Fitness Jargon Changed How I Think About Growing A Business
Putting your business through bulking and cutting ensures measured, controlled growth over time.
A VC once described funding to me as rocket fuel. Put the money in and the startup takes off.
Sure, it’s a simplistic analogy, because if money were all that’s needed then every funded company would take off and dominate their market. We know that funding != success.
However, money does naturally contribute to growth. It allows you to hire sales and marketing talent, build more features into your product, and spend more on ads, which theoretically will translate into growth.
We took on $270,000 in seed capital in 2014, plus about the same amount in an interest-free government loan. That funding was absolutely essential in allowing us the time we needed to reach product-market fit before the money ran out.
Once we were growing organically at a good pace I started feeling pressure, real or imagined, to raise a series A. The proverbial “they” say it’s better to raise funding when you don’t need it. Imagine how much faster you could grow with a couple million dollars in the bank!
It was a tough decision but in the end we decided to turn down some investors. Instead, we did what any other type of business, SaaS or otherwise, does to grow — reinvest profits to fuel growth. What a concept, right?
In the process of doing this, we sometimes get to a point where cash reserves start running low and so we pull back on spending and let cash build back up again. It’s a natural process, but until now, a sporadic one.
I now refer to this as bulking and cutting, a term I picked up by reading bodybuilding literature (Yes, I’ve been hitting the gym and trying to lose the dad bod).
What is bulking and cutting?
The idea behind bulking and cutting is this:
For an ideal body you want to have a good amount of muscle and low body fat. The human body has a hard time losing fat and building muscle at the same time. When you’re losing fat you also lose a bit of muscle in the process. Building muscle back also adds a bit of fat. It’s why most people who do a lot of cardio, like joggers, are thin and lacking muscle, and why powerlifters are usually on the bigger, fatter side.
A way around this is to go through bulking and cutting periods, each usually lasting a few weeks.
When bulking you’re eating slightly more calories than you burn, mostly made up of protein, which helps you build muscle. In the process you’ll gain a little bit of fat too.
Then, once you are ready to start your cut, you’ll eat slightly fewer calories than you burn, which results in fat loss. But in the process you’ll also lose a bit of muscle too.
Rinse and repeat. That’s what bodybuilders and fitness models do regularly to rock their year-round summer bodies.
The human body is in a constant state of change, whether we like it or not. The key is to strategically guide your body so the change is happening in the right direction.
Just like with a business. The world is constantly changing. Markets change. New competitors enter the game ready to out-innovate you. Your business needs to constantly adapt and grow to thrive.
The way to manage change is to bulk and cut.
Bulking for business
When you’re bulking you’re reinvesting profits back into the company to fuel growth. Hiring people. Opening up a new office. Partnering. Rebranding. Launching a new product. Moving into a new market. Whatever is needed for the long term health of your company.
Companies that are near death are less likely to pull off a bulk without raising money — bulking takes cash to successfully pull off.
An example of this is Blockbuster Video. Once they were treading water they were in survival mode, changing their return policies left and right in an attempt to optimize a failed business model. They didn’t even try to launch an online streaming service until 2008, when they were just two years away from filing for bankruptcy protection.
Here’s a more relatable example: When I ran a web design agency I was considering rebranding the company to specialize in a vertical market and becoming a Hubspot-certified partner. But it was too late. We were already suffering the effects of being a generalist agency selling to a small local market, and we needed any revenue we were generating to cover our expenses.
We were in survival mode, and changing your market is a risky, strategic move that requires some cash, patience and stability to properly pull off.
You can only bulk from a position of strength, not desperation.
But bulking also has it’s drawbacks.
Consider the archetypical over-valued, over-hyped silicon valley startup with tens of millions of dollars in venture capital with no clear business model burning money for the sake of “growth” (is VC cash steroids in this analogy?).
While there are occasionally success stories, more often we hear cautionary tales of the pitfalls that come with raising too much money and scaling too quickly, resulting in unfocused products, HR nightmares, and a quickly dissipating runway.
Bulking makes you fat over time, which is why you need to balance it with cutting.
Cutting for business
Bulking is like levelling up your Pokémon.
But once you level up you’re going to have some residual bloat. New hires require training and time to get up to speed. Personalities need time to gel and hierarchies to become established. And yes, there will be less cash in the bank.
A cut is simply pulling back and giving your business time to breath. Go for a few months without hiring anyone. Double down on your new strategic positioning and figure out what’s working. Remove what’s not adding value to the business. Build you cash reserves back up. Rally the troops.
Thinking in these terms ensures that we are being careful and deliberate about how we grow our company and keep Proposify bathing-suit ready.