Hardly a day goes by without hearing about someone else’s quantum leap in their business. How they became an overnight success, doubling or tripling their profits or even growing their profits by a factor of ten.
These stories come about through a combination of factors and are often packaged and sold as a ‘formula’ for others to follow. Sometimes these formulas work for others and sometimes they don’t. More often than not they actually don’t work. Way more often in fact.
I’ll save an explanation of why that is for another occasion but today I want to touch on a different type of formula, a mathematical formula that can help you double your profits within a year by taking moderate rather than quantum leaps.
Setting a goal to double your profits within a year is big deal. Maybe you’ve tried it already. If so, how did you go? Did you come close?
If you haven’t set such a goal before, what’s your initial reaction to the idea? No doubt it seems appealing on one hand yet daunting on the other.
Therein lies the problem. Daunting almost always wins the day and we usually end the year falling way short of the target. And it’s not because we can’t do it or don’t have the skill set, it’s because the quantum is too big to consider.
Put simply, a year is too big a time frame and ‘double’ is too much of a step.
When we think of a year it’s easy to put things off or get caught up in a loop of planning and preparation and general ‘busyness’ that doesn’t actually move us forward.
And when we think of doubling we get caught up in a loop of coming up with ninja business ideas that sound great in theory but don’t quite deliver the expected results. (See, you’re not the only one who goes through that…)
Enter the number seven.
Seven is one of the coolest numbers on the planet. In the universe in fact.
Even Wikipedia thinks so. I checked and there is much more written there about the number seven than any of the other single digit numbers. What more proof could you ask for than that? (When you’re done here take a look at the Wikipedia page and you’ll see why seven is more interesting – not yet though!).
Seven is a powerful and significant number but in the context of today’s discussion I want to invite you to think in terms of percentage, i.e. 7%. And instead of thinking in terms of a twelve month time frame, I want to invite you to think in terms of a one month time frame.
Compare the goal of ‘increase my annual profit by 100% in one year‘ with ‘increase my monthly profit by 7% in one month.‘ Which sounds more achievable to you?
If you’re anything like me you’d say the latter of the two. (If you’re nothing like me just go with the 7% a month option anyway).
Here’s the psychology behind it (pop psychology of course but still valid nevertheless):
– When you think of monthly profit vs annual profit it seems less intimidating
– When you think of a one month time frame vs a one year time frame, you are more inclined to spring into action today
– When you think of 7% vs 100%, you are more inclined to think “I can do that”
And here’s some examples of how you could action it:
1st month – Increase your prices by 10%. (I bet you could pull that off easily enough but the thought of doubling your prices within a year probably makes you choke?).
2nd month – Release a new product or service
3rd month – Run an ad campaign that brings in new business
4th month – Partner with an associate catering to a similar market and get exposure to a new audience
5th month – Run an email campaign targeting past customers
6th month – Have a sale on an existing product or service line
7th month – …
You get the drift. These are all perfectly ‘realistic’ actions that leverage different parts of the business and could potentially increase your profit each month by 7% or more.
Now, here’s the fun part. Guess what happens if you increase your monthly profits by 7% each month for a year. Through the magic of compounding, your profits in the twelfth month would be more than twice what they were in the first month.
It would go something like this (insert your own number for the January figure of course): January profit = $10,000. February profit = $10,700. March profit = $11,449… December profit = $21,049. Bam! Monthly profit has more than doubled within a year.
Now don’t get me wrong. Profit growth of 7% a month is still a big deal and very hard to achieve consistently for 12 months, but in terms of something to strive for, a monthly 7% goal is way more easy to work with than an annual 100% goal. Even if you only reach it for six months of the year do you think you could live with that?
Of course none of this stands in the way of making quantum leaps that might just double your profits in a shorter period. Having helped clients triple their profits in just a few short months I can tell you that sometimes the quantum results take you by surprise. Having said that, if you are taking twelve swings a year your chances of hitting a home run are much greater than if you just take one (or two or three…).
The month-to-month approach also gives you twelve chances each year to write off the disappointment of any unmet goals and reset your expectations for the following month. With an annual approach, the typical pattern will be to have eight or nine months of telling yourself you ‘should’ be doing XYZ, followed by three or four months of berating yourself because you didn’t do XYZ. (I told you you aren’t the only one didn’t I?)
Beyond that, the monthly 7% goal also sets you up psychologically to handle growth in general and it gets you in the habit of setting up the systems you’ll need if sudden quantum growth does happen. Now doesn’t that sound useful?
So there you have it. That’s how the magic number of seven can help you double your profits within twelve months.
How does that position you moving forward? Do you think you could have a crack at 7% profit growth next month? I’d love to hear your comments and feedback below.
And of course, if you need help with making it happen or have any questions, let me know, I’d love to help.
PS – I wrote this post in July, the seventh month of the calendar year. Make of it what you will
I've been self-employed since I was 19 (and that was quite some time ago) and have owned manufacturing, service and consulting businesses ever since. Every business goes through stages and each stage in each business needs a different strategy to flourish and prosper. I can teach you about the stages and the strategies to shortcut your success.