As one Redditor puts it:
“Basically, when you own your own business you find out everything cost ALOT of money. And you can’t just double your business to double your income as all expenses go up as you grow. I’d estimate that if I wanted to double my income, I’d have to quadruple the size of the business. I don’t know if it’s worth it.”
Indeed.
I’ll add to that.
There are basically 2 different kinds of businesses you can run:
- Businesses built on disruptive innovation where you get lots of investor money and try to disrupt existing players in the industry; or,
- Businesses built on quickly generating a net profit.
When I was a kid, my friend’s dad owned a sign shop.
Basically, he made signs for other businesses. He probably made signs for local government buildings too, i don’t know exactly who his customers were.
But it was a business built on a traditional model.
Make something people want. Sell it. Generate net profit.
Not every business operates that way. This Silicon Valley, growth hacking, get-investor-money disruptive innovation business model is premised on the ability to turn a cool idea into a business or to overturn existing business models and hopefully make it pay off sometime in the future… maybe years, maybe decades.
Both types of businesses work, but each requires a very different mindset and some business owners are good at one but terrible at the other.
The more traditional model is the one people usually go for.
It’s easier, seems more practical, and there’s an obvious metric to track — net profit.
With disruptive innovation, you’re inventing something new with no immediate or obvious market yet. Maybe there is a small market but the broader potential market isn’t ready yet for what the business is building… like Tesla about 10 years ago.
There’s an exception to this though.
A company like Backblaze (it’s a company specializing in backing up your computer files) came up with a new idea that was arguably a disruptive model to the traditional hard drive backup model.
But… they didn’t use any outside investor money. Instead, everything was financed internally and so… they grew very slowly. Took on no debt, and created a, more or less, stable business model.
Anyway, point?
It really doesn’t matter how you grow your business.
Both models can work.
But, eventually, all businesses run into the same problem.
A problem I outline in my report, “Why Successful Business Fail”.
The problem manifests in different ways, to different degrees, and might look slightly different depending on the exact business, but it always happens.
Almost inherent in growing… anything.
Call it “growing pains”.
Anyway, if you haven’t yet gotten that report, you can get it by signing up to my email list.