Three months after its public debut, Uber posted a $5.2 billion loss that’s “impressively vast” even for a company whose business model is based on outspending the competition, said The Economist. Since its inception, Uber has lost a total of $14 billion. A few weeks ago it laid off 400 people from its marketing department, representing a third of the entire division, and has placed a hiring feeze on new engineers.
Uber’s stock is down 20 percent since their IPO in May. It’s expensive to recruit drivers, there’s more competition and consumers are very price-sensitive. Even the most-promising startups, with billions of dollars in venture capital, must answer to the laws of gravity.
Last Wednesday was a private coaching call day. I started early in the morning and took call after call, in 45 minute increments, until late afternoon. In many of the calls, there was a common theme of growth via attempt to ignore gravity. Doubling the size of your business is not as simple as doing twice as much of what you’re doing right now. Growth creates complexity and complexity kills growth. New employees, hours, locations, additional doctors and strategic partners – all of this is complex and it can strangle the very thing you want to achieve.
As a recovering stubborn-headed know-it-all who used to do all of this the wrong way, please learn from my mistakes and understand what I get to see working all over the world and also what doesn’t work.
Understand the laws of gravity in your business. Attempt to defy them and you will eventually be pulled back down to earth.
First, decide how big you want to get and why. Aimless growth is like a mapless journey. It might turn out great, but the odds are not in your favor. If you can’t write down a revenue goal, you’re highly unlikely to achieve it by accident.
Second, determine how much profit you must derive from each unit of time, service or product. Do not violate it. Cut costs at every turn.
Third, know your “enough is enough” number and have people in your life that can hold you accountable to not only achieve it, but also to enjoy the life you’ve created around you before you’re dead and gone.
Fourth, realize every successful business is really a marketing and sales business. If you don’t know the money math inside these core competencies, you will never achieve significant growth.*
Take total collections and divide it by the number of new patients, clients or total products sold last year. Do the same with total collections and number of full time employees. Know your most-productive hours in the business and your least-productive hours. Set the minimum required revenue per hour or per product line and task managers to maintain or exceed those metrics.
Failing to acknowledge the gravity in your business is like ignoring a bad joint sprain and attempting to run a marathon. Most of your peers operate blindly and big dumb companies behave badly all the time, but this is no reason for you to follow in their path.
* You and 39 other clients can join me in 2020, where I will show you best-of-class statistics for each of the metrics (i.e., gravity) in your industry and help you perform in the top 1-5% of your market and field. You can request details for an upcoming discovery call where you will see details of the program. Make your interest known by going to MyCoachingApplication.