How to Grow a Business 4x in 36 months

My reputation is built largely on the fact that I cheat.

I openly admit my cheating, but no one cares, because the way that I cheat is not unethical, immoral, or illegal.

I realized in 2017 that Warren Buffet and I do exactly the same thing. Here is how he describes it:

“Ted Williams wrote a book called The Science of Hitting and in it he had a picture of himself at bat and the strike zone broken into, I think, 77 squares. And he said if he waited for the pitch that was really in his sweet spot he would bat .400 and if he had to swing at something on the lower corner he would probably bat .235. And in investing I’m in a ‘no called strike’ business which is the best business you can be in. I can look at a thousand different companies and I don’t have to be right on every one of them, or even fifty of them. So I can pick the ball I want to hit. And the trick in investing is just to sit there and watch pitch after pitch go by and wait for the one right in your sweet spot. And if people are yelling, ‘Swing, you bum,’ ignore ’em. There’s a temptation for people to act far too frequently in stocks simply because they’re so liquid. Over the years you develop a lot of filters. But I do know what I call my ‘circle of competence’ so I stay within that circle and I don’t worry about things that are outside that circle. Defining what your game is – where you’re going to have an edge – is enormously important.” 

These have been my filters for the past 35 years:

1. Do I believe in the business owner? And do I like them enough to give them a place in my life?
2. Has their company been flat, or declining, for the past 3 years?
3. Do I see a clear path to grow them a minimum of 4x in 4 years or less?
4. If we focus 80% of their ad budget on a single media, will that number of dollars allow us to reach enough people with enough repetition to see significant growth in the second half of the first year?

These are the reasons behind those questions:

1. If the business owner is incompetent, I cannot help them. If I do not like them, I do not want to help them. (Yes, I am tragically self-accommodating.)
2. If the business owner has not been flat or down for at least 3 years, they won’t be willing to make the changes I need them to make.
3. If they have no potential for massive growth, there is no potential for me to make massive money.
4. When buying mass media, it takes more money to reach 20 percent of a large city than it does to reach 20 percent of a small one. Is the ad budget big enough to give us a fighting chance?

A business owner and his son spent a day with us in Austin last week. I like both of them and they are obviously good at everything except lead generation. They live in a large city and have been receiving horrifically bad marketing advice for the past 20 years.

They are doing $2 million/year in a town where $30 million would have been easily accomplished if they had started doing the right things just 9 or 10 years ago.

I am now going to share with you a formula that I trust, even though I have never tried to disprove it. (A real scientist would have tried to disprove his hypothesis. I am not a real scientist.)

I have observed this pattern for many years:

1. Anything that works quickly will work less and less well the longer you keep doing it.
2. Things that work better and better the longer you keep doing them always perform poorly in the early months.
3. When you have discovered their untold story, and created a strategy that will work, and launched the right message to their city, the dollar growth you see in Year One will allow you to project with some accuracy the growth of that company for the next two years.
4. At the end of 36 months, you will know if your business owner is tall enough to ride this ride.

This is the math I used when I agreed to help this father and son:

1. 80 percent of their $250,000 ad budget will allow me to reach at least 300,000 people (and possibly as many as 500,000 people) at least 3 times a week, 52 weeks in a row. That means the average listener will have heard their ad 156 times by the end of 12 months.
2. That much repetition among that many people should allow us to grow $1,000,000 in Year One. (Notice that I am tracking dollar growth, NOT percentage growth. If you track percentages, this formula falls apart.)
3. When you know how many DOLLARS your new message has added in Year One, you can count on 2x that many new dollars in Year Two, and 3x that many new dollars in Year Three. Because the longer you keep doing the right thing, the better it works.
4. 1x + 2x + 3x = 6x by the end of Year Three. If 1x is $1,000,000, then we should be able to finish Year Three with a sales volume of $8,000,000 if the business owner is able to maintain their close rate and there are no major disruptions to the economy or to the business category.
5. By growing the business 4x, I will be paid 4x as much money each month for writing their ads. They grow; I grow in lockstep.

That’s how I cheat. I wait, and wait, and wait for a pitch that is in my personal sweet spot, because in the game of ad writing, you are never required to swing at a pitch you don’t like.

Have a great week.

Ciao for Niao,

Roy H. Williams

NOTE FROM INDY BEAGLE: “More Cowbell“ is a famous comedy sketch that aired on Saturday Night Live on April 8, 2000. The sketch depicts the recording of the song “Don’t Fear The Reaper” by Blue Öyster Cult. The sketch stars Christopher Walken as a music producer and Will Ferrell as a cowbell player whose overzealous playing annoys his bandmates but pleases Christopher Walken.

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