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How To Use The Law Of Compound Growth To Accelerate Your Business

Written by: Brian Carmody, Executive Contributor

Executive Contributors at Brainz Magazine are handpicked and invited to contribute because of their knowledge and valuable insight within their area of expertise.

 

You’re familiar with the law of compound growth in your savings and investment strategy. But did you know you can harness the power of that law to grow your business to new heights — faster, and with less risk and effort than you’re experiencing now?

Green sprout on bucket full of coins and graph growth business investment

First, let’s get on the same page with compounding interest.


Let’s say you have an account with $10,000 in it earning 5% annual interest. It could be a bank’s savings account, or an investment account like an IRA.


At the end of the year, your account grew 5% and your new balance is $10,500.


In the second year, your 5% return is calculated on the first year’s balance ($10,000) plus the first year’s resulting interest ($500). Thus, year two’s 5% interest builds from $10,500, not $10,000.


And as a result, at the end of year two, your 5% growth is bigger than the first year’s $500: it’s $525. Your new principal is $11,025, and year three’s 5% is calculated from that new and higher amount.


Another simplified example: Start with a single penny. Double your principal every day for 30 days.


Day 1: $0.01


Day 2: $0.01 + $0.01 = $0.02


Day 3: $0.02 + $0.02 = $0.04


Repeat that 27 more times.


At the end of the month, your new balance is $5,368,709.


That’s the power of compounding.


Now let’s do that for your business.


What is Compound Growth in a Business?


Let’s say your annual revenue is $1 million. You create a Market Dominating Position (MDP) that makes you stand out from your competition in such a way that customers feel like you are the obvious choice.


By finally getting crystal clear on your MDP, you’re able to use it when networking (think: “elevator pitch”), in your website messaging, your Google My Business listing, social media, business cards, etc. Everywhere. Even printed on your invoices.


Now let’s be ultraconservative and say that this grows your sales by 5%. As a result, your new revenue is $1,050,000.


Now that your MDP is tested and working, you add another profit acceleration strategy called Affiliates and Joint Ventures. You contact 5 people that are in industries complementary to yours.


You tell them your MDP and they agree that you are the best choice the market has to offer. As a result, they are more than happy to refer their customers to you when they have some that are good candidates for your business.


Again, let’s be ultraconservative and say this grows your business by just 5%. Thanks to the law of compound growth, your new 5% growth is calculated from the $1,050,000. So, your increase in sales for the Joint Venture referral strategy yields $52,500 in new sales.


$1,050,000 X .05% = $52,500


Recap:

  1. Make small incremental changes in multiple areas or your business.

  2. Each new strategic impact creates more revenue and profit.

  3. The next successful strategy grows your business exponentially because it calculates from your new revenue and profit totals.

The changes must happen in a specific order. I can’t tell you what that order is for your business without talking to you and understanding where you are and where you want to be. Run away (as fast as you can) from anyone who approaches you with a “solution” before they’ve ever met you. That’s called “Spam” and it can happen in email, social media, and in person.


But layering strategies in a specific order matters because each builds on the last. Get that sequence right, and it’s rocket-fueled, exponential growth for your company.


Compound growth applies to companies of all sizes and its effects cannot be overstated. Leveraging compound growth enables you to rapidly accelerate growth and profitability for long-term success.


Next, I’ll walk you through how you can create compound growth in your business using a few profit acceleration strategies. If you are an entrepreneur who wants to stop gambling on ads and instead grow your business using strategies you can control, read on.


Small Improvements Add Up Quickly


Have you ever wondered how some companies achieve massive success while others struggle to survive? The secret lies in small improvements made consistently over time that seem insignificant at first, yet add up over weeks, months, or even years to become lucrative gains.


That’s incredibly encouraging news.


Small improvements often go unseen. We tend to focus on large goals with quick results. How does this story usually end? You guessed it. Frustration, and an empty bank account.


Instead, reset your approach to this:


Start with one strategy. Make it work. Do not get bogged down in perfection. Document and automate this new system.


Take your increase, even if it only impacts your profit by 3% to 5%, and begin work on the next strategy.


Do it again. Be happy with 3% to 5% growth. It adds up exponentially when you keep repeating this process. Do it 10, 12, 20 more times.


Many businesses can double their income with just 3% growth in 12 areas of their business. And here’s the secret marketing and advertising agencies don’t want you to know: Profit growth comes from many other aspects of your business. There are at least 40 areas of a business, and marketing and advertising are merely two.


If you are low on cash, start with strategies that don't cost anything except your time.


Growing your business, you see, is actually a lot simpler than you may have experienced up to now.


Begin With Strategy, Not Tactics


Stop putting so much pressure on yourself, or any single growth strategy you are trying. People at the helm of a successful, growing company will tell you that it’s many small things that contribute to their health and wealth.


So, I want you to start thinking of growing your revenue and profit as a stacking exercise. Start with one strategy. Take the time you need to get it up and running. It may take six weeks to work on and launch your Market Dominating Position. But if you get it right, like a small pizza shop called Domino’s did, it could be worth billions.


Or it may take just two weeks to cut costs in overhead and your cost of goods sold (COGS), thus making you more profitable in just those two weeks!


Now, businesses that traditionally have a lot of overhead and high COGS like manufacturing, distribution, group medical practices and dental practices to name a few, often have a lot of “low-hanging fruit.” I can often find lots of ways to make them more profitable, in just a few weeks, by showing those business owners where to look to lower costs.


In the manufacturing company I ran for eight years, we lowered our break-even point by a whopping 77%. That had a massive impact on our profits. Advertising and marketing had nothing to do with that.


Profit Acceleration Works for Service Providers Too


But what if you’re a service business and you don’t have COGS at all, and your overhead is minimal?


Well first, let me challenge you on that. Even if you are a company of one, take a look at your software-as-a-service tools. Add up the cost of subscriptions for your CRM, email automation, funnel software, SMS marketing software, online review and reputation management software, website hosting, website builder, surveys and forms, online appointment calendar, online course platform, and online community platform.


Those probably add up to $500 to $700 per month. Plus you need Zapier just so that they all can work together.


Here's an easy fix. Grab HighLevel right now and cut those bills in half (probably more). HighLevel is an off-brand, white-label program that does all the above in one program. The price starts at just $97. By comparison, ClickFunnels alone costs $297 per month, and that’s just one of the functions of HighLevel.


Let’s move on.


There are plenty of strategies you can stack to make you more profitable that don’t focus on your costs, but rather on the other side of the equation, i.e. revenue and profit.


You could implement a campaign that builds trust, expertise, and education. Imagine a compelling lead magnet on your website or social media profile channels. It’s packed with value for your prospects who are early in the buyer’s journey. It doesn’t sell, it educates. You’re going on a few casual dates; you’re not proposing marriage yet.


Then you drip emails to these people to nurture them along their journey. Keep educating them. They will grow to trust you and see value in the expertise you’ve given them at no charge.


Eventually, after several touches, you include another compelling offer. You acknowledge that they’ve downloaded your lead magnet. (But please don’t call it that! That’s just a term we’ll use here among friends.)

You write, “Wow, you’ve stayed with me this long, you must really be into what I’ve been talking about in my emails.


“So, what do you say we take our relationship to the next level? I have another compelling offer for you, but this one’s not free. But it is a low-risk, low-cost entry into working together.”


This might be your 60-minute intro course for $47, or your group coaching sessions for $497, or your $99 two-hour business audit.


What I’ve just described up to this point in this service business example uses profit strategies called:

From here, you can stack even more strategies after the first few are working like a well-oiled machine. For example, create Scripts, and Policies and Procedures to handle (qualify, close, onboard) the inquiries and sign-ups to your initial paid-entry offer. Add a strategy for following up with the people who don’t sign up at this stage too.


You can Add (more) Products and Services (another profit acceleration strategy) to stack strategies like Up-Selling, Cross-Selling, and Down-Selling. You could Bundle products and services to add more value to your clients and more profit for your business. These could also help you deploy strategies like More Appointments, Increase Purchase Frequency, and Increase Customer Longevity.


Compound Growth Can Double Your Income


We’ve merely scratched the surface with the profit acceleration strategies available to us.


What if we went back to the first step in this example and created a landing page that spoke to the needs and interests of a single, specific niche? All the profit acceleration strategies we stacked on top of each other would create compound, exponential growth in sales and profit for that one sales channel.


Now duplicate the entire stack and create a new landing page with language tailored for a different niche target market.


And instead of relying on SEO, SEM, and PPC tactics, all of which eat up your profit and rarely pay off, what if you paid referral fees to your joint venture and affiliate partners in other industries who refer people to you? You only pay them when a referral becomes a paying customer, this is another strategy that costs you nothing out of pocket.


Now do it all, the niche landing page, the referral system, and the layers of profit acceleration strategies, a third time. A fourth? Want to keep going?


Is your mind blown? Can you see how you can scale your business with small 3% to 5% improvements? Doubling your income now becomes child’s play.


Now do you see why you don’t have to gamble all your money (and your hopes) on a single marketing tactic? That’s gambling of the highest order. I’ve tried those stakes, and believe me, “the house” always wins. The marketing agency you hired to build your online sales funnel will make more money than you will.


But with Profit Acceleration through Compound Growth, you can double your income with mere 3% to 5% improvements using 10 or 12 strategies. And if one of your strategies happens to give you a 50% boost, well, so much the better.


If you want to achieve massive profit growth, focus on making multiple small improvements in different areas of your business. Layer strategies on top of each other. Many of the strategies I teach cost nothing but a little time and brain power.


Even small impacts add up over time into life-changing income. Don't expect overnight breakthroughs. Instead, trust the process. Make incremental strides forward every week and month – then enjoy seeing your effects multiply exponentially over time.


For more examples of how to use the law of compound growth to accelerate your profit and create life-changing income, access my free training now. I have some video and book bonuses for you when you sign up too.


Follow me on Facebook, Instagram, LinkedIn, Twitter, and Youtube, or visit my website for more info!


 

Brian Carmody, Executive Contributor Brainz Magazine

Brian Carmody, aka “The Profit Finder,” will show you where your business is leaking profit. After leading his own manufacturing company to the Inc. 5000 List three times, and then through the pandemic, he and his leadership team lowered their break even point by a whopping 80% (without layoffs). His company grew DESPITE paid ads and marketing — not because of them. Now, using “Profit Acceleration Through Compound Growth,” Brian coaches others for similar results. His mission: To find life-changing income inside your business without using paid ads.

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