Preparing for Takeoff: 3 Real-World Business Tipping Points

Small business owners talk about the moment when their businesses finally pay off.
February 28, 2012

When does a business reach its tipping point? That is, when does the groundwork laid and momentum built finally pay off?

I posed this question to several small business owners who surprised me with their responses. They described business tipping points more as personal epiphanies and less as a critical mass of customer awareness that drives sales. However, these moments of insight led to financial success by inspiring and guiding them to take specific actions.

Prepare for investor interest and customer demand

For Shawn Davis, aka “Chef Big Shake” and owner of CBS Foods, an awareness of new possibilities occurred following the rejection of his pitch to Shark Tank investors. He realized that his business would receive significant publicity when the episode in which he appeared was aired on national television. So, between its taping in October 2010 and broadcast in April 2011, he prepared to hear from potential investors and customers in a variety of ways:

  • Invited industry experts to review and redesign branding including logos and packaging.

  • Ensured that branding was consistent throughout retail packaging, website and social media platforms.

  • Made the website SEO-friendly so that investors and customers could easily locate the company.

  • Defined operational processes to support growth including creating procedures for responding to calls from distributors and figuring out who would manage transportation.

Shawn says that the business was well-positioned for growth, even though it wasn’t completely ready for the interest generated by show’s publicity. Nevertheless, since then, his company has grown from annual sales of $30,000 to being on track to produce at least $6 million in 2012.

Make capital investments

Small business owner Brooke Jackson, M.D., had a series of defining moments in her private practice, Skin Wellness Center of Chicago. Opening the business in 2003 was a personal triumph, which was quickly followed by “professional and reputational success” as evidenced by the volume of referrals from physicians and patients.

Her financial tipping point came about a year after start-up when her accountant advised her to start paying herself. Brooke recognized that though her financial cautiousness was helpful in controlling costs, she needed to invest in herself and her company. Specifically, she gave herself a salary, purchased a laser at a cost of $100,000, and committed to keeping her practice current. Today, Dr. Jackson is a nationally recognized skin care expert and her business is thriving.

Similarly, Amar Panchal and Sonu Ratra, a married couple and owners of the Silicon Valley-based staffing firm Akraya, made capital expenditures to run the business. They invested in CRM systems enhanced with custom applications that synced client and candidate databases, which enabled them to reduce lead times and fine tune the candidate submission process. They also purchased a cutting-edge phone system that improved customer service.

Differentiate the business and promote diversity

Despite early success and growth, Amar and Sonu sensed that they needed to differentiate the business from competitors. They realized that “to stand out, they needed to become not only a preferred supplier to their clients but also an employer of choice for job seekers.”

So, they decided to promote the company’s status as a woman- and minority-owned business to clients, acquired MBE (Minority Business Enterprise) and WBE (Women’s Business Enterprise) certifications, and implemented a diversity business strategy that included speaking engagements and sponsorships. Just as significantly, to attract and retain talented employees, they introduced perks such as free gym memberships and a $5K dream vacation upon completing five years of service. As a result, the company gained recognition for its positive workplace practices, and its revenues skyrocketed.

Julie Rains is a senior writer at Wise Bread, a leading personal finance community dedicated to helping people get the most out of their money. Get daily money tips by following Wise Bread on Facebook or Twitter.

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