Before You Can Multiply, You Must First Learn to Divide

July 30, 2008  

divide multiplydivide multiplyWhile in Asia, I heard a great expression, “Before You Can Multiply, You Must First Learn to Divide.”  I now find myself using this saying nearly every day.

The idea is that if you want to grow your business, you must learn to partner with others – and give them a slice.  This means you take a smaller slice of a bigger pie.

I have been doing this for a while now with my agent.  He takes a percentage of my business in exchange for handling everything from negotiating, contracting, logistics, travel, invoicing, etc.  I am convinced I make more money through this arrangement…and work less.

I recently had a conversation with a guy who runs a seminar business.  When big name American speakers come to his country, he hosts a public seminar.  His biggest challenge is getting butts in seats.  When I looked at his business model, it was flawed.  He has a lot of fixed costs, like advertising, printing (brochures) and postage.  His customer acquisition cost is ridiculously high, and was often hit or miss.  He could spend $5,000 on a newspaper advertisement and get only three customers paying $300 each.  Even with 50 paying customers, he is still paying a 33% customer acquisition cost – assuming no discounts.  My suggestion was to create a model where others make money only when he makes money.  One example is to set up an affiliate program where he gives a large commission to people who get him paying customers.  This moves his costs from fixed to variable.  This removes his risk while encouraging others to take a vested interest in his success.

Yesterday I was at a board meeting for my local National Speakers Association chapter (I was the President last year and am still on the board).  Over the last two years we spent a lot of time and money on something we call the “Visibility Initiative.”  The idea was to get visibility for our members in order to help them get more gigs.  We spent thousands on website development and marketing.  If we use the “divide before multiply” concept, it would make more sense to get someone to do all of these activities for us.  Speakers bureaus sell speakers to event planners.  They already have the connections and already have websites.  This is their business.  Therefore, if we partner with a bureau (or two), they get their commission for every gig booked and we get greater results with less effort.

When I was on the Donny Deutsch show, a caller asked, “I am the owner of a business.  How do I retain my top talent?”  Donny asked what percentage of the business he owned.  The caller said 100%.  Donny’s response was (paraphrasing), “Wrong.  As of today you own 80%.  Go into the office of your top 10 people and tell them that they are now partners in the business.  Give them 2% each.  They will have a greater sense of ownership.  Besides, this is probably the amount you would have given them as a bonus anyway.” 

Where can you multiply by first dividing?  Where can you give a slice of your business to someone else?  How can you grow your business while creating more income for others?

Leave a Reply

Old Comments

One Response to “Before You Can Multiply, You Must First Learn to Divide”

  1. 7 Ways Innovation Can Recession-Proof Your Business | Business Innovation Speaker and Consultant Stephen Shapiro on October 23rd, 2008 9:16 am

    [...] 6. Before You Can Multiply, You Must First Learn to Divide (bonus tip) While in Asia, I heard a great expression, “Before You Can Multiply, You Must First Learn to Divide.”  I now find myself using this saying nearly every day.  The idea is that if you want to grow your business, you must learn to partner with others – and give them a slice (and a vested interest in YOUR success).  This means you take a smaller slice of a bigger pie.  With the economic downturn, this philosophy is even more appropriate.  People are now hungry for new money making opportunities.  When you help others make money, you make money.  Read more about this powerful, yet simple concept. [...]