Do You Know The Key To GROWING An Online Business?

I have a simple question for you today? Is your business scalable?

A business that is not scalable will rarely, if ever, get you to the financial freedom you desire. Scalability is crucial.

So, what exactly is scalability?

As you probably know, if a business is “scalable” it can sell more product, make more sales, without dramatically increasing its expenses.

For example, the franchise model, like McDonalds or Subway, is difficult to scale. In order to increase their sales, franchisees need to find new locations, build brick and mortar restaurants, stock physical inventory, and hire new staff, just to name a few of the expenses.

It’s a strategy that CAN work, and has worked for many, but it is very expensive.

And when it comes to home-based businesses, you need to beware of a few things that will hold your business back and prevent it from scaling up.

Selling physical products Physical inventory is expensive. You need to order it, pay to have it shipped, warehouse it, and pay to ship it back out. All of this costs money…and man hours.

You can increase your sales only to a point. Eventually, you’ll be forced to rent more space or hire more employees to meet the increasing demand. Very expensive.

Selling low-priced, low-margin products – The difficulty in scaling a low-priced, low-profit product is that greater sales numbers don’t translate to greater profits.

Here’s an example…

Let’s say you sell a $50 product with a $25 commission. If you start out selling 100 per month, you clear $2,500 per month minus what you spent on advertising.

Let’s say your advertising was 10% of sales ($500)…that means you cleared $2,000.

Now let’s say you pump up your advertising and increase your sales by 10 fold. Now you clear $25,000 minus $5000 in advertising…for a profit of $20,000.

Not bad, right?  But keep in mind you had to make 1,000 sales to get there.  Is it easy to do 1,000 sales a month?  Probably not.

But let’s say you sell a $1,000 product with a $500 margin. If you start out selling 10 per month. You clear $5,000 per month, minus what you spent on advertising.

If again it’s 10% of sales ($1,000), you cleared $4,000. On just 10 sales.

Now let’s say you pump up your advertising by 10 fold. Now you clear $50,000 per month minus $10,000 on advertising. That’s $40,000 in profit on just 100 sales.

And the more you scale up, the better it gets.

That’s the power of scaling up with high-profit, high-priced products.

The other reason why you need high-profit, high-priced products is the economics of your business.

Economics really boils down to extracting more money from every customer over the “lifetime” of that customer.

There are many ways to accomplish this. You could do it on the first sale by raising the price of your product. Or you could do it by selling them a lower priced item first and then upselling them to higher priced items later, for example.

But the bottom line is that the more profit you make from each customer, the more you’re able to spend on generating more traffic…and working on getting your sales machine to convert better.

And it’s almost impossible these days to make the equation work with low-priced items.

First, because they’re low priced, you have to sell a lot of them to succeed. Which means you have to pay for a lot more traffic than with a higher priced item.

Second, because you have to sell a lot of them, the transaction costs are higher. Processing, shipping and supporting 100 $10 sales costs more than processing one $1,000 sale.

Of course, selling high-priced products may require a different approach than low-cost products.

One of the secrets to selling high-priced products is one-on-one phone sales.

Right now, there are many great programs out there where they provide a professional sales team for you for free.  So, if you are not a natural sales person, it a lot easier now to profit from high-priced, high-profit products.

Here Is What To Do Next…

The fastest and best way to success is to work with a coach or mentor. This will shorten you learning curve tremendously

For a limited time only, I’m offering you FREE strategy session. I can only take on a limited number of people each month, and I usually have to turn away people, so book now to get your spot before it fills up.

Book Your Free Strategy Session

 

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EdTong

Email: EdTongInc@gmail.com
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