How to Make Your Business Unstoppable

Introduction

• Failure Rate: Two out of three businesses fail within 10 years.
• Success Story: Since 2016, all businesses started by the speaker continue to make money.
• Objective: Outline steps to make a business unstoppable.

Step 1: Stop Selling to Small Customers

• Reason for Failure: Many businesses fail not due to owners, but because their customers are unreliable.
• Example: A gym CRM with high churn due to gyms going out of business.
  • Structural Churn: Inherent in the market structure.
  • Market Choice: Important to choose the right market.
• Chick-fil-A Analogy: Like talent selection in sports, choosing the right "team" in business matters.
• Small vs. Big Customers:
  • Big agencies serve big clients due to reliability.
  • Small customers bring volatility, adversely affecting businesses.
• Shopify Example:
  • Despite being best-in-class, experiences 40% churn annually from prosumers.
• Strategy: Serve large, stable customers rather than volatile small ones.
  • Lower cost of servicing for smaller businesses if chosen.

Step 2: Ask, Not Tell Your Customers

• Paul Graham's Insight: Solve business problems by talking to customers.
• Case Study: Allen, a software company.
  • Initial mistake in targeting gym owners.
  • Pivoted to serving agencies after customer feedback.
• Product Iteration:
  • Rank and Build vs. Elegant Solution models.
  • Two questions for product iteration:
    1. What is the one indispensable feature?
    2. What could be removed without notice?
• Customer Feedback: Vital for improving products and marketing.
• Testing Changes: Implement and observe customer reactions to changes.

Step 3: Don't Pretend to Be Something You're Not

• Quote by Shane Parrish: Success is doing the obvious for a long time without overestimating intelligence.
• Example: Solar company wanting software valuation.
  • Reality: Business type and revenue quality determine valuation, not labels.
• Tech-Enabled Service:
  • Value is in efficiency improvements and customer retention, not in superficial tech labeling.
• Case Study: Treatment center and insurance-based model.
  • Insurance-based model provides stable business but lower multiples.
  • Cash pay model might have better returns due to higher charges.
• Final Advice: Focus on improving your actual business rather than chasing higher valuation through labels. Do what you do well and consistently.

Conclusion

• Foundation: Right customers, iterative product development, and authentic business model.
• Next Steps: Continue building upon these core principles for business success.