People, Products, Projects or Guru — Four Ways to Grow a Small Business
These days, it seems like the only way to start a company is to build an MVP, capture the interest of an investor and shoot to the stars fuelled by venture capital.
But believe it or not, that’s actually not how most companies get started or grow, not even in this age of startup accelerators and unicorns. There is another way, and it’s actually one with a much higher chance of success.
The downside? It’s going to take a long, long time and involve a lot of hard work.
On the other hand, it can be the most rewarding and meaningful journey of your life, one in which you discover your inner drive and purpose.
The map to this journey looks like the figure below. It’s a two-by-two with four fields and each field represents a strategy to growth, especially for knowledge heavy small businesses like freelancers or single consultants.
The human figure represents just that, human beings. The flip side to this, the barcode on the right, represents products. At the bottom you have a business selling single units of something and at the top the goal is volume.
So now you have four different combinations.
The upper left quadrant is a business that sells humans in volume. This is the typical consultant business where the number of resumés with the right words and abbreviations reign supreme. This is the company selling 200 java developers in bulk or the small bookkeeping-shop. Standardised skills that can fit like puzzle pieces into a larger organisation or solve a very specific (but generic) problem. You typically compete on price.
The upper right corner is the home of products where more volume is better. This can be a physical product, perhaps a book, or a video course, a SaaS-app, a mobile app or a game. The key is that the solution to a problem has been captured in a way that can be multiplied without human touch.
The lower right is where you sell individual deliveries of unique products or projects. A movie production would be the perfect example. Or a large, software development project from start to finish. Many companies from the upper left quadrant wants to move in this direction since you’re higher up the value chain. While this is in many ways still a consultant job, the important distinction is that you sell sustained value, not skills. You are framing the solution to a business problem, not simply delivering it. This typically involves pitching a big project for clients.
Last but not least in the lower left column you have the guru position: sell one individual to as high a price as possible. This is an expert in the true sense of the word. Speaking gigs or very expensive consulting fees is how you make money. This is a person CEOs and prime ministers listen to. You have probably written a few books or made some kind of noteworthy achievement in the pass, to be able to charge premium prices for your time. But you can of course start out more modest than that.
Most people are in the upper left square, at least in the beginning of their career. You educate yourself to get the right initial setup of abbreviations on your CV, then you take employment as a piece in a corporate machine.
If you’re in this position and have caught the startup bug, you’re probably dreaming of attracting venture capital so that you can take the shortcut route to build a product: jump directly to a product that scales. But you soon discover that this is like buying a lottery ticket: not predictable and not sustainable. One day you have enough of working the machine so you quit and start freelancing. “When I have time over, I will build that product”, you think to yourself.
This, too, however, is a dead end as you struggle to make progress on your many product ideas — or fail in coming up with one you believe in.
The problem with those approaches are that they are quick fixes to something that actually should take time in order to be sustainable. You can instead take another route and it can look something like this.
You start out, as most people do, selling your time and your skills. But, you start doing stuff and telling people about it in something that interests you or you want to learn more about. The telling people part can take many shapes and part of the journey is figuring out ways to put stuff out there that you are comfortable or even passionate about. I, for example, like to write. I have been blogging (on and off) for more than one and a half decade. But I’ve also experimented with podcasting (didn’t catch on), photography and Youtube. Etsy and Pinterest might be your platforms. Find your medium and start building an audience by doing stuff and telling people about it.
Slowly, you will start to grow in the lower left corner of the model. You are of course not a guru yet, but you might have an audience of 100–1000 or more people, all with the same interest you have. Growing an audience to a 1000 people within a year is definitely achievable almost regardless of subject (thank you, Internet!).
At the same time, start meeting people with the same interest. Go to meetups, fairs, conferences and other places where your audience hangs out. If you have a local meetup, try getting a speaker slot. Or why not start organising one yourself?
After gaining some momentum, chances are high you will be asked to do some kind of small project related to your interest. This is when you reach the value delivering part of the journey. This can sometimes at this small scale be hard to distinguish between the freelancing work you do but there is a significant difference in selling a skill and selling value. For example, the difference between selling yourself as a “PHP developer” or selling an “e-commerce shop” or even “online sales”. This is all about understanding the context your customer is in and how you add value, and as mentioned before, about framing the solution to a business problem, not simply delivering it.
When you have an audience and understand how value is created it is time to start thinking about how to scale by productising what you know. This can be in the shape of an ebook or a video course or a simple SaaS-app, it depends on the area you’re working in. Don’t overdo it the first time, just build something small that you can sell that does not involve billing your time.
With that first loop in the model completed, it might be a good time to start thinking about how to bring in more people like you and growing in the upper left corner. Going “full circle” like this will grow your authority and status and who knows, maybe you’re invited to speak at a conference (lower left corner)? This in turn leads to more and bigger projects (lower right) and so on. Eventually, the right product (upper right) to build will be an obvious next step.
You then have four different paths to follow and grow and it’s up to you to decide what kind of company you want to build, which in the end means to answer the question: what kind of life do I want to live? You might have noticed, though, that they actually strengthen each other and pull each other towards more growth. (An entrepreneur like Gary Vaynerchuk would be a good example of someone doing all four.)
Notice how you never spend any time thinking about what “business idea to pursue” or chase any golden goose of VC money. If you have chosen something that truly interests you, the entire journey might not even feel like work! You are learning, every day, more about something you love doing. And, you are getting paid doing it!
Figuring out what this interest actually consists of, is in fact the hardest part of the entire process. It can take years to understand what truly drives you. But there is a certain pull of motivational gravity that steers you in the right direction once you start doing stuff and telling people about it. This will create a feedback loop where it’s very important you, yourself, take an active role in understanding what drives you in the loop. Make it a habit to ask yourself questions like: “do I like doing this?”, “how do I want to grow this business?”, “what kind of life do I want to live?”.
And, yes, of course some markets are harder to “crack” than others. Still, I argue that the opportunities we have are greater than ever thanks to the amazing power of the internet. You can build an audience in the smallest of niches and learn how to extract value from it, enough to make a living.
To sum things up, forget about chasing perfect “business ideas” or wait for that insight to pop up where you suddenly wake up and know how to become a millionaire. It won’t happen. Get out there and focus on three things:
- Understand what drives you and can keep you going.
- Do stuff and tell people about it. Build an audience.
- Understand how to deliver value to that audience.
Now think about the four ways to grow, how they are different from each other, what kind of business you want to build and how they can strengthen each other.
Most important of all: just start, don’t wait. Doing stuff and telling people about it will set wheels in motion that will pull you to the next step.
Oh, and remember that this journey can take years. It’s not a get-rich-quick scheme, more like a get-happy-slowly. The understanding that growing your business is about growing you.
Good luck on your journey!