Chapter 25
Exponential Curves
By John Counsel
All human progress can be charted on a continuum, the absence of achievement at the bottom and the completed achievement at the top. We're usually found somewhere between the two extremes, working our way upward or sliding backward.
But a continuum on its own can be a fatally misleading perspective in small business. Consider this example.
Let's say that you're starting out in business, and you've set yourself a sales target for your first year of $100,000. You start out at the bottom of the continuum that measures your sales progress (like a thermometer), working your way up to your sales target, month by month. After nine months of battling, you've reached the grand total of only $25,000 in sales for the year with only three months left in which to reach your $100,000 target.
How do you think you'd feel at this point?
If you're like most people, you'll be pretty depressed, and your motivation and morale will take a severe battering. You'll probably feel that the task is impossible that there's no way you can reach your target in the time remaining.
Many people quit at this point.
Yet the truth is you're precisely on target! Keep going as you've been going and you should reach the magic $100,000 in the next three months.
Stop now and try to work out what's wrong with this perspective. Why is it so misleading? You have all the facts in front of you. The target is realistic. There's nothing wrong with your performance so far. It's only this particular perspective that's inaccurate.Why?
Finding the missing dimensionThe key to identifying why this continuum is misleading is to ask yourself what's missing? What does it not show that you had to be told in order to understand it?
The answer's quite simple (like most simple, common sense things that nobody ever sees until they're pointed out).
What are we expecting this continuum to tell us about our progress?
Two things. . . money (our cumulative sales totals for the year) and time (the starting date, the twelve months target date and the dates in between).
But how did you know it was twelve months? And how did you know that $25,000 was the nine months total?
The continuum doesn't tell us a thing about the time involved. Only the money!
The missing dimension is time. We can see where we are in relation to our sales target, but we need to be told the time periods separately. In other words, the continuum only shows us where, not when. (Quantity without quality.)
It's a one-dimensional context that fails to give us enough information on which to base sound, informed business decisions. In the absence of factual knowledge and correct perspective, our emotions take control. This is why we feel depressed and ready to give up.
We need to add an extra dimension time. So let's put the information we have into a two-dimensional context a graph.
The amount of information now available to us is significantly greater. For a start, we see that the continuum we thought was charting our progress was only the vertical axis of the graph. Our actual progress is represented by an exponential curve that more accurately reflects reality.
The main message, though, is that at $25,000 in 9 months, we're right on target to achieve our objective of $100,000 in sales in our first full twelve months in business. The effect of this knowledge on our motives and morale is dramatic. (Exponential!)
Yet the only thing that's changed is our perspective the angle from which we're viewing the exact same set of facts from A to B in this diagram.
In the first diagram, we were viewing this graph end-on (A).
Why an exponential curve?
All human progress is accurately represented by exponential curves learning curves, growth curves, healing curves because of our ability to improve the results we achieve in a given time.
Ralph Waldo Emerson put it eloquently.
"That which we persist in doing becomes easier for us to do; not that the nature of the thing itself is changed, but that our power to do it is increased."
In other words, practice makes perfect. The more we do something, the better we get and the faster the results begin to happen.
Consider what happens when we keep our customers satisfied and fulfilled.
Research shows that one happy customer will eventually result in seven new customers. If those seven are also happy, they'll bring in a total of 49 new customers. It doesn't take long to see the kind of exponential growth this can create.1 > 7 > 49 > 343 > 2,401 > 16,807
Add to this the original customers, most of whom will continue buying from us, and the result is better still, even allowing for diminishing returns from existing customers who move, get married, get sick, die or go elsewhere to buy.
An exponential curve is a much more accurate and reliable perspective when measuring our business growth. It helps us to do the right things for the right reasons.
Taken from
Dont Go Into Small Business
Until You Read This Book!
by John Counsel
Small Business Books 1996
© 1996, 1997 by John Counsel
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