Dan Martell - February 06, 2017


The 3 Cycles of Business Growth

Topics
business cycles business cycles
Hosted by
Dan Martell
Building An Advisory Board For Your Business How To Theme Your Work Days For Productivity

Episode Stats


Length

6 minutes

Words per minute

213.8

Word count

1,491

Sentence count

92


Summary

Summaries generated with gmurro/bart-large-finetuned-filtered-spotify-podcast-summ .

If you feel like you're building a business, you're growing really fast, but you're not making any money, or you don't have a good handle on what part of your business you need to be focused on next week, next month, next year? Or you're feeling like you've been building this company for a while but you don t even know if you're a good operator, a good entrepreneur, or a good executive? Then this episode is for you!

Transcript

Transcript generated with Whisper (turbo).
Topics generated with Qwen2.5-3B-Instruct.
Hosts, guests, and mentioned names generated with spaCy (en_core_web_sm), reconciled against Wikidata.
00:00:00.000 I do know a very inappropriate joke
00:00:02.540 that takes a little bit of time to tell
00:00:04.440 but always gets me an incredible laugh.
00:00:13.860 The three cycles of business growth.
00:00:15.840 If you feel like you're building a business,
00:00:18.700 you're growing really quick,
00:00:19.980 but you're not making any money,
00:00:21.700 or you don't have a good handle on
00:00:23.860 what part of my business do I need to be focused on
00:00:27.120 today, next week, next month,
00:00:29.240 or you feel like, hey, I've been building this company
00:00:32.820 for a while but I don't even know if I'm a good operator,
00:00:35.020 a good entrepreneur, a good executive,
00:00:37.440 then this video's for you because I just want to share
00:00:39.120 with you guys the opportunity of understanding
00:00:41.920 what part of the cycle you're in so that you can understand
00:00:45.180 what do you need to do next, right?
00:00:46.520 Because I really believe that understanding
00:00:48.960 these three cycles will give you the clarity that you need
00:00:51.760 to not feel like things are going crazy.
00:00:53.840 I mean, to know, the number one thing I do for my clients
00:00:56.940 when I coach them is making sure that they understand
00:00:58.900 that it's normal.
00:01:00.040 I think that most entrepreneurs are so freaking hard
00:01:02.600 on themselves, right?
00:01:03.880 They're going through the turbulence.
00:01:05.240 They're going through the growth.
00:01:06.240 They're going through the downsizing and the language
00:01:09.480 and conversation and frustration and lack of sleep
00:01:12.040 and all these things that they do themselves
00:01:14.140 is just not fair.
00:01:15.080 So I want to give you context for the different cycles
00:01:17.720 that I believe exist in all businesses,
00:01:19.420 especially ones that are growing really fast
00:01:21.120 and kind of know how you transition to the next one.
00:01:24.120 So for me, I really learned this lesson
00:01:27.520 watching a good friend of mine, you know, he built,
00:01:29.960 I think he was in business a little under 10 years,
00:01:31.920 built a four million plus dollar a year business.
00:01:34.500 And what I noticed is over the last 10 years is
00:01:38.240 the business grew and then he gave it back.
00:01:41.260 And he grew and he gave it back.
00:01:43.400 It's funny how many entrepreneurs,
00:01:45.640 they think they're making progress because
00:01:47.800 essentially what they do, it's like a stock.
00:01:49.740 They make a lot of progress, then they deal with challenges,
00:01:52.980 and then they're here so they want to grow again,
00:01:55.540 So they grow again, but they pattern,
00:01:58.500 they kind of hit the top,
00:01:59.540 and then they lose it all again.
00:02:01.340 To me, business is not about making money.
00:02:03.300 Making money's easy.
00:02:04.360 You know, if you know how to talk to people
00:02:05.980 and create value, making money's easy.
00:02:08.080 The hard part is not losing it.
00:02:10.140 And that is the challenge
00:02:11.380 and why you need to understand what cycle you're in
00:02:12.860 so that you can focus on the next level
00:02:14.020 so you don't go up, down, up, down.
00:02:16.280 Don't give it back.
00:02:17.620 If you're in that cycle today,
00:02:19.400 then make sure you understand these three cycles
00:02:21.380 to get to the next one.
00:02:23.000 So the first one for me is going after sales.
00:02:25.340 If you're starting in business or you're trying to go to business, you've got to get the top line revenue.
00:02:29.480 Income, and especially profits, solve all problems.
00:02:33.380 So when you're like, well, should I create these systems or should I hire more people or should I buy this new machine to improve the efficiencies?
00:02:41.700 Those are all really great options, but to me, if you need more top line revenue, you've got to focus on going for sales.
00:02:46.980 Sales, sales, sales, top line revenue.
00:02:49.400 Make sure that the income's there because great businesses work off percentages, right?
00:02:53.660 And if you have a high enough top line revenue,
00:02:56.700 enough income, and you have a decent profit margin,
00:02:59.780 then that number's actually quite impressive.
00:03:02.180 Most businesses get in trouble
00:03:03.440 because they're only doing a few thousand a month, right?
00:03:05.900 10,000 if they're lucky.
00:03:07.400 You wanna be doing a lot more
00:03:09.300 so that when you look at the percentage of profit,
00:03:12.060 you'll be able to expand it
00:03:13.660 and improve the economics of the business.
00:03:15.920 So number one is going after sales
00:03:18.000 and really focusing on the top line revenue.
00:03:20.040 Number two is building the cost structure.
00:03:24.120 So most entrepreneurs are really good at selling.
00:03:26.920 You know, if you're successful,
00:03:27.880 if you've been in business now for almost 10 years,
00:03:30.380 you've probably got great top line revenue.
00:03:32.380 But what you need to get great at
00:03:34.060 is understanding the margin structure, the cost.
00:03:36.740 Where do the expenses come from?
00:03:38.340 Because again, I don't want you to give it back.
00:03:40.680 I want you to make the money, build the business,
00:03:43.680 create the profitability, and don't give it back.
00:03:46.340 And a lot of entrepreneurs give it back
00:03:47.560 in the margin structure.
00:03:48.360 They buy something for $10, they sell it for $12.
00:03:52.200 That's just crazy.
00:03:53.140 This happens all the time in the service businesses.
00:03:55.040 They're like, you know, I've got this team
00:03:58.240 and I'm billing out them at X rate
00:04:00.600 and I'm getting paid for this.
00:04:01.640 It's like, yeah, but you're not considering the fact
00:04:04.200 that you've got overhead, you've got real expenses,
00:04:07.540 you have clients that you've gotta finance their growth
00:04:09.880 because you probably have outstanding receivables,
00:04:12.120 you have people that may not pay you,
00:04:13.480 you have the potential for lawsuits.
00:04:15.760 I mean, at the end of the day,
00:04:17.060 if you don't understand your cost
00:04:18.820 to figure out your gross margin,
00:04:20.420 then that's where you go.
00:04:21.780 Top line revenue's number one.
00:04:23.620 Number two is understanding your cost controls.
00:04:26.300 Really looking at each project,
00:04:27.980 each product that you sell,
00:04:29.780 each service that you sell,
00:04:31.180 and figure out what's the profitability or the margin
00:04:33.620 so that at least you know.
00:04:34.580 Then you can go to the market and say,
00:04:35.860 hey, customer, I love you,
00:04:37.240 but I know we used to do this for this amount,
00:04:39.100 and going forward, we have to change it
00:04:40.820 just so that we can build a great business.
00:04:42.260 Because to me, the frustration is not being able
00:04:44.560 to do great work, right?
00:04:46.020 You can't do great work if you're always putting out fires,
00:04:49.200 chasing receivables, not have the profit level
00:04:51.900 to invest in the team, to do things for culture,
00:04:54.620 to really just know that you've got the ideas
00:04:57.160 and you're holding yourself back
00:04:58.300 because you can't afford to invest, all right?
00:05:01.240 So you need to get the cost control.
00:05:02.340 Once you get the top line, you get the sales going,
00:05:04.240 number two is getting the cost.
00:05:05.240 Number three is making sure that you improve
00:05:07.980 your market reach, right?
00:05:09.280 Which is essentially what I call, you know,
00:05:11.540 I have a model called the growth engine.
00:05:13.320 It's demand marketing.
00:05:14.580 It's improving your ability to have a message
00:05:17.480 inserted into the market that attracts more clients, okay?
00:05:21.020 Sales is like selling, right?
00:05:22.320 So you're just going off, picking out the phone,
00:05:23.660 referrals, et cetera.
00:05:24.620 Market reach is actually building a marketing program,
00:05:27.760 right, increasing your offering.
00:05:29.660 So maybe you started here and you do this really well
00:05:31.700 and you got to half a million revenue,
00:05:32.860 now you want to go to the next level.
00:05:34.260 You need to figure out what's the next offer
00:05:36.700 or product or service that we need to present to customers
00:05:39.640 or segment a new market to be able to grow
00:05:41.780 the overall business.
00:05:42.940 Improving your market reach is number three.
00:05:45.000 So that is how businesses go.
00:05:47.480 They expand, they contract.
00:05:49.180 They expand, they contract.
00:05:50.440 Growth is never linear, right?
00:05:52.320 I know that every time we sit there, we're like,
00:05:53.920 oh, let's build a business plan.
00:05:55.780 I'm gonna start here and I'm doing X amount of revenue
00:05:57.960 and I'm gonna end the year up high.
00:05:59.560 It's never linear.
00:06:00.820 Go look at your numbers on a monthly basis.
00:06:03.120 It's step functions of growth
00:06:05.120 because it's always expand and contract.
00:06:07.540 So what you wanna know is what cycle do you need to be in?
00:06:10.040 Do you need to improve your market reach?
00:06:11.600 Do you need to improve your cost controls
00:06:13.160 or do you need to improve your top line revenue, your sales?
00:06:16.540 And if you're there and you've done that,
00:06:18.160 then get the cost controls, get the profitability,
00:06:20.400 then improve your marketing reach, boom.
00:06:22.360 Then go after sales again.
00:06:23.600 That's the cycle.
00:06:25.240 That's the way businesses work.
00:06:26.760 It's always about trying to find opportunities
00:06:29.200 and turning those opportunities into profit.
00:06:31.240 So those are the three business cycles.
00:06:33.260 Real quick, going after sales, cost controls,
00:06:36.440 and three, expanding your market reach.
00:06:38.840 I hope this video finds you incredibly well.
00:06:41.200 And as per usual, I challenge you to live a bigger life
00:06:43.320 and a bigger business and I'll see you next Monday.
00:06:45.280 Cheers.
00:06:46.320 If you like this video, be sure to subscribe to my channel.
00:06:48.860 I'd also encourage you to join my newsletter
00:06:50.600 where I share exclusive invites to events
00:06:52.540 and other free training videos.
00:06:54.080 And if you're ready to get going,
00:06:55.100 I've got a couple more videos queued up for you.
00:06:57.280 See you next Monday.