Law of compounding effect in business
Ayeni Ekundayo ✅
Global Consultant in Digital Marketing, Lead Generation | Reputation Management Expert
In 2017, there was this popular advert titled awaken to what matters by Lipton.
The advert focused on a story about a man who owned a furniture business named Ade Furniture.
He had a son called Sola, the father wanted his son to learn about his furniture business so badly but Sola was focused more on drawings.
Sola’s father asked how he would be involved in the business if he didn't learn, but Sola said that his father would never comprehend.
We were led to believe that after the father and son drank Lipton in the advertisement. The father developed an interest in Sola's drawings, this made him notice how many sketches of furniture his son has created.
They combined at the end of the commercial to form Ade and Sons Furniture Designs. Both the father and the son had won.
I know you're wondering how this relates to the law of compounding effect, so let's move on to how this relates to the law of compounding effect
According to the Law of Compound Interest, when money is allowed to collect for a sufficiently long time, it grows faster than you may expect.
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How might the principle of compound interest benefit your business?
Shola watched his father perform the manual labor of carpentry over time, but as time went on, he became interested in creating a mental image of the craft.
As a result, they were able to communicate with and pitch their potential consumers more effectively, which enhanced their customer relations.
When starting a business, you frequently take small steps that inevitably won't result in the success you hope for. However, as time passes, the law of compound interest kicks in, and you gradually gain more familiarity with the business world.
This is accomplished by perseverance and learning from company failure, which results in the business decision-making process becoming much more strategic and informed.
This leads to a rise in the ratio of your output to your revenue.
Success is not always a singular occurrence; rather, it can be a journey of consistent, continual learning.
Best Regards,
Ekundayo Ayeni
Cash2Asset Ltd; E-commerce and Fintech
2yThat's true but largely depends on how you optimize the accumulation of money. When money accumulates faster than it is channelled into creating values, bulk of the money may go into redundancy; meaning that size of your business or the extent to which your business grows to maximize utilization of the wealth or cash accumulation determines to what extent it compounds.