What’s the single most important factor in growing your business? A recent report, The State of the Business Owner 2014, sought to uncover key differences between those with high sales and profit growth and those without. High sales growth was defined as companies growing revenue more than 10 percent a year (and faster than their industry); high profit growth was defined as growing net profit more than 10 percent a year (and faster than their industry).
Business owners were asked how much time they personally spend on marketing and sales for their businesses. The results were surprising: Entrepreneurs who spent at least 40 percent of their time on marketing and sales for their companies grew their revenue 60 percent faster than those that did not. Their profits grew at an even faster rate.
The report dubs this the “Two Days for Growth rule.” In other words, you should be devoting two days out of your work week to sales and marketing. There was no defined breakdown between the two—some of the successful entrepreneurs spend all of their two days on sales, others on marketing and others on a mix of the two. What you choose can depend on your skills and comfort level.
While taking “two days for growth” was the top key to success, some other factors were important as well.
A Unified Vison and Business
The study found that people with prior experience starting a business were far more likely to experience fast-growing sales and revenues than first-time business owners—even if the first-timers had been in business for 30 years! The key seems to be that serial entrepreneurs were more likely to view their businesses as a “coherent whole rather than a series of disconnected parts.” Serial entrepreneurs were more likely to be able to answer these questions:
- What is our vision and our regular strategic planning process to adjust our progress and move towards that vision?
- Who is our most profitable customer?
- How will we turn sales and marketing into a single unit that works together to attract that customer?
Confident, But Not Too Confident
The business owners surveyed were extremely confident in their ability to control the future. A whopping 86 percent agree with the statement, “I can do anything I set my mind to.” Ironically, however, the study found that the stronger an entrepreneur’s belief in their ability to control the future was, the less profitable their business was.
While confidence is important for business owners, being overconfident can lead to a “lone wolf” attitude where you end up doing everything yourself and refusing to delegate. In contrast, the study found the most effective entrepreneurs in the study were those who had confidence in themselves, also confidence in their employees. By empowering their employees and getting the most from them instead of micromanaging or dominating them, they were able to build what the survey calls “growth teams” and get more results with fewer people.
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Rieva Lesonsky is CEO of GrowBiz Media, a media and custom content company focusing on small business and entrepreneurship. Email Rieva at email@example.com, follow her on Google+ and Twitter.com/Rieva, and visit her website, SmallBizDaily.com, to get the scoop on business trends and sign up for Rieva’s free TrendCast reports.