Cyclical and Scalable... Like Everything Else
Updated: May 29
In the dynamic world of business, understanding cycles and scalability is crucial for small business owners. This post aims to shed light on the importance of recognizing and leveraging business cycles and adopting a different perspective on scaling strategies. By exploring these concepts, small business owners can make informed decisions that positively impact their growth and profitability.
Evaluating the Current Landscape
To effectively plan for the future, it is essential to determine where your business stands in the current cycle. Factors like seasonality, product cycles, and upcoming changes can significantly influence projections and outcomes.
If you ask me as a small business owner if you can beat last year's numbers, my general position would be rather not. While some companies may remain immune or even thrive, the general outlook may be challenging. However, it is crucial not to dismiss these challenges as normal but rather view them as potential opportunities for growth and adaptation.
What Feels Different This Time
What is happening now is not normal. We are on a sinking ship with Fed patching holes with no intention of stopping the sinking. I believe that we are in recession, and the economy is facing huge challenges ahead. I have no idea about the intended outcome, but the survival of the system is on the line. Elites and architects of the unfolding drama are watching it from superyachts and most likely working on option C. If nothing works, they will take us to war.
Why should we care about all of this? Because it can affect us, our families, and our businesses.
The Impact of Cycles on Personal and Business Success
Understanding that everything moves in cycles is key to making informed decisions. Small business owners must consider the various cycles at play, including personal, business, industry, national economic, and geopolitical cycles. Recognizing how these cycles intertwine and affect each other can help anticipate potential hurdles and adapt accordingly. By proactively addressing cyclical changes, businesses can position themselves for long-term success.
A Different Perspective
Scaling a business requires careful consideration and a different mindset.
Before opening my first computer store, I spent lots of time in a local Radio Shack. It was a perfect place to observe and learn since I had no retail experience, and they were a major industry player—for example, customer service, visual merchandising, product selection, sales processes, etc. During one of my visits, the store manager, who knew me by the time, told me about problems they had with shoplifters. Apparently, they were losing around $200 per store a day.
I was in wholesale electronics at the time, so based on my cost estimation and the store revenues, they were grossing around $2800 a day. Of course, that was a time the dollar was money. So after hearing that losses were around two hundred, I was dismissive, impressed by the margins. Then he repeated: $200 per day per store, and we have 1600 locations.
That was the moment. I wasn't a stranger to multiplications, but right then, my attitude toward numbers changed. Business is a numbers game. Looking at financial statements from different perspectives helped me focus on all numbers with equal attention.
If I walk to any small business today, chances are that within an hour, I might find a new way to increase a daily profit by, let's say, $7. In many
cases, the instant reaction will express little excitement. With daily volume in thousands, seven dollars is not that tempting proposition. If your business is open six days a week, it is $2184 annually. You get the idea.
Recognizing the importance of every dollar earned or lost fosters a more comprehensive understanding of a business's financial health. It encourages small business owners to seek even modest gains, as these seemingly small improvements can accumulate into substantial profits over time.
The Power of Incremental Growth and Scaling
While a modest gain of a few dollars per day may seem insignificant, it is essential to grasp the bigger picture. Small improvements can translate into significant annual profits by multiplying incremental gains by the number of business days in a year. Scaling strategies focusing on continuous improvement and harnessing the power of small gains can lead to substantial growth and financial stability.
Embracing Cycles and Scalability for Business Success
In conclusion, understanding business cycles and implementing effective scaling strategies are vital for small business owners. By evaluating the current landscape, considering the interplay of various cycles, and adopting a perspective that values incremental gains, entrepreneurs can position themselves for long-term success. As business owners navigate the ever-changing business environment, recognizing cycles and leveraging scalability will enable them to adapt, grow, and thrive in the face of challenges.
How Inoptia Can Help
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