Practical Ecommerce

The beauty of compound revenue growth

When my company had sales of just $66,000 a year, I thought, “How will we ever get to a million dollars?” When we got to that level, I thought, “How will we ever get to a much greater number?” That process continues indefinitely for most entrepreneurs.

Regardless of where your company is at, calculate what happens to your revenue when it grows by a consistent percentage every year. For example, say you have 10 orders per day of $125 each, on average. This means your revenue is $456,250 per year — 10 x $125 x 365 = $456,250. If your revenue grows by 20 percent each year, it will exceed $1.6 million in seven years!

Growth doesn’t have to be dramatic. If your company grows by what seems like a modest percentage, in 5 or 10 years it can reach the size you are after.

The important question is “how?” How do we grow our companies year after year?

I suggest simplifying and focusing.

First, simplify your approach. As a business grows, the systems and the communication networks within the organization often become more complex. A very small business with only a single entrepreneur has no internal communication problems.

But as the company grows, with many employees, communications often become more complicated. Also, as you add new processes on top of old ones, a company may have multiple people doing the same task. Finally, most entrepreneurs have a can-do attitude. That’s how they got their business off the ground. But that same attitude often hurts entrepreneurs as their business grows, because they still take everything on, as opposed to delegating.

To overcome those complexities and to simplify, I suggest these three steps.

  • Create an organizational chart. Make sure the chart includes all of the roles and a clear line of reporting within each role. The chart should also include accountability. It helps employees to know what they are in charge of, how they fit within the company, and who they report to.

Provide everyone in your company with this document and remember this is a dynamic chart that changes as you hire new people or make changes. As a rule, it’s good to think one year ahead as you consider your organizational chart.

  • Conduct a weekly managers’ meeting where you communicate, organize, and solve problems. This meeting should be on the calendar — never to be broken. The meeting is mainly about the execution of the plan.

Oddly, a business is a set of daily problems. People are busy solving the same problems multiple times a day. The weekly meeting should be about creating solutions to core problems. It should be focused on reducing complexity, to allow employees, customers, and vendors to focus on the goals of the company.

  • Hire carefully and provide a good environment for people to flourish. Hiring good people is obvious to most entrepreneurs. What often eludes entrepreneurs, however, is when to hire. In many cases, an entrepreneur waits until he has enough business. However, when the business comes, the company oftentimes cannot manage it: Everyone is focused on solving immediate customer issues. Then the business drops, and entrepreneurs wait for the business to come back before they hire.

This is a vicious cycle that must be broken if we are to grow. Instead, hire based on what the new person will bring. Every position you are considering must do one of two things or a combination of both: increase sales or cut costs.

While every business is different, the keys to growth are often the same.

  • Choose the right industry. You must have a market that supports growth. If the market is not there, it is very hard for a small business. It may be impossible, in fact.
  • Create attainable financial and other business goals that all employees can connect with and work towards together.
  • Limit the priorities of the company. Every quarter, focus on three to five key aspects of your company that will help you achieve your goals. If you choose correctly, you’ll always take care of the most important issues your company is facing.
  • Hire the right people. Bring in people who are smarter and better at their areas than you. Give them space to improve the company and provide a culture that supports initiative and doesn’t look to assign blame for a mistake.

My aim for this article is to help you think of ways to grow your ecommerce company. By creating a simple framework that people can easily follow, your company can enjoy consistent, year-over-year growth.

Do you have ideas for growing a company? Please provide comments or questions, below.

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Comments ( 4 )

  1. Elizabeth Hollingsworth November 24, 2015 Reply

    Very interesting post, David. Many single-person business owners like myself outsource for as long as possible. When you run your business from home, hiring even a part-timer raises issues about compliance (for tax, benefits, insurance etc) as well as where to set up extra desks!
    I saw a similar interesting article on how to grow your business by 5 hours a week here http://www.weddingiq.com/blog/grow-your-team-in-5-hours-a-week

    • David Sasson November 24, 2015 Reply

      Elizabeth thanks so much for the great comment. I did not consider the limitations of home. There are also limitations in commercial space. Outsourcing is a great way to go; we also work with outside contractors quite a bit. You can also hire remote employees. I recently met an entrepreneur who has her entire team all working from separate homes. It depends on the business you’re in and your appetite for growth.

      Thanks for sharing the article. It’s nicely written and concentrate slightly more on the aspects of hiring.

  2. Carlos Rivera November 25, 2015 Reply

    I really enjoyed this read. I am working on a lot of the same problems/solutions you proposed. Thank you for reinforcing the need to simplify in order to grow. Happy Thanksgiving!

    • David Sasson November 25, 2015 Reply

      Carlos thanks for the nice comment. The simpler you can get your business the more profitable it will become. Happy Thanksgiving.