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Practice Management > Building Your Business

Momentum will grow your business

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When I give a presentation, I often start out 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 important elements in the success of a business. However, if I had to choose just one word, it would be momentum.

We learned in high school physics that momentum = mass x velocity. In business, mass is comprised of 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.

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. In other words, your greatest challenge is to grow your business in a predictable manner. This is easier said than done. Only entrepreneurs who master the growth in revenue and profitability of their business become the best in their chosen field.

Let me give you an example. Terry is a financial advisor who I started working with in 2002. At that time, he was 46 and had been an advisor for 20 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 a number of 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 broad range of interests took its toll on his practice. 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 to redefine his vision for his practice. Rather than treating it 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 and to invest in marketing initiatives that increased sales. Over the last five years, his practice has grown at a compound rate of over 30 percent per year. He has become the No. 1 producer with his major supplier. He is growing his practice in a predictable manner and has gained mastery over the growth trajectory of his business. Even more important, he is having fun again and is passionate about building his business.