Are there really only three ways?

I’ve been wracking my brain to find a new one, but there’s no way around it.  Although there are hundreds of specific approaches, when you distill them all down, there are only three ways to expand a business.  Three main ways, and only three.  What are they?

1. Sell more to your existing customers
2. Find more new customers
3. Merge or acquire your competitors

You might ask, “What’s the point of talking about three when there are ‘hundreds of specific approaches’?”  That’s a reasonable question - it’s easy to think consolidating them obscures the opportunity.  But in fact, it’s just the opposite.

You see, most people don’t think much — about anything — and when they do they don’t never pay attention to how they’re thinking. So they never develop tools for how to do it.  Generalization is one of those tools. Generalization allows you to crunch (maybe it’s the opposite of crunching) a whole bunch of information into a few manageable pieces you can more easily manipulate in your mind.

That’s what we’ve just done here. Now that you realize there are only three ways to grow a business - whether you are measuring growth by sales, or cash flow, or profits, or market share, or number of customers… whatever, you can examine each of these three more carefully and see how they apply to your business.

And that’s what you should do next.  At least, that’s what I tell all my high-paying clients!

I got an email this morning that asked the following question:

I read your article on Value Proposition and ROI. Your examples deal with physical products. I coach people in so-called ’soft skills’ - presentations, speaking and listening, enhancing imagination. I can detail many positive outcomes but do not know how to quantify the results of such training. Therefore I don’t know how to use the methods you suggest. Can you help me?

Since this is such an important question, I thought I’d post my response here:

I know it sounds unreasonable, but you’ve got to be able to put a number on it. The reason “soft skills” people tend to charge less, and earn less, is because they don’t go through the exercise of pinpointing the value.

If someone becomes a stronger speaker, how much will it impact their speaking fees? And if they don’t charge for speaking, what do they hope to get from that improved skill? What will the downstream effects be? Will they sell more, or perhaps gain support for important ideas or campaigns? Why do they want to be a stronger speaker, anyway? You must have an answer to the question, “why do it?”

At some point, if the “soft skill” doesn’t lead to an increase in productivity, and somehow profits – why are they trying to learn it? Why should the invest?

Let’s take the idea one step further to something as abstract as “enhanced imagination. “ Why should someone pay you for this? While it might seem obvious, you want to make sure what’s obvious to you is explicit for your potential client. The answer the comes to my mind is that enhanced imagination will lead to more effective product development, or stronger sales presentations — something like that. Which in turn will lead to something that either earns income or saves income. But that’s in my mind - what is in theirs?

You may think it is unreasonable - crass even - to try to reduce everything to dollars and cents, but if it doesn’t come down – in some way – to a return on investment, why should a business, or a business person, spend their money with you. If it’s not commercial– it’s not a business. It’s a hobby. An avocation. A pastime. But then you’re in a whole different kind of market, and a completely different selling proposition. Businesses are in business to make money, and if you’re soft skill doesn’t help them do it, they should spend their money on something else. When you can clarify how your services do that, the sky’s the limit.

Just saw that Internet Marketing education pioneer Ken McCarthy is doing something I think is unreasonable. Ken pretty much invented the internet marketing how-to seminar. Now, since Ken’s first The System seminar, prices on these confabs has gone from $500 a day to $5,000, but without any significant increase in value. Following Dan Kennedy’s lead, these events have been stuffed with “air” – worthless stuff that make the package seem bigger, but no real increase in the impact of what’s being delivered. McCarthy has kept the value strong. But talk about bucking the trend – not only has Ken kept the value strong, he’s actually lowering the price. See http://www.systemintensive.com/

Anyone who has read Be Unreasonable knows how I feel about price cutting and the best response to it, so I was happy (and surprised) to read McDonald’s founder Ray Kroc felt the same way.  In 1960, one of his Knoxville franchisee was being hammered by a competitor offering five hamburgers for thirty cents. Can you imagine, thirty cents! Even so, the customers still came over to McDonald’s for the fries and shakes. So the competitor hit harder - with a hamburger, milkshake and fries for ten cents.  The reasonable response would have been to cut prices and at least match the other guy’s offer  – following him down the road to pricing ruin. 

Ray’s response? 

“If we can’t do it by offering a better fifteen-cent hamburger, by being better merchandisers, by proving faster service and a cleaner place, then I would rather be broke tomorrow and start all over again in something else.”

I heard this while speaking with my friend Mark Levy, who heard it from some branding guy, he couldn’t remember whom. “Positioning is dead,” the guy said. Since both Mark and I are positioning people this was of major interest.

He said that positioning was dead because the people, the users, the community… they were creating the positions of companies by participating in Web 2.0. He believed that companies’ positions were defined by what was being said about them in the infosphere.

This is total nonsense. While Web 2.0 gives people a voice and amplifies the conversation, you have to ask where the conversation comes from in the first place.

Look–most people, bloggers included, want to be lead. They want to be told what to think about and how to think. Then they can react and respond, but not until then. It’s very rare that people initiate the conversation. Those who do are called “thought leaders,” everyone else is part of the crowd.

Positioning is all about framing a context that defines what people need to think about. Positioning is about providing the seeds that ultimately flower into conversation. Reasonable people take the seeds and help them germinate. Unreasonable people create the seeds. Good positioning unreasonably tells people what to think in the first place.

Web 2.0 is a fabulous development in how people and businesses communicate. It’s like going from a one-way street to multi-lane boulevard. Just don’t get deluded into seeing this as creativity. Most of the time it’s just traffic.

All UNREASONABLE ideas violate some accepted wisdom.  Some norm.  Some convention.  Some formality.  Some age-old practice.  Some way of doing things, the contravention  of which would be inconceivable.

That’s what makes them unreasonable.

I’ve been wracking my brain to find a new one, but there’s no way around it. Although there are hundreds of specific approaches, when you distill them all down, there are only three ways to expand a business. Three main ways, and only three. What are they?

1. Sell more to your existing customers
2. Find more new customers
3. Merge or acquire your competitors

You might ask, “What’s the point of talking about three when there are ‘hundreds of specific approaches’?” That’s a reasonable question - it’s easy to think consolidating them obscures the opportunity. But in fact, it’s just the opposite.

You see, most people don’t think much, and when they do they never pay attention to how they’re thinking -so they never develop tools for how to do it. Generalization is one of those tools - a powerful one allows you to crunch a whole bunch of information into a few manageable pieces you can more easily manipulate in your mind.

That’s what we’ve just done here. Now that you realize there are only three ways to grow a business - whether it’s sales, or cash flow, or market share… whatever, you can examine each of these three more carefully and see how they apply to your business.

And that’s what you should do next.

Here’s something unreasonable: a success book that uses the words “cash” in the title and “millionaire” on the cover, not hawking one more worthless get rich quick scheme.

I just got a copy of Loral Langemeier’s new Cash Machine For Life, and it’s pretty neat.  It lays out a step-by-step foundation for building a real business that can provide cash flow and profit for a long, long time. I call it get rich slow - definitely counter-trend.

The book covers a lot of ground, from idea generation and brainstorming, finding a model of what you want to create, setting up a plan, building a team, marketing, sales, operations, finance – the works. My own Earn Twice As Much With Half The Stress, covers some of this same ground with exact step-by-step formulas – but Loral does it differently. If you or someone you love “needs” to build a business, first try to talk them out of it. But if they’re really serious, get them this book. Loral can be found at http://www.liveoutloud.com/blog/.

20^th century architect Ludwig Mies van der Rohe is famous for saying, “Less is more.” In the 21^st century most businesses — large and small — seem to think the opposite; more is more rules the day.

Books have more pages than ever before. So do magazines. My wife’s latest copy of Vogue is over 400 pages. There are more TV channel choices and more radio stations. There are more car brands and more car models. More custom-fitted premium blue jeans. And when you get to the internet, there are an infinity of blogs (like this one) and news sites and information feeds and, and, god knows – everything anyone could ever want…

But do people really need more? History books that run more than 800 pages? Come on; is an 800 page book really better than one with 350 pages? 20 CD sets that contain the same information formerly found in four-hours. Even multi-hour special event TV shows are rarely better than their slimmed-down 1 hour sibling.

Among my pet peeves are the products sold by internet information marketers. The operating theory, called “thud factor,” is that you should do whatever you can to make the product seem larger. That includes double spacing, wide margins, printing on one side of the page, including lots and lots of vainglorious interviews, full motion video of things that could be demonstrated with one photograph – the list of bulking-up techniques goes on and on and on and on and on…

Who’s got time to read all of this? Author and marketer Joe Vitale once sold a $125 report that was five pages short. Wow, Joe – what a breath of fresh air. Just the raw facts. Just the information I need and nothing more. (Full disclosure: My company sells instructions on how to systemize and turnkey a business that has only 240 pages — yet each page is so packed with information that people routinely pay almost $5,000 for it.)

And what about all those choices and options?

I don’t think people don’t need them. Exhibit “A” for this argument is the steady increase of attention deficit disorder. Most people who think they have ADD really just have too many things on their minds.

This profusion of variety doesn’t add anything to our lives, but rather it diminishes our effectiveness and our quality of life. Barry Schwartz’s 2005 book, The Paradox of Choice says that all these choices not only make us unhappy, but much further, by forcing us to “invest time, energy, and no small amount of self-doubt, and dread” they actually erode our psychological well-being.

Be unreasonable. Think about how you can simplify and shrink your products and services. Don’t try to overwhelm people and fool them into thinking they are getting value when all they’re really getting is volume. Provide real value instead, and make it concise.

More is not more.