher revenues to yield increasing pricing advantages for their inputs, which leads to the same elite customer:

  1. Disciplined and definite people that do the single best valuable thing they can focus on rather than being a “Jack of all trades, master of none”.
  2. A compelling and focused mission that leverages proprietary skills/equipment too hard for average people to acquire or learn from youtube.
  3. Minimum 20% pre-tax margins on annual revenues in excess of $400K.
  4. $1M valuation based on a 2.5x-5x earnings multiple

All easily accomplished with

  1. E-commerce
  2. Fast food
  3. Salons

 

 

 

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