In the first part of this articleI showed you how to create a source of money i.e. a small B2B service company that solves a problem for large companies and addresses the three underlying challenges that large companies face. If you haven’t read it, go back and do it now before continuing.
There is nothing better than building a small business that grows dramatically, does a great job for its customers, employs a lot of people, and brings in millions of dollars for its owners year after year. Well, that’s not quite true. There is one thing better: turning that business into a business worth hundreds of millions if not billions to a buyer. It’s a moonshot.
So how do you get there?
Once you’ve built a revenue stream that helps your large corporate clients with headcount, technology risk, and funding, it’s time to start tackling these challenges yourself. We will be looking at all three at the same time as they are highly interconnected.
Now that your livelihood has been in business for a while, you have three (or maybe four) things to do:
- You have a brand and a reputation in your marketplace. Important influencers in your field will listen to your ideas.
- You have extensive knowledge of the industry. Now that you’ve been working in your field for a long time, you have a deep understanding of the challenges your industry faces as well as the opportunities it offers.
- Your livelihood has a seasoned team. You will look to them to help you develop your moonshot.
Oh, and the fourth: Since you’ve been a livelihood for some time, you probably have a lot more access to bank, investor, and customer capital than when you started. You may need this money to become a moonshot.
So let’s come back to these three underlying challenges that you faced for your large business clients:
- Hire people so they don’t have to
- Use new technologies and assume the resulting technological risk
- Act as a bank for your customers by carrying their debts
Your pivot to moonshot requires the development of innovative solutions using your reputation, your access, your knowledge of the sector and your team (and possibly your capital) to discover a way to:
- Reduce your own workforce– probably one of your main sources of overhead – by developing your own proprietary technology
- Use this technology to attract a new type of customer: the one who buys your technological solution, not the service of your company.
- Reload your solution in real time, rather than billing at the end of the service
Let’s look at an example of one of the entrepreneurs who spoke during our Inside the Mind of the Entrepreneur course at Rider University’s Norm Brodsky College of Business:
Based in Washington, DC Mobility Kitewire, founded by Jere Simpson, initially developed custom software for its clients, many of whom were government agencies. They came to Kitewire when they needed a new database or application to automate certain business processes. One day, Jere saw a way to turn his money into a moonshot. One of his clients needed to monitor digital activity on his employees’ mobile devices. Jere wondered: Would other companies want this solution as well?
Fast forward three years and Kitewire no longer develops custom software for its customers. Now, it’s a mobile apps business that allows large businesses to monitor their customers’ digital activity for a few dollars per month per device, paid automatically. Here’s the best part: When a new customer comes on board with 1000 new devices, Kitewire no longer needs to hire people! It just runs a few more servers to support the extra workload.
Gross margins increase, labor costs decrease, and the total addressable market ranges from a few customers to all businesses in America, even globally. Jere’s company automatically collects its fees in real time.
This is how his money became a moonshot worth hundreds of millions of dollars.
As you will recall from my previous post, I teach alongside Norm Brodsky at Norm Brodsky College of Business, and what I enjoyed most about participating in this initiative is seeing how students apply the knowledge we let’s share with them in real time. .
Remember how these students started to doubt their own entrepreneurial spirit at the start of the semester? Well, later I’m happy to report that their mood will change noticeably. After the fourth or fifth story of high-level entrepreneurial acts, they focus their questions less on hardship and more on other aspects of the history of these entrepreneurs: quality of life, freedom, creativity and yes, wealth. They begin to understand that entrepreneurship is not a product of genius (thought that never hurts!) But of passion. And finally, they come to recognize that while the road to success may be difficult, it is not beyond the reach of anyone with that passion.