Growing your business

The following is based on one of The Covenant Group’s clients. All of the names and telling details have been changed.

When Norm Trainor, our founder and CEO, gives a presentation, he often starts by asking the audience the following question: “If you had to choose one word that is critical to the success of a business, what would that word be?” Typically, people will respond with words such as: “motivation”, “planning”, or “innovation”. Obviously, all of these words are essential elements in the success of a business. However, if we had to choose just one word, it would be momentum. We learned in high school physics that momentum = mass x velocity. For our purposes, in business, mass comprises the people working in the business, the capital invested in growing the business and the utilization of technology to foster growth. Velocity is the rate at which the business grows and the direction in which it is moving.

Momentum = Mass x Velocity

The value of a publicly traded stock goes up or down based upon the perception of the momentum in the business. If a company reports that its revenue will not meet projections in the next quarter, the market usually reacts negatively and hammers the share price. When you do not know where your next sale will come from or what your revenue will be over the next year, your business is likely losing momentum. Your biggest challenge in growing your business is to control the growth trajectory of your business. In other words, your greatest challenge is to grow your business predictably. The problem is that this is easier said than done. Only a tiny percentage of entrepreneurs learn how to make their revenue and profitability predictable. Entrepreneurs who master the growth in revenue and profitability of their business become the best in their chosen field.

Let us give you an example. Terry is a financial advisor whom we worked with. At that time, Terry was 46 and had been a financial advisor for twenty years. His practice had grown to a high six-figure business. However, for the previous five years, his revenue remained flat. The business was not growing. To regain momentum, the starting point was to revisit his direction. The future drives the present, not the past. The clearer you are about your future direction, the more likely you are to achieve it. Terry did not have a clear vision or direction for his practice. As a result, he fell into the diffusion trap. He invested his time, money, energy and creativity into many areas. His brother-in-law wanted to get involved in a pizza franchise, so Terry became his financial partner. Some friends began to invest in real estate, so Terry got involved. His lack of focus and the broad range of interests took their toll on his practice. His revenue was flat, and his expenses were increasing. Terry’s income and the profitability of the practice began to suffer. At the same time, his various investments were not doing well. They also suffered from a lack of focus.

The solution to Terry’s problem was quite simple. He needed to redefine his vision for his practice. Rather than treating his practice as a cash cow to fund his other activities, Terry decided to invest in the area he knew best, his practice. He redeployed capital back into the business. This allowed him to hire the right people on his team and invest in marketing initiatives that increased sales to existing and new clients. Over the last five years, his practice has grown at a compound rate of over 30% per year. He has become the #1 producer with his major supplier. He is predictably growing his practice and has gained mastery over his business's growth trajectory. Even more important, he is having fun again and is passionate about building his business. 

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The Covenant Group is referred to by many as the place entrepreneurs go to become Business Builders. They are considered thought leaders and have authored the best-selling books, The 8 Best Practices of High- Performing Salespeople, The Entrepreneurial Journey, and The Business Builder.