Why do markets go up?
When I ask people this question, they always forget the basics. They get caught up in tactics for marketing and lead generation, and they fuss over management styles and team-building techniques, forgetting that all of these activities don’t mean much if the business isn’t oversubscribed. The fundamental truth of economics: the basics of “demand and supply” that you learn on day one of any economics class is what matters. A strong market, a good business plan or a compelling story all help, but ultimately your price is set by the balance of supply and demand. And what’s more, the market abhors a profit.
A profit is only tolerated if demand is higher than supply. Other than your stakeholders, no one cares about your business being highly profitable.
If you tell consumers they can have a cheaper price but the company will lose money and might go out of business, they probably won’t even think twice about buying as much as they can. They aren’t worried about your profit margins; they are concerned about their own budgets.
This is why you’ll only make a profit if you are oversubscribed on your capacity to deliver, and why demand for your stuff must always be greater than your ability to supply it.
The principles of being oversubscribed can be useful across many aspects of your business. For example, if you want to hire top talent, you need to be oversubscribed for top talent. That means that some people need to miss out on the job.
If you want impactful publicity you need to be oversubscribed for people who want the story you have to share, so some news outlets won’t get the story. If you want to sell products, those products need more buyers than supply can allow for — so again, some people will miss out.
Being oversubscribed requires nothing more than a situation where some people who really wanted something had to miss out on having it.
Of course, it’s a difficult situation because you and your company don’t want people to miss out. Naturally, you want to sell to everyone who’s willing to buy, yet that very mindset is what stops you from being oversubscribed.
Lots of people want a Ferrari — but the people at Ferrari aren’t losing sleep over it. They know that the fact that some people have to miss out is what makes Ferrari so coveted. Every product that is oversubscribed has people who didn’t get it, even though they were willing to buy.
If you can get the balance right and keep yourself oversubscribed —disappointing those people who missed out without them losing interest in you entirely, while still delivering remarkable value to those who got through — you’ll have no problems being profitable.
If you want to be oversubscribed you’ll need to get comfortable with some people missing out on what you have to offer. That’s how the market works — and that’s how it determines your rewards.
2 Hour Keynote: Oversubscribed.
Justine Coombe, Australia’s #1 Salesforce Independent Strategist, will be hosting a series of keynote talks for the wider business community shaped around 7 big ideas to automate systems and keep demand higher than supply. There are only 70 seats for the talks, and we’re over halfway booked a week after we announced this event to our inner circle.