Stage 5 Scalability: Incremental Value and Exponential Profits

Sometimes business owners get stuck. They are not sure what they can do to grow the business. But most companies dream of becoming bigger and more profitable, and most organizations strive to be better than their competition. How do they make it happen?In Stage 1 of small business success, it’s time to create a strategic plan. Stage 2 requires entrepreneurs to start getting customers and become an expert in the field. In Stage 3, owners must begin delegating essential tasks to senior people, and in Stage 4, systems are created. In Stage 5, it’s time to scale up. Not only must you offer the very best product or service (and that’s no easy task,) but it’s also time to create an authentic brand that has meaning and value that goes well beyond the scope of your offerings. Creating a franchise-type system goes beyond whipping up a logo and a mission statement. A scalable business also has to meet the emotional and psychological needs of their customers. In Stage 5, a company must move beyond products or services and transition into the realm of emotional value.It’s time to think about how the business makes clients feel.

And most importantly, a franchise-type system creates a product and experience that can be successfully replicated again and again.By now, the organization should have a solid team to cover all the bases – sales, accounting, HR, marketing, operations – and the owner simply orchestrates the team in ways that create incremental value. In Stage 5 of Business Success, the owner must stop running the company and start leading it.

Peloton Doesn’t Sell Exercise Bikes

Peloton is an excellent example of a company that has mastered Stage 5. Peloton has only been around since 2012. By 2020, Bloomberg announced that the founder, John Foley, was officially a billionaire. That makes him one of the fastest billionaires in history. Peloton is just one of many companies in the crowded fitness category, but they didn’t do it by selling exercise bikes. In fact, they consider themselves a technology company. They built their success on incremental value. Peloton sells upscale exercise equipment connected to hardware and software that allows the company to stream fitness classes on a tablet affixed to a machine. Some classes are on-demand videos, but many classes are live. And to access the workouts, Peloton owners must pony up $39 per month, on top of the $2,000 initially spent on their bike or treadmill.

Peloton knew that selling really good exercise equipment wasn’t enough to rule the market. So instead, they created a virtual gym. They invested a lot in training and promoting engaging, inspiring instructors (they’re so good that some have become social media sensations.) Peloton equipment includes software that fosters interactive communities who can share aspects of their workout with each other. Peloton created incremental value by marrying home exercise with the motivation and social benefits of a gym. And they created fanatics in the process.

Three Reasons to Love Stage 5

1. ScaleAt this stage, you can grow a business exponentially. With sound systems in place, a strong leadership staff, and well-defined incremental value, it’s possible to successfully expand distribution, open new locations, or even bring in other owners.

2. Better MarginsOnce you create a business with incremental value, you no longer have to match the competition’s low prices

3. Your Business Can Run Without YouWhen a business masters Stage 5, the owner will find that they don’t need to steer the ship every minute. At this stage, an owner can leave for a day (or a month) and find the business continues to run successfully without them at the helm.

Learn More

Want to find out more about the7 Stages of Small Business Success? Take a look at my best-selling book, listen to my podcasts, or book me as a featured speaker at your next big business event. And if you want personalized coaching from an industry leader, contact 7 Stages Advisors for personal assessments, coaching, and recommendations.