In the first part of this article, I showed you how to build a moneymaker — that is, a small B2B service business that solves a problem for large companies and that addresses the three underlying challenges that large companies face. If you haven’t read it, go back and do so now before proceeding.
There’s nothing better than building a small business that grows significantly, does a great job for its clients, employs lots of people, and makes its owners millions of dollars year after year. Well, that’s not entirely true. There is one thing that’s better: to turn that company into a business worth hundreds of millions or even billions to a buyer. That’s a moonshot.
So how do you get there?
Once you’ve built a moneymaker that helps your large-company clients with headcount, technology risk and financing, it’s time to start addressing those challenges yourself. We’ll consider all three at the same time because they are highly interconnected.
Now that your moneymaker has been in business for a while, you’ve got three (or maybe four) things going for you:
- You have a brand and a reputation in your marketplace. Important influencers in your field will listen to your ideas.
- You have deep industry knowledge. Now that you have been working inside your field for a long time, you have deep knowledge of the challenges your industry faces along with the opportunities it offers.
- Your moneymaker has a seasoned team. You’ll be turning to them to help you develop your moonshot.
Oh, and the fourth: Since you’ve been a moneymaker for a while, you probably have much greater access to capital from banks, investors and clients than you did when you started out. You may need that money to become a moonshot.
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So, back to those three underlying challenges that you took on for your large company clients:
- Hiring people so they don’t have to
- Employing new technology and taking on the technology risk that comes with it
- Acting like a bank for your clients by carrying their receivables
Your pivot to moonshot requires developing innovative solutions using your reputation, access, industry knowledge and team (and possibly capital) to discover a way to:
- Reduce your own headcount—likely one of your biggest sources of overhead costs—by developing your own proprietary technology
- Using that technology to attract in a new kind of client: one that’s buying your technology solution, not your company’s service.
- Charging for your solution in real time, rather than billing upon completion of service
Let’s look at an example from one of the entrepreneurs who spoke at our Inside the Mind of the Entrepreneur class at The Norm Brodsky College of Business at Rider University:
Washington, D.C.-based Kitewire Mobility, founded by Jere Simpson, originally developed custom software for its clients, many of whom were government agencies. They would come to Kitewire when they needed a new database or a new app to automate some business process. One day, Jere saw a way to turn his moneymaker into a moonshot. One of his clients needed to monitor the digital activity on the mobile devices of its employees. Jere wondered: Would other companies want this solution as well?
Fast-forward three years and Kitewire no longer develops custom software for its clients. Now it is a mobile application business that allows large companies to monitor the digital activity of their clients for a few bucks a month per device, paid automatically. Here’s the best part: When a new client comes on board with 1,000 new devices, Kitewire doesn’t have to hire any more people! It just spins up a few more servers to support the additional workload.
Gross margins shoot up, labor costs go down, and the total addressable market goes from a few clients to every company in America — even the world. Jere’s business collects its fees in real time automatically.
That’s how his moneymaker became a moonshot worth hundreds of millions of dollars.
As you’ll recall from my previous post, I teach alongside Norm Brodsky at the Norm Brodsky College of Business, and the thing I’ve enjoyed most about participating in this initiative is seeing how students apply the knowledge we share with them in real time.
Remember how these students began to doubt their own entrepreneurial spirit at the beginning of the semester? Well, later on, I’m happy to report that their mood would shift noticeably. After the fourth or fifth story of entrepreneurial high-wire acts, they focus their questions less on the hardships and more on the other parts of these business owners’ stories: the quality of life, the freedom, the creativity and yes, the wealth. They begin to understand that entrepreneurship is a product not of genius (thought that never hurts!) but of passion. And finally, they come to recognize that while the road to success can be rocky, it’s not beyond the reach of anyone with that passion.