Grow Your Business Like China, Part 3

“Growth is an erratic forward movement: two steps forward, one step back. Remember that and be very gentle with yourself.” – Julia Cameron

Last week – on Tuesday and Friday – I talked about how a Confucian saying got me to look at business-building in a new way.

On Friday, I explained that Confucius’s directive to grow the “population” first can be translated into business-building if you think of it as increasing the amount of momentum you generate. The more momentum you have, the easier it will be to get your business up and running.

Today, let’s look at the other two aspects of Confucius’s growth strategy: enrichment and education.

Enrichment: Creating Positive Cash Flow

In past ETR essays on business development, I’ve argued that creating profitable sales should be the first and most important thing you do when you start a business. I still believe it’s the most important. But that saying by Confucius got me to think of breaking through inertia as the “real” first stage of building a business. So that puts creating positive cash flow in second place.

In Nicaragua, we’re in this critical second stage right now. After spending a year and lots of money getting all parts of this very big development machine in motion, we’re now at the point where we can responsibly begin sales. Since cash flow has been negative up to now, we’re very anxious to start selling “product” and reverse that trend.

We could have begun selling earlier, as some of our competitors did – but then we would not have had a firm grasp on the costs involved in delivering the condos and villas we’re planning to build. There are so many hidden costs involved in building a project of this size – legal and land-planning requirements, for example, and environmental reconstruction obligations. Even the obvious construction costs can accelerate beyond control unless you make realistic projections and lock down your general contractors into iron-tight contracts.

Having gotten our ducks in a row, so to speak, before initiating sales, we’ve avoided the number-one-reason most residential community developments fail: selling units before you know what they’re going to cost you to complete. (By the way, when I look at what some of our competitors are doing down here – what they’re promising and the prices they’re quoting – it makes me nervous. With Daniel and his people involved, I’m thinking we’re definitely the biggest, best-capitalized, and most professionally experienced developer in this market. But we can’t deliver product at the prices some of our competitors are advertising. And if we can’t, how can they?)

So I’ve come to appreciate that there is indeed a pre-sales first stage in business – and although that stage should indeed be completed as quickly and inexpensively as possible, it shouldn’t be avoided.

That said, from this point forward we’ll be devoting a very large portion of our best human resources in Nicaragua to creating profitable sales. How we’ll best sell our condos and villas we’ve yet to determine. What we know now is that we’ll be testing a variety of methods, including short- and long-form e-mail advertisements, search engine optimization, website marketing, direct mail, general advertising, billboards, hotel brochures, and all sorts of one-on-one lead-generation and sales techniques.

I’m working now with a small team of experienced professionals in these areas, and we’re putting together a budget that will allow us to complete at least one significant test in every sales and marketing venue we can think of. You never really know which of your marketing options will work best when you begin a new sales project, so the shrewd marketing executive finds a way to test just about everything. The good news for us is that most of the methods I’m familiar with – the direct-marketing methods – can be tested without spending a ton of money. And the more expensive venues, like television and newspaper advertising, can be kept in line with tight budgets and strict adherence to testing controls.

This second stage of business growth – figuring out which sales and marketing strategies work for you – needs to be implemented as quickly as possible. You want to discover the secret of selling your product profitably before you run out of the money you’ve allocated for testing. The only way you can be sure you’ll do that is to budget properly and then test aggressively, starting with the most-likely-to work strategies and working backward from there.

Education: Teaching Your “Secrets” to the Troops

Once you have figured out the art of acquiring new customers profitably, you need to teach that art to your key employees. Some fledgling business owners, worried about giving away their core business secrets to potential competitors, keep these fundamental sales and marketing strategies to themselves. “If my employees know how to start and grow a business such as mine,” they figure, “what’s to stop them from doing so?”

This sort of thinking is usually a mistake. It tethers the entrepreneur to the day-to-day marketing efforts, depriving him of the time he needs to create and develop new products and projects. It also limits the responsibilities of his best employees, who come to resent his lack of faith in them and grow bored with the lack of intellectual challenge.

The way to maintain the loyalty of your followers, Confucius says, is to discover the “right way” to go and then to teach your people to follow it. This is as true now as it was when he said it more than 2,500 years ago.

In creating and selling products to your market, there are many wrong and ineffective ways (ways that don’t work ethically or financially) and a few correct and effective ways – sometimes only one.

In the business of developing and selling our seaside residences in Nicaragua, that way has to do with creating beautiful, livable structures that will work in a tough, tropical climate – and then to sell those structures, with a package of irresistible amenities, accurately and honestly, but also forcefully.

The same thing is true for the business that Early to Rise is in: To grow our business profitably, we must discover what financial, business, and self-help information services our readers are interested in, create world-class products in each of those major areas, and talk about them to our readers in an enthusiastic manner over an extended period of time. We have to be sure to provide plenty of details about these products so our readers, a very independently minded group, can come to their own conclusions about which ones they want from us and how much they’re willing to pay for them.

This kind of core knowledge – made up of the essential selling strategies of a business – can’t be kept secret from your employees. The sooner it can be taught to a small group of smart, aggressive employees, the faster your business will grow. The power of that knowledge will be multiplied in proportion to the number of people in your organization who understand it.

If you’ve ever had the pleasure of finding and grooming a top-notch marketer or salesperson, you know what I’m talking about. You know that the value of that one superstar is worth at least a dozen ordinary employees. So why would you negate the effectiveness of a superstar by keeping him in the dark about your best marketing and selling secrets?

This third Confucian stage of building a business – educating your best employees – is a process that has no end. As soon as you have brought one employee up to a “master of marketing” level, you must give him (or ask him to hire) a small cadre of assistants and teach them those secrets plus any additional secrets he might have learned along the way.

By creating this culture of learn/master/teach in your company, you enjoy two very important benefits:

You free up your own schedule to run the business from the top.

You geometrically increase the power and reach of your marketing.

And your business will then grow bigger and better than you ever imagined.

[Ed. Note: Mark Morgan Ford was the creator of Early To Rise. In 2011, Mark retired from ETR and now writes the Palm Beach Letter. His advice, in our opinion, continues to get better and better with every essay, particularly in the controversial ones we have shared today. We encourage you to read everything you can that has been written by Mark.]