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Growth-Funded Growth—Scale Your Business without Breaking the Bank

Growth-Funded Growth—Scale Your Business Without Breaking The Bank

There’s a lot of business optimism in the market. Small businesses in particular are extremely optimistic about growth, according to the National Federation of Independent Business (NFIB) 2018 Small Business Trends Report. This year, the well-known study reported one of the strongest optimism readings in its 45-year history, being topped only by early eighties Reagan-era euphoria.

According to IGNITE On Purpose CEO Terri Maxwell, “Positive thinking is essential for success, but it takes more than that. You need a real strategy to grow through the inflection points that hamper most small businesses. At IGNITE On Purpose, we’ve proven over and over again: the key to scaling a small business is having a Growth-Funded Growth Strategy.”

The Growth-Funded Growth Business Strategy

Growth-Funded Growth is an aggressive methodology that pinpoints exactly how much PROFIT (not revenue) to invest back into demand generation programs in order to guarantee a 1-2 percent increase in net profit. This is different than investing money in sales or advertising, which eats up profits and produces disappointing returns.

“Most small businesses get stuck at what we call inflection points, or benchmarks. For example, what got a business to $1 million in annual sales is not what gets them to $2 million, much less $5 million. Often entrepreneurs think they have to spend more money to make more. “They throw a lot of money at advertising, but that strategy won’t get them to $2 million or beyond. There’s a better way to do more with less money,” Maxwell says.

Rather than spending more, Growth-Funded Growth is about implementing a demand generation strategy which is more cost effective and efficient than typical marketing strategies, so the business grows more profitably. It’s through demand generation that leads come TO the business, rather than the business chasing leads.

Want to test Demand Generation on a Pay-for-Performance basis?

 

The 3 Principles of Growth-Funded Growth

Growth-funded growth is critical to moving a business through the natural evolution points, and ensuring it grows more profitably. Many entrepreneurs are impatient with their business growth and consequently waste money on marketing or sales, rather than investing it in growth.

There are 3 principles to a Growth-funded Growth Strategy:

1. Reinvest a designated portion of profitable growth back into more growth through the most efficient marketing avenues to ensure that you: 1. grow quickly; 2. grow more profitably; and 3. grow net profit 1-2 percent for every $1 million in revenue. Ideally, a $2 million business would get to 12-18 percent EBITDA with a Growth-Funded Growth model.

2. Move the business through difficult growth inflection points by focusing on the strategic imperatives for that next business phase. For example, to get a business to $1 million, the focus is on product differentiation and demand, but to go to $2-5 million, the focus shifts to management and technology infrastructure and product/service scalability. Many times, these are counter intuitive, because what got the business to one level, IS NOT what gets it to the next.

3. Most importantly, implement a cost-efficient demand generation strategy so that leads are coming to the business on a regular basis as you building out that infrastruction (principle no.2).

What is a Demand Generation Strategy?

Effective demand generation programs are driven by providing value to prospective customers BEFORE they become a paying customer, such as checklists, ROI calculators, product sampling, free trials and educational content. According to Maxwell, “For every business I’ve ever led, we implemented a demand generation model – and found ways to add value and build relationships with prospective buyers BEFORE they became a paying client. As a result, our growth was steady, focused and consistent. Demand generation is MUCH easier now with digital marketing tools, as it’s easier to provide value and build relationships digitally.”

Food and beverage products have used this strategy successfully to introduce products. Think about a grocery store on a Saturday. There are samples on almost every aisle. Today, most cloud-based software companies offer a 14-day (or longer) free trial of their software platform before requiring customers to purchase. This mindset is driven by a commitment to provide value rather than sell products, and to ensure that your products match your customers’ needs. Not only does it result in higher demand, but also higher satisfaction.

Believe it or not, ANY business can develop trials, samples and tools that add value and build relationships with prospective customers.

Demand Generation vs. Lead Generation

Lead generation places your service or products in front of as many people as possible in the hopes that someone will be interested enough to engage with your brand and buy from you. The law of averages states that the more people you approach, the more likely you are to get a sale. We’ve all heard the phrase, “it’s a numbers game.” That used to be true. But today, it takes an average of 14 touches before a prospect will buy, so lead generation by default is less effective.

“Lead generation is an all-or-nothing approach. Contrast this with demand generation, which guarantees success, because your target market willingly approaches and engages with you. That’s a win-win!” Maxwell says.

One small business owner IGNITE on Purpose recently helped grow quickly is an estate law attorney. As Maxwell explains, “They came to us after being stuck for a few years at one of the key inflection points. Revenue had been flat for several years in a row. Previous attempts to spend money on advertising didn’t positively impact revenue, but it did reduce profit. We implemented a demand generation strategy on a Pay for Performance basis, aligning our bonuses with increases in profitable growth. Less than a year later, revenue increased by 61 percent.”

Get Started with Growth-Funded Growth

With the Pay for Performance Program, we only make money when your business earns significantly more money. Our bonuses are triggered by the business growing profitably. “We know how hard it is to grow a business, having done it ourselves multiple times. Rather than ask you to take a risk you aren’t comfortable with, we want to partner with you, but only if we’re a good fit for each other,” Maxwell says.

We are so confident in our Demand Generation programs, that we implement them on a Pay-for-Performance basis. What does that mean? It means we only make money when your business is growing profitably.

Contact us to see if we’d make a good partner to you, and ultimately, help you to generate demand and continuously grow your business.

 

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