During my years in corporate finance in the tech industry, we used to talk all the time about the importance of knowing your numbers. When you are managing high growth regional product lines in the hundreds of millions of dollars in yearly revenue, whoever is able to better analyze the massive amount of data that comes attached with these dollars every single day wins the competitive game. Maintaining above average growth rates at scale is no easy feat. Business intelligence matters. “Crunch the numbers until they cry” they used to tell me, and that is what we did.

Last week we hosted a fantastic entrepreneur at the Innovation Hub for a talk, who delighted the crowd with his stories on growth, using creative solutions to overtake obstacles, and learning how to capitalize from the problems you face every day in your journey. While he has been able to expand into a $10M (+) cosmetic laser services company in a bit over a decade, he has operated with caution and common sense, while seeing competitors fail. His advice was plain spoken, almost to the point of seeming obvious. Scaling a resource constrained enterprise in a dog-eat-dog marketplace while weathering a recession is an even harder feat that the one I describe above at the beginning. Our entrepreneur is successful because he knows his numbers intimately. Last week he was able to give out samples of his distilled data potion to all of us who were lucky enough to come see him share his advice.

When your service is asset constrained, like his, you can grow by either purchasing new assets or maximizing the return on the assets you already own. When purchasing new assets is a multi million dollar proposition (specialized laser machines), and your process is linear (you can only treat one customer at a time), what makes the most sense? Increase your hours of service, of course! No one in the industry is doing it? Who says it can’t be done? Change the industry standard, like he did. Welcome to the 12 service hour day for cosmetic laser services.

The increased maintenance cost of running your assets longer will eat the marginal profit you will make from them – most might think. Not in this case! Flexibility in scheduling the high priced technicians required to operate them actually resulted in lower per hour cost of operation that more than offset any added costs of maintenance. For finance geeks like me, the beauty of this is not so much in the intelligence derived from the actual numbers, but in the way our entrepreneur made sense of it all. Paraphrasing what he said, extended hours allowed more people to work at the time when it created the most value for them, balancing the money they made and their personal life demands. More maintenance people also gained the chance to make more money as the work capacity was expanded. He created more value for more workers and their families, and in turn he also created more value for himself and his employees, being able fund the growth of his company, opening up even more future opportunities for everyone.

That is why we stress value creation in our programs. It is, at the end, all that matters. In a non-coercive commercial exchange where each of the two parties perceives a bigger amount of value than what they are giving up in each transaction, value does get created. It is simple, true, and it is refreshing when we find entrepreneurs that still maintain this level of clarity in their thinking.

Our View from the Top – September 18, 2018