In this stage of growth you notice that the gaps between thresholds get larger. I believe that there’s a reason for that.
First, your overhead absorption gets much better as you become larger. There are a few articles that you can read on this phenomena but to sum it up -- the quicker you meet your overhead in a month, the more your profitability rises and you can blow past break even points.
Things like overhead expenses and costs of goods sold become very important at these phases. Even a small savings in cost of goods sold can double your profits in the end.
Usually, at this point you’re ready to hire a salesperson to handle the tasks that are slowing you down as an owner. Your company begins to find the niche that you’re suited to, which is something you’ve been working on through the other growth thresholds. The work you produce is better than the competition at whatever you’ve chosen your specificity to be, and you thrive as a result.
Opportunities that did not use to present themselves before start spontaneously appearing because you hit a volume of capacity for projects that you did not have before. Unfortunately, administrative duties also start to rear their ugly head at this stage. Things like: accounting, advertising, sales invoicing, quoting, book-keeping and other tasks become a real thorn in the side of your growing business.
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Honing Your Skill
The key to maintaining your accelerated growth is to become a beast at your specific ‘thing.’ The niche that you’ve chosen is something you need to own. If you’re a widget maker, aim to become the industry leader who is creating the best widgets out there.
As you niche down, make sure that your product is the best it can be so that way when you grow you aren’t needing to make tweaks to the product, you’re just adding effort in creating more of it to double or triple your sales.
At this stage of growth it’s important to learn the idea of scaling not just selling.
What I mean by this is that if you find a product or process that you’re really good at, you need to understand how to scale it and not just sell the product. You have to be able to multiply the growth by an exponential factor so that it takes off. Whereas if you just focus on the sale, it’s more of an organic activity, a slow burn.
Selling takes a long time to get going, you have to keep adding people and overhead in order to keep experiencing growth. So learn how to scale and not just sell.
Automation is Key
Automate your administrative tasks. The first place you should start with is automating your accounting. As you grow, you’ll start getting more bills and invoices from your vendors than you’ll be able to keep track of. At the same time, you’ll be sending out more quotes and documents to customers than you did in the past.
Once you figure out a quick and efficient way to automate these tasks in your current state, it’ll be much easier to scale. If you want to do some research about throughput accounting, it has proven to be effective so that you only have to keep track of one number.
Figuring out how to keep your number down to a known number that you’re forcing through your bottleneck, you can subordinate the entire business to that bottleneck and it’ll make your accounting life so much easier. As we all know, accounting is something that we must all be aware as business owners, so make sure you understand and are on top of it now, so that it can serve you well in the years to come.