When Growing A Business, Build It From a Position of Strength
Chasing business scalability is an elusive path. When we focus solely on the scale, we lose sight of what matters for growth. Losing sight means never attaining the scale we seek.
The key to successful scalability is how we start, and the initial structural integrity.
During the early Noodlehead Marketing journey, I recruited team members before I could truly afford to do so. While it would have been better to maximize our capacity and create a queue of future clients, I didn't choose this path. Thus, the only way I could justify keeping these team members was through constant business acquisition.
After achieving moments of success, the daunting task of doing it all over again at the start of each month persisted. The times of feeling ahead were slim to none.
As we progressed, the need for more business led to shortchanging ourselves and sacrificing the margin required to deliver well and get ahead. We sought to provide better sales deals (to our own detriment) to land business faster out of fear and inexperience. Eventually, we slipped into a cycle of robbing Peter to pay Paul. And before we knew it, we were playing catch up, just to survive.
This was not a wise way to live or operate a business. While this cycle could have continued, we had a client fire us in a way that gave us the margin we needed to shift the dynamic. And this milestones forced us to face the reality of what it took to sustain the business we created.
Understanding This Weakness & Adapting
This spiral was driven by only considering the tip of the iceberg, not the entirety of what was required. Our unrealistic beliefs simply perpetuated the inevitable.
When we face the truth and respond accordingly we set the foundation required for true growth and long-term scalability. Let me illustrate what it looks like to pursue a vision while also embracing reality along the way.
As a business, there will be times when we deliver goods or services, and unfairly don’t get paid. Regardless of how well we seek to minimize this reality, we won't be able to completely eliminate the possibility. So, we need to plan that it'll happen.
When we don't plan, we’ll scramble to make up for it when negative unexpected events inevitability takes place. For this possible scenario, we'll want to charge enough across all customers that when one client does not pay, it has no effect on our operations. Yes, it'll be painful, but at least it won't affect our ability to fulfill our commitments.
In 2016, three different clients failed to pay me for my services totaling almost five-thousand dollars. Thankfully, I collected two-thousand of it within the following year. Unfortunately, the other three-thousand (2.6% of my annual 2016 income) was lost in the abyss. But, with a generous cash flow in tandem with my annual income, this did not negatively impact our lives. It only slowed down our ability to save for a mortgage deposit and pay down debt.
Now Strong As A Freelancer
In my freelancing business, the approach is to maximize my foundations and build on them. And, it’s to establish justification (demand and margin) prior to existence instead of after it. As a freelancer, this means cultivating a solid and full book of business.
As a result, I've increased my hourly rate every year by five dollars per hour. When I've hit my capacity still, I've referred my clients to other freelancers. I'll project manage and direct their efforts, but its usually after my own capacity is maxed out or I'm too expensive.
I'm now perfectly positioned to grow a marketing agency because it would be built on a strong scalable foundation. Since I'm not interested in building another marketing company, I'll continue to increase my rates and refer others.
This approach allows me to work fewer hours, manage less responsibility, and earn more income. It's a model that allows me to blog here, and pursue my desire to become a financially viable writer.
Build Pillars of Strength
There are countless ways to build a position of strength and another example is us minimizing our debt. We recently finished paying off our 2017 Kia Sedona auto loan, and are now focusing our surplus cash towards paying off the remainder of our student loans. By minimizing our financial debts, our position of strength increases, providing us additional margin and leverage to live generously and wisely.
Feeling the weight of debt, the terrible cycle of playing catch up, and experiencing the freedom of financial success, I'm highly motivated to move us forward and keep the momentum going.
We're planning to shift the snowball effect towards debt to maximizing our giving, living, and spending plan.
When you reflect on your business, do you find you've positioned yourself and your organization from a place of strength? Or, do you consistently find yourself playing catch up, simply to survive?
Now is a good time to shift the dynamic to a strong foundation.