Several months ago, I was at a crossroads. Our online kids coding startup had been growing, but our growth had slowed despite numerous pivots, marketing tweaks, and website changes.
Our social marketing campaigns weren't achieving the returns that we needed, and we were attracting a lot of the wrong types of customers who didn't really understand our product or even have a burning desire to use it. Our team was running after every opportunity in sight, and finding ourselves stretched in too many directions. The ninety-hour work weeks were taking their toll, and burnout was setting in.
I decided to call my friend Greg Head, who has scaled multiple businesses to $100 million in revenue and nine figure valuations. After co-founding SalesLogix and exiting for $300 million, he served as the chief marketing officer of Infusionsoft, which he helped grow from $15 million and flat-lining sales to $100 million in revenue in less than five years.
He listened to my story, asked me a few questions about our strategy, and gave me a simple piece of advice that changed everything for us.
He said, "You've got to focus to grow."
Leaving Survival Mode
According to Head, the early stage market discovery and validation phase resembles a hunt in which the hunter is out shooting at everything that moves. It's a side effect of survival mode, when you do and try everything in order to get your company going.
There was almost no business opportunity that my startup would have turned down in the early days, as we were trying lots of things to see who our customers were, what worked, and what didn't.
I spread my attention everywhere. We were scrapping for every sale, and going after every opportunity to make enough money to make payroll. And while this helped us stay afloat in the beginning, it wasn't a sustainable business model and it was slowly killing our focus and burning out several key team members.
Hitting the Scaling Point
As I learned, a survivalist mentality may be necessary to get a business off the ground, but it isn't enough to make your business successful. At some point, you have to change your thinking.
Head calls this turning point the "scaling point". Your scaling point defines you as the best in your market at something important for someone specific. To hit your scaling point, you have to commit to this narrower segment, and make important changes to make this happen.
Finding your Scaling Point
Head asked me a series of questions to help me discover our scaling point:
How does your ideal buyer describe your product in a simple way that communicates why it is important to them?
What's the difference between your best customers and your worst customers?
What is your competitive space and how do you compare with alternatives?
Are you creating a new product or service category that must be explained and evangelized to your market? If so, how can you boil this down into its essence?
What do your different types of customers each want most from your product or service?
After helping me define my ideal segment and determine that it was large enough to fuel our growth, he recommended that we commit all of our attention, brand communication, and strategy to this group.
Focus to Grow
After hitting the scaling point, Head says that startups have to embrace a near obsessive focus on this target segment which in most cases amounts to around 10 percent of the potential market.
At its core, the scaling point is about simplicity. Which is why so many startups fresh from survival mode have such difficulty at this critical stage. They are trying to do too many things, over-complicating their processes and services, and cannot see their scaling point clearly.
Head explained that at Infusionsoft, they were trying to be everything to everybody. After identifying their scaling point, Head helped grow the company at an exponential trajectory without even making many changes to the existing product.
As I'm discovering at my coding for kids startup, it's a scary decision to let go of things that helped pay the bills in the early days.
But now we are finding that we are selling much more product to our target market, our referrals have skyrocketed, we are receiving far fewer customer service requests from people who don't understand the product, and our marketing has generated a much more efficient return on investment.
In saying no to things that aren't in our focus, our company has a renewed business model and we believe we are finally ready to scale.