Principles of Building Entrepreneurial Success

Principles of Increasing Returns

Wisdom for Today

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  • Any course on business theory business economics will include a review of the law of diminishing returns. This law states that committing resources to a process to achieve a business objective will typically produce gains up to a point. At some point the gains will peak, and thereafter regardless of how many more resources are added to the process, the gain will decrease and continue diminishing over time.
  • The principle of increasing returns states that for minority and female entrepreneurs, there is a diametrically opposite phenomenon: Their efforts typically will produce little gain for the system until they reach breakthrough, or the first-hit mark. Beyond this first hit, all their efforts produce significant gain that is cumulative and allows the return curve to grow exponentially.
  • The power of this principle is that once you are engaged in an entrepreneurial venture, smaller quantities of effort on your part will start to yield significant gains your business. At this point, your business start to experience explosive growth.   

Wallace, R. (2000), Soul Food 52 Principles for Black Entrepreneurial Success, New York: Perseus Publishing    

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