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Growth Points in Business
Today, Iâm going to share knowledge that you can quickly and effectively apply to almost any business. What matters here isnât your role in the business. These insights are meant to help you lead the company toward growth and scale, regardless of your position, so that you get your own results as well.
The first thing you need to do to find any growth points is to understand the goal youâre aiming for. For example, maybe you want your company to generate a profit of a million dollars in two years. Or perhaps you aim for a steady monthly income of $10,000 as a shareholder. Maybe you want to sell your company in four years for $30 million. Or, you might want to create a small family business that will be a creative outlet for youâa stable business that lasts 20 years, or one that you pass down through generations. Once youâve determined your goal, you can move on to finding growth points.
Business Molodost, GeekBrains, and the Education Sector
Letâs use the education business as an example, since I have extensive experience in this field. I once owned and managed the company Business Molodost (one of the largest training companies in the Russian-speaking space). I was also the CEO of GeekBrains, where we merged GeekBrains and Skillbox to take them to IPO. Iâve advised top companies and currently own several educational companies myself, where I now act as a shareholder. Recently, we had an offsite meeting with the educational company Life Practic (a psychology school), where we discussed various growth points.
Growth Point Methodology: How to Calculate Unit Economics
The first thing I would look at when identifying a growth point is the average check. What does that mean? In the education business, youâre selling services, education, for $300âa one-time payment for a program. Years ago, in the Russian-speaking market for supplementary professional education, no one could turn a profit. Why couldnât they grow?
They were selling at an average check that didnât make sense in terms of unit economics, which meant they werenât earning enough to scale. What does that mean?
If youâre generating leads through marketing and each lead costs $20, and your conversion rate from lead to purchase is 10%, that means a client will cost you $200. So if youâre selling an annual program for $300, the unit economics clearly donât work. Thereâs no way you can spend $200 just on marketing for a $300 program, because besides lead generation, there are other marketing expenses, like traffic costs. There are also costs for sales: youâll pay a salesperson another $40 per client. Then there are management costs, legal fees, finance, customer support, and product costs, which could easily eat up $200 for a year-long program per student. Even in online education, where you might think itâs scalable, those costs can still run $100, $200, or $300.
So what did some players in the market do back then? This is critical. For example, Skillbox in 2019 realized that if they were selling at $300, unit economics werenât working, and scaling was impossible. They decided, âLetâs raise the check.â They increased it to $600, $700, and the unit economics started working at $600. The same $200 in marketing expenses, but now $400 was left. Letâs say $50 for other costs, $200 for the product itself, and now youâve got a little profit left over.
Whatâs important is that when the unit economics start working, you can invest more in advertising. The number of clients increases, and you have more free cash to improve your product and continue to grow.
Growth and Scaling
Some might ask, âWhy grow? Iâm fine with the profit and clients I have now.â
The more you sell, the more money you have to create a quality product, pay good salaries, and stay competitive in the market. Thatâs why unit economics is such a crucial component and must work within your business model.
The average check is a great solution. If you look at the average check, many people donât personally handle pricing. The CEO hands it off, saying itâs a sales department issue. The head of sales says they donât deal with pricing and passes it on to the product director. I always separated average check and pricing into a distinct area of the business, so it would directly report to the CEO (even if itâs just one person, they should report to the CEO). Then, when the marketing director, sales director, or product manager comes in, they canât change the pricing structure to suit their own interests.
The average check is a significant growth point within the business.
"Thereâs a Growth Point â Itâs the Right Authors"
When I think further about business growth points, I say: "Thereâs a growth point â it's the right authors." What does that mean? For example, we work on an educational product, and people come to us for the offers in our learning programs. Since we have a strong internal community (like in a psychology school), a solid structure of authors and programs, and we offer some exclusive authors, why not focus on making authors a growth point?
This means we will focus our company on scaling and growing through finding the right speakers and people, while being very selective about them.
Weâll understand that this is our current key growth point. In some big companies, like Coursera, which operates in education, are the authors a growth point? Itâs unclear. Are authors a growth point in Skillbox? No. Are they a growth point in Yandex Practicum? No. Are there schools where authors are a guaranteed growth point? If we look at the educational products under the label "info-business," then the author is a guaranteed growth point. In such cases, the author or their team is undeniably the biggest growth driver. Without these people, the business would collapse. At the same time, donât fool yourself.
For example, if I come into an educational company and see that the growth point is having the right average check or generating more leads, and the product is good but lacks substance, they should be making authors their focus. By attracting top-notch authors and speakers or investing in finding them, they will grow.
How to Grow Marketing: What We Did at GeekBrains
Another growth point we can highlight is growth in marketing.
For example, a growth point is having the right unit economics when it comes to consistently generating traffic.
If we are able to massively generate traffic through contextual and targeted advertising, thatâs our growth point. We invest more money, create new offers, new ads â this is guaranteed growth. Or someone might say their growth point is their sales funnels. To clarify: instead of directly advertising our educational product ("Buy this program to grow your business with us in one year"), we create a separate funnel, a lead magnet.
For example, at GeekBrains, in our supplementary professional education for IT, one growth point was the sales funnel. We had an event called âThe Path to IT.â My partner and right-hand man, Alexander Sagun, and I led a session about how to break into the world of IT. It served as a funnel: we attracted clients through free registration in large volumes (50, 70, 80, 100 thousand people a month), then we sold them paid products. This was our growth point because the more people who completed the event, the more stayed with us and bought long-term programs. For us, this was a key growth point (with various factors and details involved). Authors, in this case, were not a growth point. Itâs essential to recognize in your company whether something is a growth point or not.
PR
Another growth point is growth through PR.
For example, we might say that our company will grow in the market if it has a certain reputation or if a large number of professionals in the market know us. Or, if people who arenât even our clients know about us. Maybe every graduate and current student recommends us. Perhaps every instructor who works with us will recommend us. PR can be a significant growth point for many businesses: restaurants, cafes, video services, furniture sales, educational businesses, and so on.
PR can be a powerful growth point, but not a fast one. Unlike average check, which can be adjusted instantly, or sales funnels and advertising investments, PR takes time. In PR, itâs essential to find and understand the structure.
How to Find Your Clients
Another growth point is the region where you operate and your clients.
Do you work in one region of a country, in specific areas within regions, a particular city, a neighborhood, or in the European Union? You may define a region where people move in certain ways, where there are specific rules, currency, or language.
For example, you might say you work with the Russian-speaking population or Russian language in Belarus, or that you operate in Belarus and Kazakhstan, or Russia and Belarus together. Or you could say you work in the Asian market: Malaysia, Thailand? Or perhaps you work in the U.S. in a specific state. I have a mortgage business in the U.S. with licenses in several states. We donât operate in all states, because each state (aside from needing separate licenses for different activities) is unique in terms of offers, ads, and offline opportunities. We may decide to expand to all states or focus on the top 10, top 15, or top 20. What language should we work with? English? Or English and Chinese? Or maybe English, Chinese, Korean, and Russian?
In education, itâs crucial to be clear and calm about the region you serve and the type of clients you have. Many people get confused and say, âSince everythingâs online now, it doesnât matter where Iâm from, the whole world buys from me.â You hear this everywhere. But having a clear focus on your region and clients is key. Why is this a growth point? It might not seem like a marketing tool, but once you define your region and client base, you make all decisions with that in mind.
For example, if you say your growth points are the region and PR, you know to focus your PR efforts in that region. Or if your restaurant serves tourists from Germany, your PR should target Germans before they even arrive in Palo Alto. Clear focus on the region and your clients is essential.
"Let's Just Throw in Some Money": Should You Really Do That?
A growth point in your business, especially in the educational business, could be simply âletâs throw in some money.â
This is a very interesting growth point, and when you mention it, people often have mixed reactions. What does âthrow in some moneyâ mean?
Letâs say we have an educational business, we make $100,000 per month, and we know for sure that weâll make $1.2 million this year. But we want to make $5 million this year. Is that possible? Very tough. To do that, we could throw in an additional $5 million and generate $5 million in revenue. Someone might ask, âWhy do that? Itâs crazy to put in $5 million just to make $5 million in revenue.â But Iâd say, âHow is that crazy? By generating $5 million in revenue, weâll gain a huge number of clients. We can then focus on PR and recommendations. These clients will buy from us in the future. Weâll create a business thatâs worth money. It might be unprofitable in the first year, but our main goal is to increase the companyâs value, even if itâs slightly negative at first. Or our unit economics might stabilize later.â
Or maybe we throw in $1 million into advertising. We know our unit economics are working right now, and with a 20% return on investment, we can grow fast. Weâll make $5 million in revenue. By generating that $5 million in revenue from the advertising investment, our unit economics will work. But if we donât raise that $1 million, we canât invest it in ads because we donât have itâweâre currently generating $100,000 in revenue. The system wonât work without that investment.
Pay attention: these growth points can often seem strange or confusing to many people. Others might say, âThis is totally normal. We always invest money and then earn more from it.â
The biggest money in the world is usually made by moving funds from one stack to another. For example, someone takes a $100 million loan from a bank, invests it in buying a new company, then puts that company up as collateral for the same $100 million because it has assets. Over time, they pay off the loan using profits from the company, then sell the company for $150 million, keeping $30 or $40 million as profit after paying off the loan. Bigger numbers arise on larger deals, and massive amounts of money are made this way. Not through sales funnels or lead generation. But right now, weâre talking about growth points. Once youâve outlined your growth points, whatâs important is choosing 2-3 main ones and giving them serious priority, so thereâs no debate or confusion. If someone suggests focusing on SEO, but your SEO isnât great, you say, âThatâs not our growth point. Our growth point is TV ads,â or âOur growth point is handing out flyers on the street,â or âOur growth point is constantly hiring sales managers, 40 every month.â Once we understand this prioritization, we make decisions differently.
Important!
Even after youâve identified 2-3 main growth points, you still need to track the rest. How should you track them?
For each growth point, itâs necessary to develop clear, measurable criteria to monitor and evaluate them moving forward.
For example, with PR, you might say, âWeâll evaluate our PR system by surveying every client after theyâve completed a course. Out of 80 clients, those who bought from us should say their experience was good.â Or you might say, âOur growth point is PR, especially online, and itâs important for us to have strong recommendations and reviews.â No problemâthere are top-10 platforms where people leave reviews, and on each of them, our rating should be at least 4.5 or 4.7 out of 5. Or on 9 out of 10 platforms, we should have a rating of no less than 4.7, with at least 1,000 reviews on each platform. How else can you measure PR in terms of perception and experience? You might say, âWeâll ask every client whether they came to us through a recommendation or not.â We want 70% of our clients to come via recommendations. We donât verify this with technical toolsâwe simply ask, âDid someone recommend us to you?â and if they say, âYes, a friend told meâ or âA relative mentioned it,â that counts. Or you might say, âOur PR metric is that when we survey 10,000 people on the street in any city, 9,000 of them should recognize our brand.â If 90% of people know your brand, thatâs a measurable result for you.
When you identify, say, 10-15 growth points for your business and choose 2-3 main ones, then create measurable indicators for each growth point (about 30 indicators for 15 growth points), the next important step is to track these metrics weekly. The point isnât to discover your growth points here and now, but to continuously monitor these parameters in your work, your business, or your project over a long period. When you review 30, 40, or 20 parameters weekly, your thinking will evolve completely within a year.
Whether you run a company with 5,000 employees or a business where youâre the only one, this method opens up a whole new way of thinking. Thereâs a saying that holds some truth, but itâs also a big mistake: focus only on one or two key metrics.
I always say, itâs crucial to know your goal. If you donât know what youâre doing in your professional life, how much you want to earn in salary or dividendsâyou need to know your goal clearly.
But on the other hand, you need to constantly reflect on a wide range of parameters. The more parameters you have, the more your thinking will shift on how to grow and scale.
Focusing on the Right Goals
In todayâs world, it seems like weâre living through some disruptions: weâre bombarded with information everywhere. Everyone scrolls endlessly, watches tons of movies, attends a massive number of events and workshops, and talks about how to learn and grow. But as soon as it comes to regular action at work or in businessâespecially something that involves broadly tracking progressâpeople say, âThatâs not a priority for us, we wonât focus on it,â or, âWe heard at another workshop that tracking one parameter is enough, thatâs the key.â
The reality is that the wider your perspective in business and work, the more youâre able to scale and grow in areas you canât even imagine today. If youâre at a certain point now and you want to move to a new one (which may be illusory), you donât really know what your life will look like at that new point, because youâre a unique individual. To get there and experience joy, success, scaling, and growth, you need a broad and strong perception, based on a wealth of information and knowledge. Your business goals, your growth points, and the weekly tracking of those metrics will give you powerful, scalable results in business and at work.