Factors for Sustainable Growth
When I studied at school, one of those science equations that stuck with me was the equation for momentum: P=MV. It’s got me wondering if there is an equivalent formula that we can apply to business. And I think there is. Understanding that formula will help you to build momentum in your business, and drive you forward faster toward your goals.
What is momentum?
Before we begin, let’s look at what momentum is. In scientific terms, it is mass x velocity. (Velocity, by the way, is speed x direction). If you increase mass or speed, then momentum increases. And an object with a larger momentum is more difficult to stop.
Now, people refer to all sorts of things as ‘having momentum’ making them difficult to stop. Football or basketball teams, for example, are said to have momentum when they are on a winning streak. They are hard to beat, and with every victory they become even more difficult to beat. Their momentum increases.
Similarly, a business can have momentum. It adds customers more easily, sells more products, and increases revenues and profits – which it can then reinvest to increase its momentum even faster. Once you have momentum, success is almost a given. You would have to seriously derail to fail.
Defining momentum in business
Okay, so we know that momentum is important. Without momentum, your favorite sports team is unlikely to be crowned champion at the end of the season. But the scientific formula for momentum doesn’t hold true for sports teams or businesses. Indeed, size can be a limiting factor on speed in sport or growth in business:
- I doubt that the 200lb Usain Bolt would have had the same success if he had been a 300lb sprinter
- A company with 20 employees is generally more agile than a company with 50,000 employees and 200 committees to get ideas past
So, not P=MV as we know it. But perhaps there is another way to describe mass and speed in business?
What is your potential capability?
Your ability to create momentum in your business depends upon its capability. If you as an entrepreneur do not have the capability to perform, then you won’t. The same applies to the business itself. We understand this, but how do we define capability?
For me, capability comes down to five factors. They all limit your capability if you allow them to, though only one of them is finite:
1. Quality
The quality of the work you produce will limit your ability to win new business and create loyal customers who become advocates of your business’s products and services. Great businesses deliver great-quality products, and continually strive to improve them (think Apple and its ever-evolving iPhone).
2. Knowledge
The knowledge you possess of your market, your product, your services, and of your customers gives you the power to improve what you do. It helps you to target your marketing (for example, by utilizing email marketing segmentation), and make better use of your resources.
3. Process
The process you use is incredibly important to your capability. Humans have known this since the beginning of time. Innovation and invention have process at their heart. It is why humans invented the wheel. It was the foundation of the Industrial Revolution. Within content marketing, we talk about the stages of the content funnel – and this allows us to create the most efficient process to market our products and services.
4. Adaptability
Adaptability is your ability to adapt to evolving market conditions, customer needs, and changing rules and regulations. If you can’t adapt, you risk losing momentum. If you change to snow tires in thick snow, you’ll handle better and maintain more momentum than if you stick with normal tires.
5. Time
Finally, we arrive at time. The only finite factor of the five that make up your potential capability, because there is a finite number of hours in each day. However, you can ‘buy’ time, by improving your knowledge, process, and adaptability.
In the equation of momentum, I substitute these five factors as follows:
Time ^ Quality + Knowledge + Process + Adaptability
Increasing your velocity – adding money into the equation
Money is a multiplier in any business. Strike that. Money, used wisely, is a multiplier in any business. It is money that can buy you time, by allowing you to invest in training, development, machinery, systems, marketing, and so on:
- A person who improves their knowledge with training can offer more services and increase prices
- A business that hires experienced employees can use their expertise to gain more customers
- A business that buys more efficient machinery can produce more widgets each hour, reducing per-item costs and increasing margins
So, now we have the business formula for momentum as:
P = MV
P = (Money) x (Time^ Quality + Knowledge + Process + Adaptability)
And here’s the thing: if you increase any of these factors, you increase your momentum. Not only that, but, if you maintain momentum and manage effectively, that momentum will become supercharged.
However, you cannot simply throw money at a situation. Money is a resource that must be targeted and employed as cautiously and effectively as your time and your knowledge. Only by understanding what you need to achieve can you direct your money effectively to grow your business.
Using money to grow your business
Buying time. Your time. The time to do what you want, when you want, how you want. Investing your money in the people and processes that will enhance your business is a time saver.
Wise investment in people improves your business’s expertise, and saves you time and money in training yourself to do something that someone else has been doing for years. Their expertise and experience are translated directly into improved products and services, and an improved potential capability of your business.
You get things done better and faster, and you get to focus on what you are best at. Your business grows. It becomes less dependent upon a single person (you), and that makes it more valuable as a business.
If you need a new gearbox for your car’s engine, do you spend six months on a mechanic’s course, learn how to change the gearbox, and then do the job yourself? No. You analyze what you need to get done, and you invest in the expertise to have it done quickly and efficiently. That’s what great entrepreneurs do. They know what they don’t know, and develop the capability to fill that gap.
Gaining that business momentum is often the most difficult part of business building. Once you have the right pieces in place, you’ll get moving. Let me know what pieces you’re missing in the comments below.
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