Turn Your Business Into a Money Machine
Wildly successful businesses often find one process that works and then repeat it as many times as possible. If you can figure out what this process for your business, then you can grow at an alarming rate. For example, if you know that for every $1 you put in, you will get $2 out, then you can grow without fear. Some people call this achieving scale. Some people call it a money machine. Some people just call it good business.
Regardless of what you call it, I'm assuming you would like your business to be a money machine. Here are three ideas that should help you do just that.
1. Know Your Customer Lifetime Value
Your Customer Lifetime Value is simply the amount of value that the average customer brings to your business over a given time span (usually one year).
If you’re interested in calculating your Customer Lifetime Value, you can find a great explanation of the concept and an Excel spreadsheet that should help you on Occam's Razor.
Long story short, once you know how much each customer is worth to you, then you know with certainty how much you can spend to get a new customer. For example, if you make $15 of profit with each customer, then you can spend $14 bringing a new one in the door and still stay in business.
2. Be Willing to Pay for Customers
To some of you, this will seem like a no-brainer, but you would be surprised how many business owners are hesitant to spend money to make money.
Instead, they tell themselves things like...
"I'll start an email list and do some SEO. Then everyone will sign up and I can pitch them products."
"I want to create the next Facebook for motorcycle enthusiasts. All of the bikers and gear heads will come join my community for free and then I can make money on advertising."
"The foundation of my business is referrals. After all, that's the best strategy right? Happy customers will always bring you more customers."
Now, there is nothing "wrong" with the above statements. And I certainly don't suggest recklessly spending your money (more on that in a moment). But it is important to understand that successful businesses pay to bring quality customers in the door.
3. Create a Closed Feedback Loop
If you want to create a money machine and not waste your precious cash in the process, then you need to have a way to track what works and what doesn't. You need a feedback loop for each marketing and advertising activity you do.
Feedback loop is just a fancy way of saying, "track where your sales come from." You should know exactly which advertising campaigns, marketing initiatives, and actions bring in the most customers.
Yes, it will take some effort to set this up, but it will be well worth it.
Once this feedback loop has been created, then you know for sure where your profits are being generated. That's when you have a money machine on your hands. You know how much your customers are worth to you. You know how much you can spend to acquire them. You know which actions generate the most profit.
Business is good when you know that you can put $1 into the machine and get $3 out the other end.