What the heck does that mean anyway?
I was at a conference the other day and they were discussing why small businesses more often than not never break the $5 million mark.
The panel unanimously gave the stock answer…
Small business owners need to get out of the way.
That they’re the problem in their business.
I’d heard this answer before and never really given it much thought.
For good or for bad I’d just gone with it.
But this time it was different.
For some reason I just couldn’t let it lie there.
Let’s be honest.
It’s a crap answer.
Seriously — It’s not really telling you anything.
Sure we all get the concept of getting out-of-the-way.
But that’s really just too broad of a stroke to be useful.
It doesn’t really answer the question of.
How am I getting in my own way?
How do I get out of my own way?
How do I know when I’m in the way?
Then a light bulb went on in my head.
It was more like a blinking neon sign that said — OWNER LED.
And then it hit me.
The biggest challenge in a small businesses is that everything is owner led.
Sure a business owner may have somebody that helps out and manages other parts of the company.
But at the end of the day “you” the small business owner control everything.
You for all intent are…
The center of the universe.
And therein lies the problem.
It’s been called the curse of the small business.
That sub $5 million dollar a year business that stagnates.
Aimlessly drifting in the $1 to $4 million dollar revenue range.
Why is that?
Maybe it’s complacency.
Maybe it’s experience.
Maybe it’s just mindset.
Maybe it’s all of the above.
Still, when asked — many business owners want to grow their business.
They want to go big.
They’re not happy in the 1 to 4 million dollar range.
It’s too much work.
Honestly — A sub $5 million dollar business is still a lifestyle business.
Built by you.
And nobody else.
Sure some owners offer benefits and some offer perks.
But at the end of the day your business is about you and for you.
And there’s nothing wrong with that.
On the flip side.
If you want to build a legacy business.
If you’re fine with disrupting your universe.
If you want to ensure not only your future earnings but those of the people who believe in your dream…
Wouldn’t it make sense to go bigger?
I’m not trying to sell you anything.
I’m just sharing a pathway.
Gleaned from many years of working with small businesses and startups.
So how do you get away out of the way?
WHY GO BIG?
Getting to the next level is all about increasing sales and operations.
You have to sell more and deliver more.
This usually means more people and more process.
Scaling isn’t easy.
But going up a few rungs on the ladder ain’t bad for your business.
Your long term prospects improve in relation to your revenue level.
A $5 million dollar a year company is valued differently than a $1 to $2 million dollar a year company.
Leaving out the idea of an exit plan which is some people’s game…
I just want to say…
Having been there.
The air is so much better at the $5 million mark than it is when you’re running under the $5 million line.
SO WHY GO BIG?
Isn’t small okay?
Let me just say that — small is okay.
Having a lifestyle business is okay.
A lot of business owners are fine with having a million dollar a year business.
To them, I wish them the best of luck.
I wrote this book for the small business owner that wants more.
More specifically the small business owner who wants more and isn’t getting it.
For whatever reason.
Being sub $5 million is scary for me.
Your business can be wiped out by economic conditions and changes in the market.
Your business can be relevant one day and a dinosaur the next.
Growing your business to the next level can afford you the ability to shift if needed.
To have the resources to turn the tide.
If can afford you the ability to diversify and enjoy longevity.
I guess you would be reading this book if you didn’t want to grow.
But in the end. It’s a decision you make.
If you’ve decided to grow then let’s go.
It won’t be easy.
But it will be worth it.
The first thing you need to do is commit to helping others.
Then you need to take a big stick and whack your ego over the head.
At least 2 or 3 times.
It can’t be about you.
You’ve got to get rid of the lip service to yourself and really do it.
I don’t even know if humility is the right word here.
It’s more about being selfless and caring for others.
Genuinely caring for others.
I don’t know if that’s even a first thing.
I would think the first thing would be to have a dream of what that super business looks like.
If you can’t see yourself bigger than you are — really — if you can’t see yourself bigger than you are right now it’s kind of hard to start.
I suppose you could believe in something?
Let’s just start with that.
BELIEVE IN SOMETHING BIGGER THAN YOURSELF!
A business — bigger than yourself.
If you can believe that and I mean really believe that — then you’re ready.
I’m not going to get into vision.
That’s a given.
If you don’t have vision.
Stop reading and figure that out first.
If you’ve got vision then let’s continue.
YOU NEED LEADERS
The second thing you will need is to surround yourself with experienced people.
People that have built bigger businesses than yours.
Yep, that means you’re going to have to hire some professionals.
No one said this would be easy.
You will need someone that runs sales and someone that runs operations.
Yes, 2 people.
If you can’t afford them then hire advisors to be on your board.
At least until you can afford them.
Tip — There are a few good books I’d recommend on hiring.
Who: The A Method for Hiring — By Geoff Smart and Randy Street
The Ideal Team Player — By Patrick M. Lencioni
These are great books that can teach you how to hire and manage the leaders who will become your Executive Team.
I would highly recommend picking them up.
NO MORE OWNER LED SALES
Third, stop with the owner led sales.
Note — If you’re under $1M.
You shouldn’t do this.
Just being realistic here.
Some background on “owner led sales” to clarify the term.
When you start your business it’s just you.
So you sell.
The issue here is that you don’t scale.
No matter how you slice it.
You don’t scale.
People don’t scale.
Owner led sales means you sell you.
Sure you’re selling your company and all the great things you do.
Well not really…
You’re just selling you + stuff.
And you + stuff doesn’t scale.
You’re going to need to stop doing owner led sales.
There’s one caveat here.
You still may need to be involved with large deals where owner involvement is necessary to ink the deal.
But that’s not owner led sales.
That’s owner involved sales.
LEARN TO LEAD
Fourth, you’re going to need to learn to manage professional managers.
Tip — It’s not like managing your staff.
Once you hire someone to run sales and someone to run operations you will need to know how to lead and manage them.
Here’s the key.
Hire people that can manage up, sideways and down.
Remember — you don’t know how to grow more.
That’s why we’re at the get-out-of-the-way phase in your business.
If you hire right — your leaders will help you to lead them.
What a novel thought!
So yeah, now back to building a leadership team.
A good leadership team means you’ll be paying over $100,000 per year per person plus benefits.
With dollars like that, it’s worth your investment to make sure you lead properly.
One last note on leadership.
Let your leaders lead.
No Seagull Management.
No Micro Management.
No Matrix Management.
INVEST IN YOUR FUTURE
Fifth, You should provide your 2 leaders the ability to earn equity in your company.
Remember, these are the people who are going to take you past the 5 million mark and beyond.
If they can’t share in the success with you they won’t help get you there.
How much should you share?
5% to 10% per person depending on your business and comfort level.
Tip — Additional investments will be required in systems and tools for your leaders to operate.
Think business, CRM, sales and marketing systems.
With your team in place you’ll need to analyze the business and build a budget and a cost model you feel comfortable running with.
Last but not least.
Run on your own dollars.
While you may need to pull in some personal funds or take out a line of credit.
Only use those as a last resort and for calculated moves.
You should be able to fund the growth using your own dollars.
If you can’t run on your own dollars then review your expenses.
If you’re not profitable stop here.
You need money to fund growth.
You may need to re-work your business model.
Whatever you do.
Don’t borrow money to pay salaries.
BUILD A PLAN
We’re up to number 6.
Now that we’ve gotten the hiring out of the way — you need a plan.
The team you’ve hired should be capable of developing a plan.
If not, then go back to hiring and redo that step.
For both sales and operations your team should be able to develop a plan that covers the people, process and systems needed.
This very likely won’t be a large detailed document.
Expect more of a basic business plan that gets you on your way.
Tip — A great book on building a plan is Scaling Up by Verne Harnish. In his book Verne lays out the One-Page Strategic Plan (OPSP). This is a great starting point.
Tip — Your initial sales team should use Aaron Ross’ Predictable Revenue as a model. If your new VP of Sales isn’t on board with that. Get another one.
Developing these plans will require input from you and from your staff to enable your leaders to fully understand your business, what you sell and how you deliver your service today.
The easier your value proposition and service delivery model is — the faster you’ll have a plan.
It’s important to understand that how you’re doing things today very likely won’t scale and will need to be modified.
Be open to change.
In some instances be open to a lot of change.
This is usually a big sticking point for business owners.
Remember the part where I said take a hammer and whack your ego over the head?
It’s time for that.
Passion’s will flare.
Like I said before…
To scale you need processes that are simple and fluid.
This applies to all areas of your business from sales, to service delivery to finance.
Be ready and open for the change.
Once you have your plans ready you’ll need to map them out onto scorecards.
The concept of score cards are described in the book Who?.
And in the book Scaling Up.
Basically the concept is as follows.
Collaboratively come up with a 1 year plan.
Define the steps to get there.
Put those steps on your management team scorecards.
Then manage them monthly.
There are online tools like Align located at https://aligntoday.com that can help manage your scorecard.
You can also use tools like wikis or project management apps to track your scorecards.
Once you have scorecards in place you’ll need to meet at least twice a month as a management team to review them.
This helps ensure accountability and helps to make course corrections when needed.
The first monthly meeting is to review the plan and to make sure you’re on target.
The second monthly meeting is to make sure you made the goal and to review the next one.
Having a plan and tracking your plan will set you on the path to success.
IT TAKES TIME
So how long does this all take you ask?
Well it depends.
The reality is that it takes time to build the machine.
Building a proper sales engine will take at least a year or so to get up to speed.
Building operations can take 2 to 3 years.
It’s just what it takes.
It’s unrealistic to think that things will just happen overnight.
Things take time.
Each 90 days you should see progress in sales and operations.
Each year should be better than the last.
It’s the trek up the mountain to that $5 million dollar view.
Rome wasn’t built in a day.
Neither was Facebook, Google, Apple or Amazon for that matter.
SO WHAT DO I DO?
So what do I do?
One of the biggest reasons small businesses don’t grow is because the owner gets stuck.
They’re not sure what to do.
Now I know it’s scary to hand the reins of your business to other people.
To trust someone else.
The funny thing is that trust is built into this whole process.
Accountability is your agent.
It’s working for you.
By following the plan laid out in this book you’re building a system that engenders trust.
So with the system in place you’re now still left with the question…
SO WHAT DO I DO?
Here’s the answer.
With leadership in place you can now take your role as the spokesman and leader of the company.
This means speaking, networking and getting involved in your community.
You are now the spokesman for your business.
Master the role.
Position yourself within your community or market as the subject matter expert and thought leader.
This will be the key to your company’s success.
Nobody knows your business like you do.
No one is more passionate.
That passion and experience goes a long way now that you’re the brand spokesman.
Next, learn about your sales and operations.
Just because you have leaders in place doesn’t mean you’re not in the know anymore.
On the contrary.
You should learn, discuss and be able to articulate your sales and operational processes as part of your role.
Have you ever watched Mark Zuckerberg or Tim Cook talk about their business.
Yep, be like them.
Fluent and knowledgeable on the inner workings of their business.
Obviously there’s more to do than just be a spokesman.
There’s being a leader to your new leadership team.
You have to want this more than anyone else or it won’t work.
If you want to grow your business past the $5 million revenue mark you’re going to have to specialize.
You’re going to have to delegate.
And you’re going to have to lead.
If you skipped ahead shame on you.
Ha ha, just kidding.
I would have done the same.
Here’s the plan in a nutshell.
Believe in something bigger than yourself
Hire a leadership team — Sales and Operations
Stop with the owner led sales
Learn to lead leaders
Share equity and invest in your future
Develop — Sales, Marketing and Operational Plans
Implement a Scorecard system to keep score
Remember it takes time so plan on 3 to 5 years to goal
Own your new role as CEO and spokesman for the business
Obviously there’s more to this plan than meets the eye.
Proper execution requires commitment, discipline, execution and a little bit of luck.
Still, there’s no reason you can’t pull this off.
But before you get going here’s one final thought.
ONE FINAL THOUGHT
If you don’t think this plan will work — that’s fine.
If you think I’m nuts — that’s fine.
If you have any doubts know this.
I’ve ran these plays before and they’ve worked.
I want to help your small business grow.
More importantly — I want to help small business owners grow.
There’s a great big world out there waiting to be had.
I’m just a guy with a plan.
Granted — A proven plan.
I’ve given you the recipe.
You just need to add the water now.
Godspeed on your journey to $5 million.
ABOUT THE AUTHOR
Ever since he was a 16-year-old entrepreneur, Rob Leon has understood the power of operations and how it can make or break a business.
Not only have Rob’s past businesses benefited from his experience, he has also helped a diverse array of companies successfully improve their people, operations and products. As a recognized leader in his industry Rob has grown companies from 1 million to over 20 million in annual recurring revenues.
Today his company Connections for Business helps businesses in the South Florida market get the tech right in their business. They do this through applying the principles and practices outlined in this book.
Rob lives in sunny Hollywood Florida with his wife Maggie. He’s passionate about operations, technology, marketing and music. When not building the next great business… he’s writing, recording and performing music.
This book is for business owners that are stuck in the one to $4 million range. It’s for people who want to grow their business and don’t know how. It is written for people with an open mind.
Who this book is not written for. Solo entrepreneurs, businesses that are happy with just being small and lifestyle business owners. Being a solo entrepreneur or lifestyle business owner is a great thing. I tip my hat to you. But that’s not who this book is for.
There are tons of great books on running a company, operations, management and leadership. If I could only recommend 5 books to you it would be these 5.
Who: The A Method for Hiring — By Geoff Smart and Randy Street
The Ideal Team Player — By Patrick M. Lencioni
Scaling Up: How a Few Companies Make It… and Why the Rest Don’t — By Verne Harnish
Predictable Revenue — By Aaron Ross
Get Out Of The Way by Rob Leon.
Copyright © 2018 by Rob Leon. All rights reserved.