There was an interesting article in the Wall Street Journal over the weekend about Midwesterner Eric Lefkofsky, a serial entrepreneur, and how he turned $1 million into $4 billion in less than 3 years. The article has a number of tips I think are useful to the small business owner.

Groupon filed for IPO offering as an e-commerce company with a value pegged somewhere north of $20 billion. Eric Lefkofsky was listed as the largest shareholder with 21% of the stock, which would turn his $1 million investment into $4 billion. Groupon offers daily deals on goods and services to consumers in partnership with local merchants. One of my clients has used Groupon for the last 18 months with amazing results – their process works. Groupon is one in a series of start ups for Lefkosky, he has done this before, so he must have something that works well.

One of the most interesting aspects of the article was when he defined his key guiding business principles’ “enter big, fast growing markets; change course when things are not working and use data as your guide”. What portion of this business principle is applicable to your business?

Entering big – fast growing markets
Change course when things are not working
Use data as your guide

What I consistently see with business owners in the Midwest; they don’t change course when things are not working. This happens because most violate the third part of Lefkofsky’s rule, using data as your guide. They don’t have, use or develop good data sources to guide the progress of their company and therefore when the company gets off course, they don’t know it until: 1) the stress builds to the breaking point, 2) they have problems with cash flow, 3) financing issues or 4) personnel issues. Another example for you sailors; the captain of a ship will chart his course on a map and then use a compass and GPS readings to determine the progress on that course to the ships destination. The captain knows continually how he is doing relative to his end objective.

Eighty four percent (84%) of business owners don’t chart a course before they start the New Year, a new month or even a new week. So when the company makes a fatal error, it is hard to detect it until a catastrophe happens. Eric Lefkofsky invested $1 million in 2008 and in the last 2.5 years, he has already sold part of his stock for $300 million to investors before announcing the IPO in which he could make another $4 billion. Sounds like he is on to something here.

Dan Lacy
Growth & Profit Coach, Financial Strategist, Cash Flow Doctor, CEO Mentor
dan@dynastybuilder.com
phone: 765-644-8887

For the last 25 years, we have helped business owners get very good at 3 things: 1) developing the flow of data to guide the business, 2) charting the course for successful growth and 3) identifying trouble before it even becomes a small irritant. If you are frustrated with the performance of your business, contact us for a free, confidential evaluation. We will send you our latest business survey that will give you a very good indication of where your challenges are. It is easy and free.