"How Do I Scale With No Debt Allowed?"

0:00Solo founder of e-commerce business, gain traction with Muslims quickly, but is on pre-order and self-funded. Religiously, anything tied to interest, loans, or excessive debt is no go. Best way to scale? >> So, the scaling is actually a rate issue. So, as long as you're making sufficient profit with the business, then you should be able to reinvest the profit that you're making into new and additional inventory. The difficulty is just if you let's say you 10x in 1 month, just hypothetically. You would not be able to have sufficient cash flow from the last month's call it profit of sales unless your profit was, you know, insane, which is probably unlikely. Um so, you you you ask a math question, which is that what is the rate of growth that you can cash flow? And what you need to do is basically control your sales to control growth. If you truly have that kind of like product market fit, so that you could say, "Okay, um let's say that our net free cash uh you know, per month is you know, whatever, 20% of of our revenue." It's like, right? So, the max we can grow and let's say that our our uh you know, buying more inventory takes 3 months to um to materialize.

1:14Uh we basically have to plan for 12 weeks out. We can have 20% growth in 12 weeks and then that becomes our kind of uh model for how we need to grow. But, it is solvable. If the question is, um do you put yourself at a disadvantage? Uh the answer is yes, sort of. Because if you wanted to, you could raise money, right? So, that's not debt. Uh it has no interest. You you just sell a portion of your company. I'm sure investing is probably allowed. Um and you sell a portion of your company and then that capital goes into the business so that you can buy more inventory. And so, then you have a partner. And maybe that partner is distribution or they have cash or they have help or whatever.

1:47And so, there are for sure other ways. And so, this is by the way is very common for a business that has a lot of capital expenditure. Not to say that e-commerce is one of them. It is a business that does require capital to scale. But, there are other businesses that require capital to scale. And typically in those businesses people bring on investors so they can get additional cash they can pull the the future forward. Like, for example, if you're like, I want to build a billion-dollar, you know, beverage dispensary, right? It's a very capital-intensive business. And let's say that you're you have one beverage dispensary right now, and you do $10 million top line and $2 million of a profit. There's nothing wrong with that business. And let's say that each each new market you're guaranteed to make that money, but it costs you $8 million to start one, right? So, that'd be a 25% return on invested capital, which is not terrible. It's not great, but it's okay.

2:26And but that would mean that every, you know, 4 years you'd be able to, I guess five with taxes if you had a C-corp. Um you'd be able to start a new location. And that means that And then after that, your rate would double. And after that, your rate would double. Um but it just means that it takes time. So, the only way that you can get around that is that you would raise capital so that you could open up 10 in that first year. And then you basically do the arbitrage on uh how much is my is the time of my life worth uh so that I can trade percentages of my future earnings for more earnings today.

2:56That's the trick. >> If you like this video and you're a business owner who wants to break through your current revenue ceiling, I distilled every lesson from scaling 10 businesses past 10 million and three businesses past 100 million into a completely free scaling roadmap that I've used to go from zero to one, zero to 10, and zero to 100 plus. And so, you can click here and you can check it out. Again, absolutely free. And since you're a business owner, I appreciate you and uh enjoy.