Some ask, “How did General Motors get so big?”
“What ever happened to Westinghouse?”
“Why do I read so much about the astounding growth of Amazon?”
There are reasonable answers to these questions – let’s consider the major reasons.
The first contributor to growth is product demand. We as entrepreneurs, whether through our own company or as a corporate entrepreneur, have an idea and we must be able to define who will buy the product and how much will they pay? If we can answer that, how do we produce the product? How do we sell it? What is the competition? Let’s assume these questions are answered positively and “we are in business”.
What now? Growth.
Do we have the management and people skills to be able to grow profitably? Some businesses grow faster than others. Market demand. Some grow slower — do not have the range of desired products as the competition. Some don’t have the financial issues solved. Others don’t have the needed management team. And more.
Let’s examine the Widget Company and see what they did…
Bill and Andy had an idea that would allow women to be able to chop vegetables faster and neater than any other product on the market. Both wives said it would sell “like gangbusters” and we know because we face the problem every day. OK. That is the market research — 2 wives. Now STOP.
If Bill and Andy had gone to almost any household supply company they would see that there are dozens of products that make this claim—or similar. If they ever looked at a TV show for women they would have seen similar examples. They didn’t. How do we produce this?
For arguments sake, they both had mechanical skills and were able to diagram the product with a list of components needed to hold and chop the vegetables. After days of searching, they found a contractor that could manufacture in “reasonable” quantities and at a “good price”.
They ordered 100 units at $40/unit, paid for by a $1,000 bank loan from each and $1,000 each from savings. The order was delivered to them in 3 months. What to do now? Let’s go to hardware stores, show them the product and see how fast they will order.
They went to a dozen stores and received orders of 5 each from 3 stores, along with the explanation that they now sell a similar product. Of the 100, received they sold 15. What about the other 85? And that is what the wives asked as they learned how the 100 had been paid for and only 15 sold. End of story.
There is another story with a better ending.
Chuck is an electronics engineer with a solid company and with a “tinkerers” mind set. He has been fussing with ideas on how to make high volume company products for less money. They have about a 45% market share. Saving $10/machine in manufacturing cost would add over $150,000 to the company’s bottom line/year.
What does Chuck do? He can get a costly patent but since his work “exposed” him to product variances, the patent rights would go to the company. No, Chuck, a highly regarded employee, reporting to a company executive, asked for a meeting with him. He explained that his experience gave him “ideas” on how to save money during the manufacturing process. He values his job firstname.lastname@example.org 22 years — and wonders if rather than starting a company, could he and his employer agree to a plan that encouraged Chuck to come up with ideas and, if applied and worked, Chuck would receive a “bonus”. After several meetings, an agreement was signed. It so happened that Chuck’s “inventions” with patent filings, paid for by the company, provided enough “bonus money” to pay for his 2 children’s college education.
Business growth can come about in various ways — the smart ways, but never the dumb ways.