Table of Contents
Every businessman wants to have unlimited business growth. We shall understand the scaling up of business with one simple analogy of regions (area), you are serving your customers.
How much area do you want to serve with your business? Many a time people start business keeping this very important aspect in mind. They either plan their business for Society/Village level or City level or State Level or National level or International Level now Universal Level. The last one is a new entrant in this list.
Any business can grow to the extent of your mind. Each business cannot fit in each category, but with time you can either increase or switch over your business. And those who are planning to start a new business must decide their region for scale-up capability.
Local Business
e.g. If somebody wants to start Morning Snacks Business like Samosa, Jalebi, Idli, Vada, or Locha, Khammad; he will start at one corner of town or city. Once setup is done & peoples start liking it, cash will start flowing in. Now after some time that business owner, think of another outlet at another location in the same city. Can he go to the state level or national level? The chances are very less. Because similar types of snacks may not be preferred by other people and also at the same time it’s not easy for a business owner to customize the type of snacks location-wise.
The same can be the case for the transport businesses (trucks), can this business grow out of the city, yes, of course, it can grow. It can grow best up to the state level. But to move out of state i.e. national level, will not be easy.
The levels I am describing here are with respect to no. of customers i.e. from where your customers are approaching to take your product or service.
Global Business
Once the internet is connected to your business to bring customers, your business becomes global. If you are selling your product online within India, then your physical outlet doesn’t matter. Customers can place orders from anywhere in India. Only you need to manage your supply chain. If from the physical outlet, you are providing service to 50-60 people per day, then through online, these numbers can be 5X or 10X, or maybe more.
Let’s take the example of Amazon here, at a very early stage this company was operating within one region in one state, not now it’s operating in more than 100 countries across the world!
Other Example can be MacDonald’s, this business was once upon a time operated at one place, then after making this outlet a successful outlet, it was duplicated at multiple locations. Today this global foodservice retailer is operated and franchised approx. 41,800 restaurants worldwide till 2023.
It’s like, once upon a time you learn one skill and now you are utilizing that skill at multiple locations and harnessing the benefits from all these locations.
Wealth Formula!
Wealth = No. of Unit x Cost per Unit
To create the amount of wealth, either you increase the no. of units sold or increase the cost of your product which the customer is willing to pay.
Now let’s take the example of Samosa, The person in the samosa business can be Lakhpati or with more outlets can be Crorepati (millionaire) but sure shot never an Arabpati (billionaire).
Because this business has a limitation of Unit cost, it cannot be on the higher side, at the same time there is a limitation of making no. of units and timely delivery at outlets in good quality condition.
Another example we can take is Tesla Cars. For the full year 2020, Tesla delivered only 4.99 Lacs of cars to customers compared to 95.28 Lacs of cars by Toyota. And the price range of Tesla Cars in India is ₹ 60 Lacs to ₹ 2 Crores.
Now you can understand the power of Unit cost in the wealth formula. With even fewer numbers and high costs, you can achieve big success. In the year 2020, tesla has become the world’s number-one automobile company.
Time to reach the $100 billion mark (India)!
In recent years, companies market caps are increasing like never before. Once upon a time reaching a company market cap of $10 billion was a big challenge. Now in India, there are six companies having a market cap of >$100 billion & those are RIL, TCS, HDFC Bank, Bharti Airtel, Infosys and ICICI Bank. ICICI Bank is a recent entry in this list.
RIL, founded in 1973, took almost 34 years to reach a $100 billion market cap in 2007. TCS, founded in 1968, took almost 50 years to reach a $100 billion market cap in 2018. Whereas HDFC, founded in 1994, took only 25 years to reach a $100 billion market cap in 2019.
Time to reach the $1000 billion mark (World)!
Now look globally, worldwide reaching a market cap of $500 billion was a huge challenge. Now even $2 trillion is not the limit. (just to have idea, $1billion > ₹ 8000 Cr & $1 trillion = $1000 billion).
The first company to achieve a $1 trillion market cap was state oil giant Saudi Aramco. With this, it was a breakthrough in the market cap limit.
Apple, Founded in 1976, while it took the consumer electronics multinational founded by Steve Jobs, Steve Wozniak, and Ronald Wayne, 42 years to hit $1 trillion in value in 2018, the other trillion dollars came in just two years.
According to data from YCharts, Apple’s market cap stood at $981 billion on March 23, 2020. The company added its second $1 trillion in market cap astonishingly in just 21 weeks even as the world economy grappled with the slowdown amid the Covid pandemic.
To put Apple’s $2.13 trillion market cap in perspective, the company comparatively is now worth around two-thirds of India in terms of annual GDP of $3 trillion and nearly 7X of Pakistan’s $278 billion GDP. Apple is also bigger than some of the leading economies globally in terms of GDP such as Italy ($1.9 billion), Brazil ($1.8 billion), Canada ($1.7 billion), Russia ($1.6 billion), Spain ($1.39 billion), Australia ($1.37 billion), according to the 2019 figures by Statista.
Other than the above two i.e. Apple and Saudi Aramco, there are three more companies in the world having more than a $1 trillion market cap named as Microsoft, Amazon, and Alphabet as of today. So unlimited business growth is very much realistic nowadays.
New Trend (IPO)!
There is also a new trend across the world, if your company is performing well in the segment, then you can plan an IPO. With this IPO, over the night your own value and of course, your company’s value will be in billions of dollars.
We can take reference to Radhakishan Damani (D-Mart Owner, India). In March 2017, D-Mart went public by offering its IPO, under the name of the parent company- ‘Avenue Supermarts’. The IPO was a big hit. Avenue supermart offered its shares to the public at a price of Rs 299 and got listed at Rs 604 after over-subscription and he became a billionaire along with a few other family members.
So in today’s world, it is possible to have unlimited business growth. If your presence is global and you are serving millions with your product or service, your company valuation will definitely cross the billion-dollar mark.
“Strive not to be a success, but rather to be of value.” – Albert Einstein
