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Management / Sales & Marketing
August 2014 Single Truck Success

What is Your Tipping Point?

Know when your company succeeds.

August 07, 2014
KEYWORDS business / goal / point / tipping
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Do you know the tipping point when your business shifts from being “at risk” to being “successful?”

Prior to this point in your company’s growth, investment money is required to pay bills. Your business tips to being successful when it generates enough revenue to cover the expenses. Failing to reach this point at the right time will bring your business dreams to an end.

Few owners know specifically what this critical point is. When asked if they are successful, they tend to base their answer on whether or not they have reached <photocredit>iStock/Allan Swart</photocredit>their original goal for starting the company.

These desired outcomes can include: Solving an unemployment problem, making enough money to purchase a first home, having scheduling flexibility, freeing a spouse from a traditional job or possibly “getting rich.”

Although these can be wonderful goals, they may distract you from achieving the more immediate and critical point of success. Attention should be directed to reaching the tipping point first, and only after that is accomplished should the other goals be acted on. 

Determine the tipping point

The tipping point is the amount of monthly business revenue needed to cover the owner’s business and personal bills. Until this level of earning is reached, savings or borrowed money is required to make up any shortage. The tipping point is unique for each owner.

If you are not sure of this dollar goal, it is easy to estimate. Figure out how much you need to pay last month’s company expenses and add the amount you need for your personal bills. You can use this approximate amount until you have the time to calculate a more precise number.

Stay focused

Post this dollar amount where you will see it daily. Attention should be focused on reaching this critical goal. Anything that slows this process lessens your chance for survival.

The clock is ticking. Most owners have limited savings and credit available. When these get used up, the game is over and the company is forced to shut down. Once you reach the tipping point, the clock stops ticking. The company has become self-sustaining.

Lower the tipping point

Your chances for success improve if the tipping point value goes down. Are there ways you can lower it? The higher it is, the more challenging it will be to achieve. The greater the monthly shortcoming, the faster your limited savings and credit will be consumed.

The start-up phase of business is not a good time to take a dream vacation. Every unnecessary dollar spent personally or on the business robs you of precious time to reach the goal. Look for creative ways to lower your expenses.

Money is required to start a business. Use wisdom in your purchasing decisions. Can you get by with used equipment instead of new? Education is important but be sure it will help you produce more money. If possible, avoid having to rent office space.

Is there a way to supplement your income when you are starting your business? Can you work a part-time job to create additional revenue until you reach the tipping point?

The need for speed

In the beginning, your greatest enemy is time. All of your customers are new. Each month is as if you are starting over again to find work. Repeat and referral customers take time to develop.

If you are, for example, falling short of your tipping point by $3,000 per month, how many months can you survive before the money is gone?

Companies that survive have a keen sense of urgency. You should always know what to do next.

Marketing is not an expense — it is an investment vital to getting customers. Multiple advertising campaigns need to be tested simultaneously. There is not enough time to wait and see if one marketing idea works before launching the next. Continue advertising that produces affordable new customers and eliminate that which does not work well.

The daily question must be, “What can I do to get closer to attaining my goal for this month?”

Distractions

Big goals are important in providing direction for short-range objectives. But it is important to make sure that a long-term vision does not make reaching the tipping point more difficult.

Many companies have made the mistake of attempting to expand prematurely. Bringing on employees or building an infrastructure for becoming a large company can raise the tipping point value to a level that cannot be reached in a short enough amount of time.

In baseball, a player may desperately want to score a run. But he must safely get to first base before he can move on to his next goal. He may hit the ball over the centerfield fence, but if he fails to touch first, it is all wasted effort.

In the carpet cleaning industry, reaching the tipping point is like safely getting to first base. From there the owner can then strive for a higher goal.

Focus on the tipping point

Just knowing what your tipping point is increases your chance of success. The best strategy is to focus attention on getting to this point as quickly as possible.

Once you have arrived, the clock stops ticking and you have “won.” Your business is successful. Then you have all of the time you want to take your company to whatever heights you choose.

Steve Marsh is the creator of the Be Competition Free Marketing Program. He is a 40-year veteran of the carpet cleaning industry, an instructor and a Senior Carpet Inspector. Marsh is a marketing and business consultant who helps owners build their companies to attract higher quality customers. For more information, visit www.BeCompetitionFree.com.

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