Carl Gould business blog. A serial entrepreneur, author and speaker, by the age of 40 he had built three multi-million-dollar businesses. His coaching and consulting methodologies are in practice in over 35 countries.
This all came about after owning his first 2 businesses and realizing he would love to help people the way his business advisor had helped me. At the time a comprehensive coaching strategy system did not really exist in any organized way. This blog seeks to impart years of experience and business growth advice.
He began by donating over 1,000 coaching hours to those in need ranging from the homeless, military personnel, assisted living and nursing home recipients to students and emerging entrepreneurs. That not only aligned with his philanthropic values, it also helped him hone my skills as a pioneer and thought leaders in the coaching and professional services sector.
In 2002 he founded 7 Stage Advisors a Business Coaching, Mentoring, Performance Training and Growth Advisory company. Since then they have trained, certified or accredited over 7,000 Business Coaches and Mentors around the world. Methodologies have been integral to his clients becoming award-winning companies, many of them making the fastest growing list of both local and national publications, notably the Inc. 500 | 5000.
Find Ways to Reduce Risk to Get More First-Time Customers
Anyone who owns a business knows that getting first-time customers isn’t
easy. That’s because every purchase, big or small, represents a risk. In fact,
no matter how good, valuable, or inexpensive your product is, it’s risky. And
people don’t like risks.
On the other hand, we know that consumers make first-time purchases all
the time. We also know that people try new things to obtain well-established
benefits such as increased status, less cost, more convenience, or better
quality. But getting a customer to switch isn’t always easy. Unless your
customer has a self-identified paint point (not cool, too expensive, poor
service, unreliable), they will stick with the choice that is “good enough for
The secret to getting new customers–lots of them–is to research what risk
your product represents and then find a way to eliminate or compensate for
Reduce Risk With Trial Offers
One way to reduce risk is to motivate trial. Instead of requiring a customer to
buy all of your product or service, let them try a little bit. These bite-sized
offerings present less risk, are usually less expensive (or free), and are an
effective way to reduce the downside of purchase.
Sometimes bite-sized offerings come in easy-to-identify packages, such as
free samples, limited-time offers, discounted first purchases, or trial-sized
products. Reducing the risk by paring down the purchase size minimizes the
barrier to trial.
Digital businesses are well-versed with the benefits of trial offers. Before
committing to a paid package, the company often allows people to sign up
for a week or a month. Mailchimp, SEMRush, QuickBooks, and many
business software companies use this model. Then, users can try out the
features to see how easy they are to use and figure out how they work with
Free at First
Sometimes you must remove every obstacle to get people to try. That’s why
more and more companies, especially new services, give people something
for free at first. Some of the most innovative businesses around offer free
trials. Are you considering getting Netflix, Hulu, Amazon Prime, or YouTube
TV? Sign up for a free trial first. You’ll get 30 days free, and you can cancel
anytime. Of course, you give them your credit card before you get your free
trial, and it’s up to you to remember to cancel. Easy to try. Easy to buy. But
maybe a little harder to cancel.
Eliminate Risk With Samples
When it comes to hard goods, customers also struggle with the risk of trying
a new product or service. And this is especially problematic in the DIY world.
The painting industry has created many creative approaches to make people
feel more comfortable with their options. Benjamin Moore has done a great
job of allowing customers all sorts of trial options, including paint sheets and
trial-sized paint samples. Others soon followed. Sherwin Williams now offers
9”x 14.75” peel and stick sheets. And most big box stores now sell eight-
ounce paint samples made to order.
For some large ticket items, it’s essential to get the customer to try early so
they can create lifelong commitments. That’s why bite-sized offerings also
work well in service industries. For years, banks have offered free checking
accounts to attract new customers, who are later offered bank loans, savings
products, and investments. The banks work on getting customers in early.
They sacrifice smaller, immediate profits in favor of lifetime value.
In another example, over the past few decades, healthcare systems across
the country have spent a lot of time and money developing top-notch
women’s and babies’ centers, based on the realization that births are often
the first time adults interact with a hospital. If a couple has a good birth
experience, they are more likely to return to the parent system for other
Tiered Offerings: Good/Better/Best
One of the most effective ways to draw in new customers is to create well-
defined tiers. These allow clients to choose their risk level while creating the
groundwork for the most premium offering. Airlines are a classic example of
the effectiveness of tiered offerings. Most flights offer economy (good),
business class (better), and first-class (best). First-class often costs hundreds
more than economy class. The airlines constantly tout the value of their top
tier, even forcing economy passengers to walk through the spacious first-
class cabin to get to their seats.
In recent years, the airlines devised their own version of the trial offer. If
first-class seats aren’t sold out at the full price, airlines often offer every
passenger the ability to upgrade when they check in, sometimes for less
than $100. This offer is removed once the first class is full. Offering upgrades
for unsold seats encourages more people to enjoy the luxuries of the first-
class experience, eventually persuading them to buy top-tier tickets.
Ready to Develop Your Own Risk Reduction Offer?
Trial offerings, free-at-first deals, and bite-sized offerings are all around you.
So take a look at your industry with a fresh eye. Which offerings do you need to create to attract first-time buyers? How can you reduce the perception of risk? Which small purchases make customers aware of your upscale offerings? Are estimates or seminars part of your trial offer? What are your company’s good/better/best options?
With a bit of time and creative thinking, you’ll be able to use find options that reduce initial risk and drive more people into your sales funnel. And once that happens, it becomes much easier to grow your business.
How Owners Can Love Stage 5 of Business Success
When helping businesses find ways to grow larger and more profitable, I start by analyzing the company’s current stage. If they are in Stage 1, it’s time to create a strategic plan. If they are in Stage 2, the owner runs the organization and becomes an industry leader. In Stage 3, it’s time to start delegating essential tasks to senior people, and in Stage 4, systems are created that allow the owner to scale their workforce.
By Stage 5, many owners are a little bored. Some want to make major changes. They might wish they had the next big idea to catapult the company into the big leagues. And that presents a risk. The complacency or boredom that sets in at Stage 5 can also drive the founder to lose sight of the things that made the firm successful in the first place.
So resist the impulse to disrupt a reliable revenue stream or sacrifice dependability. Instead, work on ways to build on past successes. This is the time to create a franchise-type system. That means that instead of focusing on the nuts and bolts, the founder will spend time building an authentic brand that has incremental meaning and value. Innovation at this stage is not about what you do; it’s about how customers perceive you.
Get in Touch With Emotional and Psychological Needs
Building a brand involves finding more powerful ways to meet your customers’ emotional and psychological needs. It’s time for the business to grow beyond making or doing.
Meeting needs beyond delivering goods and services is a way to create emotional equity. Once you do that, you’ll be able to transition into a franchise-type system that replicates an experience, again and again, no matter who is leading the company, no matter who is selling the product, and, for many companies, no matter where you do business.
What Does Franchise-Type Business Success Look Like?
There is a long list of companies that added emotional equity to their offerings and were able to expand as a result. The stronger the emotional equity is, the further that equity can be stretched or applied to other divisions.
Whole Foods started in 1980 with just 19 employees at one location in Austin, Texas. In 2017, Amazon purchased Whole Foods for $13.7 billion, a purchase price that well exceeded the value of the stores and distribution. Amazon openly admitted it was paying for the value of the brand. Whole Foods developed a meaningful experience that they could recreate at the location after location until eventually, the experience became more valuable than the sum of its parts. Their emotional equity turned out to be worth billions.
What about stores that don’t have retail outlets? The same principles apply to mail-order exercise equipment (Peloton), airlines (Southwest), entertainment (Disney), packages (FedEx), and the list goes on.
Why Owners Love Stage 5
It’s not always easy to reach Stage 5, but once the organization is ready to scale up in this way, something magical happens: the owner no longer needs to steer the ship every minute.
With systems in place and brand-building efforts in progress, it’s now possible for the owner to leave for a day (or a month) and return to find that the business ran successfully without them. The firm no longer relies on the passion and push of one person.
Stage 5 also offers the chance for better margins. Again, think about the Whole Foods example. When it started, competitive pricing was a challenge. The store needed to be priced low, or it would lose business. Fast-forward to 2017; Whole Foods was nicknamed “Whole Paycheck” because it was a pricy place to shop. But that didn’t keep people away. Why? Because even in price-sensitive industries, businesses with incremental value don’t have to match the competition’s low prices.
Finally, Stage 5 is the time to grow exponentially. With solid systems in place, a strong leadership staff, and well-defined incremental value, it’s possible to expand distribution quickly, open new locations, or even bring in other owners. How fast and how high is up to you.
Want to Learn More?
Want to find out more about The 7 Stages of Small Business Success ? Take a look at my best-selling book, listen to my podcasts, or watch for me as a featured speaker at your next big industry event. And if you want personalized attention to help you solve your company’s unique challenges, contact 7 Stage Advisors for assessments, coaching, and recommendations.
Which Kind of Fish Does Your Business Need to Grow?
When it comes to categorizing employees, you can use all kinds of
organizational principles such as sorting by department, by seniority, by
team sizes, by tenure, and more. But many firms overlook another important
categorization: muddy fish or clean water fish.
Every employee can be categorized into one of these two categories. One
isn’t objectively better than the other. In fact, both types are great when
they’re in the right job. That’s why it’s so important to understand how and
when these two different personalities meet the needs of your business in
every stage of growth.
What are Muddy Water Fish?
Employees who do well with ambiguity are Muddy Water Fish. They do best
when the waters around them are murky. These staff members embrace
uncertainty, solve problems as they go, and move forward comfortably even
if they can’t see the way.
Muddy Water Fish require a particular environment in which to thrive. They
don’t like a lot of rules or dress codes. They can take an idea and run with it,
so they don’t need much structure. In fact, regulations and processes often
slow them down, and they know it.
Muddy Water Fish are able to drive rapid growth in the early stages of a
company’s development. They work independently, and they don’t need
much infrastructure to excel. But as your business grows, their working style
can become disruptive. A firm full of Muddy Water Fish might be innovative,
but it will have problems scaling up.
Muddy Water Fish will be important in Stage 1 (Strategy), Stage 2
(Specialty), and Stage 3 (Synergy) of Business Success. But they can
present a challenge in later stages.
What is a Clean Water Fish?
Many employees fall into the category of Clean Water Fish. These folks want
to be able to see what’s next. These process-driven individuals work best within an established framework. They need order and goals, and don’t do
well with ambiguity.
Clean Water Fish work best in mature companies with well-developed
processes. They want direction and appreciate evaluations. This type of
worker wants contingencies for every eventuality. And importantly, they
work well in large groups.
While Clean Water Fish often show up early in process-driven departments
such as accounting, they are rarely present in large numbers in a firm’s early
days. In the first stages of a business’s growth, the Clean Water Fish’s need
for organization stresses them out. They swim towards order, stability, and
continuity. They shy away from risk.
Clean Water Fish might be especially helpful in Stage 4 (Systems), Stage 5
(Sustainability), and Stage 6 (Scalability) of Business Success. But they
may slow down progress in earlier stages.
Are There Any Downsides to Muddy or Clean Water Fish?
Muddy Water Fish may create a cloud of muck to protect themselves from
scrutiny and potential dangers. Confusion or obscurity can be a form of job
security for this type of employee, so they won’t always play nice with
others. It’s also common for Muddy Water Fish to resist attempts to create
processes, regimens, and order.
Clean Water Fish come with their own set of challenges. They feel vulnerable
and insecure without processes in place. They aren’t always good at taking
leaps of faith. They get upset if others “break the rules” or if exceptions are
made to established procedures. Their need for order can trigger chronic
procrastination and become a barrier to progress.
Business Owners Start as Muddy Water Fish, and Transform into
Clean Water Fish
While it’s easy enough to categorize employees, this analogy also applies to
business owners. In the early stages, most entrepreneurs are Muddy Water
Fish. Founders must be flexible to adapt quickly to a variety of market
situations. Comfort with uncertainty is a requirement.
In a firm’s early days, the focus is on sales and growth, not checks and
balances. As a result, entrepreneurs usually surround themselves with other
Muddy Water Fish who are also comfortable with a startup environment.
However, to transition a firm to the next level, the founder must transform
into a Clean Water Fish. Eventually, owners must say goodbye to the
startup’s short-term vision and reliance on intuition. Scaling and stability
require systems, checks, and balances. It’s a common issue in company
growth. If the owner doesn’t transition from the invention mindset to a
process-driven approach, their own support teams will eventually view them
as a liability.
There is a Place for Both Types in Most Organizations
Once a business has a steady revenue stream, it’s time to put systems and
processes in place, which means it’s time to clean up the water. As the
business morphs from a scrappy startup into a going concern, it’s time to
staff the growing enterprise with Clean Water Fish who see the vision,
embrace the processes, understand cooperation, and want to create
But don’t get rid of all your Muddy Water people. While most won’t do well in
the new world of systems and processes, some still have a place in the more
fluid environments that continue to exist in areas such as sales and
Every well-established, successful firm has areas that demand order and a
few pockets of ambiguity that require more flexible employees. By
understanding the fundamental differences in working styles, you can stock
your firm with the mix of Muddy and Clean Water Fish that help you meet
Once the Strategic Plan is Done, It’s Time to Conquer Stage 2; the Specialty Stage
Some entrepreneurs want to wait until everything is finalized
before they dip their toes into the actual startup. Others are
more comfortable with ambiguity. But the fact is, no matter
how much you plan, there will be a lot of surprises in startup
But creating a plan, and sticking to it, is how most successful
companies manage to grow in predictable ways. As most of
you know, I call these the 7 Stages of Business Success.
The first stage is planning and development. And once you
have just one paying customer or client, the company
catapults into Stage 2, the Specialty Stage.
Once the company has made a single sale, the owner has
officially created a job for themself. That initial sale pushes
the enterprise out of the concept stage and into the tasks
and to-do list phase. It’s time to run a real business.
Stage 2 is the Time to Build a Reputation
In these early days, it’s time to hone your skills and become
known as the best in your industry. So look around and study
your competitors. How can you be more knowledgeable,
additionally certified, better qualified, or a cut above the
In Stage 2, the owner needs to work out the most effective
ways to be seen as the best choice. Credibility is essential for any business’s long-term success, but it’s also critical for
short-term profits. After all, you’re the new kid on the block,
and you have a lot to prove. You are the leader of the firm, so
you must be superior just to keep up.
Don’t dismiss the value of accreditation. If you need to get
certified or take classes, do so. Make sure you have the
highest professional credentials available. Whatever is
required to be considered highly proficient, do it now.
For some business owners, that will mean taking more
classes or acquiring new initials for their titles. But some
entrepreneurs can use exceptional experiences as proof of
superiority. For example, if you’re a former Olympian opening
a gym, promote your story as a unique qualification. The
same principle applies to an ex-White House housekeeper
opening a cleaning service or a plumber who apprenticed at
the Empire State Building. If you’ve encountered special
events or challenges that make you better suited or more
experienced, your customers should hear about it.
This is Also the Stage to Get Obnoxious
Lately, I’ve been talking a lot about obnoxious offers (it’s the
topic of my next book). When a business owner thinks about
what customers want–that no one else is bothering to give
them–and then figures out how to deliver on those needs,
that’s an obnoxious offer.
Stage 2 is the perfect time to develop your own obnoxious
offer. After all, you probably already know what your
competitors are doing wrong or what your customers wish you would do. So why not find a way to address these unmet
For example, in my first business, a commercial landscaping
company, I discovered that missing deadlines could make my
clients lose money. That’s why I created a premium package
that guaranteed on-time completion and included a one-year
warranty. For a 30% premium, I would ensure the job would
be finished on the agreed-upon date. No excuses. I took some
risks to offer this guarantee, but my customers loved it and
lined up to pay more.
I also got a lot of business based on a much smaller promise–
all calls returned. Many guys didn’t bother returning calls, so
people were impressed when I returned every call. That
simple promise was a foundational part of creating a million-
Obnoxious offers are ways of telling people you are the best.
Think about the factors involved in your customers’ purchase
decisions, identify a real pain point, and remove it. Every
business is different. But if you eliminate frustrating barriers,
you’re way ahead of the game.
Is Stage 2 Where Your Business Wants to Stay?
Some people like to stay in Stage 2 and maintain a hands-on
role. They remain both the owner and the star of the show.
Other entrepreneurs move on to other business models. One
is not necessarily better than the other; both strategies can
be wildly profitable.
For example, Billy Joel is still in Stage 2 of his business model.
He is the star. Who wants to attend a Billy Joel concert with no Billy Joel? If Billy Joel sourced his job out to another
musician, the value of his recordings and concerts would
plummet. In this model, when Billy Joel stops performing, he
essentially closes his business. If he wants to continue
making money, he will need to change his business model in
ways that don’t depend on his personal and ongoing
You may think that all music acts have to be a Stage 2
business, but that’s not necessarily so. Mannheim
Steamroller is a set of musicians, run by a management
team, who can play worldwide, sometimes in two or more
locations at once. No one pays to see a particular musician.
Instead, concert-goers pay for an experience.
Understanding Business Stages Helps You Grow
Understanding how businesses grow and what’s critical to
improve in each stage puts your business on the path to
predictable growth. For more information, check out my
book, The 7 Stages of Small Business Growth . This
volume explains how businesses expand, ways to manage
development, and how to sequence growth in ways that
maximize momentum and profitability. Or email me
at [email protected], and let’s talk.
Housing Sales are Hot, but is this Also a Good Time to Sell a Business?
There’s no doubt about it. We are in a very hot housing market, but is it a
good time to sell a business? Most indicators point to an attractive business
sales market as well. After months of operating in a “wait and see mode,”
many private equity groups and investors are ready to spend. Not only is
there pent-up demand, but potential buyers are eager to take advantage of
low-interest rates. This combination may make this a great time to sell your
However, market conditions are only one reason to sell a business. But if the
hot market has made you think about putting your firm up for sale, you’ll
need to prep to get the best offers possible.
The sale price of your organization can vary based on a range of factors.
When buyers evaluate a firm, they want to see a productive culture. A strong
company must have sustainable systems in place. Buyers are also interested
in the history of expansions, if there are multiple locations, the possibilities
of franchises, or the presence of affiliate programs. And, of course, a
business needs to demonstrate a history of steady or growing sales.
When You’re Getting Ready to Sell, You are in
Stage 6: the Salability Stage
Stage 6 of Business Success is the Salability Stage. If you have taken your
firm through Stages 1-5, you are in a great position to get the maximum
asking price. However, if you’re unsure where you are in the business
development cycle, you may want to revisit the goals and strategies for
Stages 1-5 in my bestselling book) .
Stage 6 firms are reliable money-makers and don’t need personal passion
and drive to continue to generate revenue.
But being in Stage 6 does not necessarily mean that your organization
attracts a great asking price. If you intend to sell in the coming months or
even a few years from now, you may still have some work to do to ensure
that investors and buyers make great offers.
Get a Professional Business Valuation Early
A professional valuation helps identify the cosmetic upgrades needed to
increase company value. Get it early in the process, well before you solicit offers. The valuation should include an exhaustive analysis of your business
and encompass the value of everything in your inventory.
Once the valuation is completed, you can address any issues identified in
ways that increase the assessment. It should also help you avoid spending
money on parts of the business that won’t add to the selling price. Best of
all, once you have completed a professional valuation, it’s easier to
recognize a good offer when it comes your way.
This is Not the Time for Big Improvements
Avoid a company overhaul. While it may be tempting to dress up the firm, at
the end of the day, you’re selling the predictability of future revenue. Solid
systems and controls should be driving the business. So, make sure you
retain key hires and keep core competencies in place. It’s okay to make the
firm look slightly better, but this isn’t time to mess with the magic that got
you this far.
An office remodel or a logo upgrade are easy changes. These kinds of
cosmetic upgrades can make your company a bit more attractive to sellers.
In addition, by upgrading things such as package design, the building facade,
and marketing materials, you add a little credibility to the success of your
organization. But again, this isn’t the time to mess with systems or controls
or move critical employees.
Organize Your Financials
When you’re getting ready to sell, make sure your P&L is attractive,
organized, and easy to review. Buyers will request a financial audit before
completing any business purchase. You may also want to improve your
company credit and reduce financial liabilities. With a strong P&L statement,
excellent credit, and minimal liabilities, your firm will be more attractive to a
broader range of buyers.
Need Help Prepping for Sale?
While this is an excellent time to sell a business, getting ready to sell can be
complicated. Mistakes can cost you millions. So, if you’re thinking about
getting your business prepared for sale this year or in ten years, let 7 Stage
Advisors help. Email me at [email protected], and let’s talk about how
you can get your business ready for a fantastic offer.
Stop Chirping and get Serious About Business Strategy
If you’ve ever had kids, you know you will end up watching a lot of movies
that you might otherwise skip. Years ago, one of my children dragged me to
“March of the Penguins,” and, as expected, it wasn’t my favorite film ever.
If you’ve never seen it, it focuses on one penguin who searches endlessly for
a partner. Finally, after miles and miles without much luck finding other
birds, he shuffles over a high hill and sees tens of thousands of penguins.
This is where he’s going to find a mate.
He starts chirping loudly, but the problem is that thousands of other
penguins are also chirping loudly, so he hardly sticks out. And even though I
didn’t come away a big penguin fan, that one scene did seem to be a perfect
example of poor strategy. We (businesses) are chirping and all of us sound
the same. We’re making a lot of noise, but it’s almost impossible to stand out
when you’re competing with others who are doing the same thing.
You Can’t Eliminate the Noise, but You can be
Whether you’re a mating penguin or a determined entrepreneur, you are
surrounded by competitive noise. I’m not telling you anything new when I
say that consumers are exposed to thousands of messages each day. You
can’t eliminate the competition, but you can revise your business strategy.
Start by letting go of “the best” title. Everyone says they are superior. Even
businesses with clearly inferior competitors can’t convincingly claim that
they are the best. It’s a standard marketing message that was invented the
same day advertising was created back in the Stone Age. It’s a parity
message, and it’s a complete waste of time.
No matter how much better you are than your competition, saying you’re the
best won’t get the attention of customers, and it certainly won’t convince
them. Your best prospects have already encountered hundreds, even
thousands, of businesses that have claimed to be the best, and most didn’t
live up to their own hype.
Do Things That Prove You’re the Best
Focus on doing the kinds of things that clearly position you as a leader and
an expert. And do things in ways that communicate confidence in the quality of your products or services. Instead of saying you’re the best, work on proving it.
So instead of saying you’re the friendliest repair shop, start learning your
customers’ names. Train your staff to take time to talk to clients, learn about
their lives, and understand how they use their vehicles.
Instead of saying you’re the fastest lunch spot in town, start offering a 5-
minute guarantee, telling customers that they have their food in 5 minutes
or the meal is free.
Instead of boasting that you’re the best law firm, start publishing articles for
the local press, become the go-to firm for local TV stations, and get your
lawyers to teach at the local university.
Doing things that position you as a leader is WAY more effective than simply
saying you’re the best. When you greet customers by name, when you offer
a ground-breaking guarantee, or when you’re all over the local media, your
best clients will see that your company is the best without you ever chirping
Avoid Sacrificing Competence for Convenience
I often talk to business owners who know what their customers really want,
but the owners also have a dozen reasons why doing the right thing “won’t
work.” It’s too hard, too expensive, or no one else does it.
In fact, I’m sure you can immediately give me a dozen reasons why the three
examples I just shared (of being the best) will never work. Allow me to beat
you to the punchline…
In my first example, that friendly repair shop would have to do everything
differently. Do you know how hard it is to remember faces and names? And
to get all of your staff to do it? And do you know how angry some customers
get when the people ahead of them in line are just chatting about their day?
And how can you possibly track the use and background of each vehicle?
What about a 5-minute guarantee? How can they possibly serve lunch, every
time, in 5 minutes? What if there are long lines? What if there are tons of
people? How can the kitchen handle that volume?
And the law firm can never be on TV or in articles because they might say or
do something wrong. How can they ask partners to teach a class? When will
they handle cases? It’s the most inefficient approach in the world!
But the truth is, in each of these three examples, those businesses
absolutely COULD be those things, but these changes will require that they
rethink how many parts of their business work. They will have to commit to
spending more time making their customers happy. Instead of being good
enough, they will have to commit to being extraordinary.
Meeting customer needs in the ways your competition can’t (or won’t) isn’t
always efficient, but it is effective. This approach isn’t the easy way. And
that’s why most businesses never do it.
Stop choosing convenience over competence. When it comes to your clients
or patients, or customers, stop choosing efficient processes and start making
effective choices that result in a a company that attracts profitable, loyal
When you begin building a company that stops taking the lazy route (saying
you are the best) and goes well out of its way to do things that make it the
best, you are no longer chirping. You’re clearly better and every customer
Be Brave. Be Different.
If you want your business to be better, bigger, and more profitable than your
competitors, you must do things differently. And doing things differently is
difficult and inconvenient. But I’ve built a series of multi-million dollar
enterprises on this principle, and I’ve helped thousands of companies do the
same thing in over 100 countries around the world. So I know it works.
If you’re ready to be brave and be different, shoot me a line, and let’s talk
about ways to get started. [email protected]
For Continued Growth, Owners Must Stop Working Longer and Start Scaling Up
Like every other aspect of life, business is full of myths and legends.
Business owners are taught to admire founders who gave it their all. They
didn’t have a personal life, and they worked night and day to build their
business. They slept at the office. And sometimes, that is a legitimate part of
building a business.
But creating a large business doesn’t require the owner to work 100 hours a
week, week after week, forever. Very few businesses fail because the
founder didn’t work hard enough. When companies get to a certain size and
stop growing, it isn’t because an entrepreneur isn’t giving it their all.
The fact is that the blood, sweat, and tears of one person can only take a
business so far. And the secret to growing isn’t working longer or harder: the
secret is scaling.
Yes, hard work and dedication are definitely helpful, but that’s not the whole
story. Launching a business requires a considerable time commitment and
lots of personal sacrifices along the way. The owner of a typical startup
begins doing everything partly because they are good at what they do and
partially because it saves money. While the “give it all you got” approach
can be exciting (and necessary) for a while, it can quickly become
unprofitable. The founder gets tired. They focus on the wrong things. They
make mistakes. They spend all their time executing tasks instead of
Avoiding the Overwork Trap
Sometimes the more you do, the harder it is to stop. That’s how business
owners get trapped in a cycle of 100-hour weeks. But once your business is
launched, it’s time to delegate, orchestrate, and find people who are better
than you. Because no matter how good you are at any one task, there are
many people for hire who are better. Find a better accountant. Find a better
sales director. Find a better facilities manager.
Instead of handling all functions, as the owner of a growing business, you
must create structure, assign tasks, and build a solid team. As an enterprise
grows, it’s time to train other employees to lead the way, and that can be
scary. But by allowing hired experts to own the success of parts of the
business, you create a well-rounded team with more experience, bandwidth,
And once the team is in place, you can concentrate on vision, quality control,
and business strategy. Throughout history, every successful business owner
had to make this transition, and you can too.
Lean on Systems and Processes
Asking others to help run your business is a big step. There’s a lot at stake,
so you want to provide as much structure and guidance as possible. That’s
why systems and processes are an essential part of scaling a business.
Creating predictable, reliable processes makes it easier for any business to
satisfy customers, expand trade, and maintain margins. That means that
each job, department, and specialty will need its own set of systems, checks
and balances, and processes. And as the owner, you will need to lead the
creation of formalized systems and processes and enforce adherence.
How does that work? Let’s start with a smaller example. Many business
owners issue checks to vendors. Maybe an assistant opens your mail and
lays a pile of bills on your desk to pay. Most are pretty straightforward, and
they take just a moment to settle. Occasionally, sorting out vendor issues
can suck up an hour or more. But on average, the task takes an hour or so of
time each week. So it’s not worth hiring an accountant for that, right?
But when start analyzing your process, you may realize that you spend
another hour or so each month tracking down invoices or trying to keep your
invoicing system in order. And maybe you spend another two or three hours
each month trying to track expenses and income and figure out profits.
Perhaps you want to learn more about pricing and determine if you’re
charging enough or too much. And you wonder if you should expand the
offices and if you could get a tax break doing it.
In this case, you are spending your time doing an accountant’s job, and
you’re also avoiding related tasks that take more time. A good financial
officer not only pays bills but also handles vendor relations. They ensure
clients and customers are paying on time. They may create new payment
systems like credit card payments, Venmo, or PayPal. They should be well-
versed in tax law and be able to advise you on ways to get the best tax
credits from your expenditures. And they can review competitive pricing and
make recommendations. The accountant can also create monthly P&L
statements, explore lines of credit, and recommend more cost-effective
In other words, letting go of a small but vital task (paying bills) empowers
you to add a team member who adds exponential value. In this example, it’s
easy to see how devoting more time and attention to the books can quickly
reap significant improvements and how adding this key hire creates the bandwidth needed to scale.
But of course, delegation is not just limited to
accounting. What about the sales tasks? Which marketing responsibilities are
you heading up? Do you have HR experts taking care of hiring? Who is
managing your facilities? Who is in charge of IT? A long list of tasks, initially
managed by the founder in the start-up phase, need to be delegated if a
company wants to scale into a seven-, eight-, or nine-figure business.
How Scaling Works: The Dentist Example
When explaining how scaling works, I often use the example of a dentist
opening a practice. At first, the dentist invests in property and equipment
and sees as many patients as possible to pay the bills. Unfortunately, he’s
overextended and scared to hire a lot of people, so he hires just one
receptionist. In this example, the dentist is doing as much as possible to
make money, trying to pay off debt, and working very long and hard to do it.
But with just one dentist and a receptionist, there’s a clear manpower limit,
which slows the practice’s growth.
Now dentists often hire hygienists to help increase their bandwidth. After all,
if two or three hygienists do most of the patient work, the dentist spends
much less time with each patient, so they could theoretically triple the
patient load. The practice may need another chair or two, so it’s not a
complex addition. But if the dentist in our example does this, he is still
working more than 80 hours a week and has to be there for every
To really scale, that dentist is going to have to think of a bigger end game. Is
the goal to work with patients all day, or is the goal to serve patients AND
have a more profitable dental practice? Could the dentist employ other
dentists? What tasks could he delegate? Yes, he may be able to reduce his
hours by hiring an office manager, an accountant, or a tech consultant, but
these hires also give him the ability to expand. Could he have offices all over
the city? Throughout the state? Across the country?
In this example, if the business owner stopped focusing on “doing” and
concentrated on vision, he could create a practice with multiple locations.
Thousands of appointments could take place, and the dentist would not have
to be present at any of them. With systems, checks, and balances in place,
it’s possible to scale the practice, which means the owner could increase
profits 10x or even 100x while working fewer hours.
By creating new roles and delegating responsibilities, the dentist spreads out
work. He allows his staff to specialize. This dentist will assign different tasks
to people who have the time and expertise to handle them quickly and
efficiently. And with staff and systems in place, he doesn’t depend on any
single person to be present every day–including the himself.
Start Scaling Up
To scale up quickly, owners must focus on building systems, automating
duties, creating processes, and building an organization that runs well with
or without them. While you may have been chief cook and bottle washer in
the early days, if you’re ready to scale your organization, it’s time to
orchestrate, refine, and build. And that’s when exponential growth can begin.
If you want help finding ways to scale or strengthen your structure, systems,
margins, or succession plan, email me at [email protected]
How to Grow from 1 Employee to 1,000 Employees (or More!)
People start out as a one-person business for all sorts of reasons. Some
people set out to follow a passion. Others get tired of layoffs and start a
business to gain control of their professional life. Others realize they can
actually make more money selling their skills directly to clients. But no
matter what drove the creation of the firm, the majority don’t start out as
well-funded start-ups. Most new businesses begin small and grow from there.
If you’ve created a business, and you’re just one person, growing can feel
intimidating, risky, or even impossible. But it can be done. In fact, many
successful firms have expanded from 1 person to 100 or 1,000 employees or
more. But there are things all companies must do to get scale up quickly and
Some Advice About the First Hire
A solopreneur works alone. Most one-person businessowners have a core set
of skills. They use those skills as the product, and also sell, fulfill, and take
care of the invoices. In the very beginning, most business owners are the
CEO, CMO, Sales Director, CFO, and all the rest. It’s very typical to see a
solopreneur who sells and executes during the week and on nights and
weekends, they focus on the billing and administrative duties.
It usually doesn’t take too long for a one-person shop to realize that if they
want to continue to grow, they need more manpower. And when that time
comes, we are adamant that the very first hire should be a good numbers
person. Seasoned accounting skills are critical for profitable growth no
matter what size the business. Whether the company is a start-up, pre-
revenue, or if you’re pulling in a million plus, an excellent financial hire is
needed to organize your cash flow. And let’s face it, for the majority of
solopreneurs, their cash flow is a mess.
When we work with a single-person outfit, it’s typical to discover that they’re
not sure of profit margins. They don’t know if their offerings are priced right.
But when you hire a financial expert, a bookkeeper, or a controller, the
company now has somebody paying attention to expenditures, cash flow,
pricing, and profits. A qualified financial officer serves as an invaluable
guidepost who makes sure that you’re getting it right.
A common error is to start by investing in sales and marketing first. Now,
sales and marketing are key, but unless you already know what you’re
spending, where you’re pricing, and what financial formula makes the most sense for the best margins, you’re spinning your wheels. Who wants more
unprofitable sales? Make sure your financial person can provide the kind of
reporting that tells you that you are getting it right. Then, and only then, can
you look for your next employee.
Are You Growing or Scaling?
So many of our clients tell us that they want to grow. Very few tell us they
want to scale. There is a big difference between the two. Understanding the
distinction between growing and scaling is actually essential for any
business, so read these next paragraphs carefully.
When a business owner makes a new sale, they are growing. They have
more business. When a company grows, it may bring in more money,
become busier, and get more clients. And all of that is good stuff.
But simply growing means that the business owner is still an employee. The
owner of a growing enterprise must be involved on a day-to-day basis and do
more and more to grow. Some business owners tell us they don’t want to
grow because they’re at capacity. The owner is already working full time,
and then some.
But scaling involves a different scenario. When an owner scales the
company, they aren’t simply spending more hours at work. Scaling is about
creating systems and predictability so that others can take over parts of the
company. Owners don’t have to worry about getting too many clients to
service or too many people to manage, because they have employees who
take over those duties. Financial people take care of billing and taxes, and
lines of credit. Sales teams manage client relationships. Human Resources
find the right hires for the right job. An owner who is focused on scaling
assigns selective control to their employees. Of course, these workers must
understand the company mission, vision, values, and purpose. With systems
in place, a firm runs profitably because it follows processes that create
consistent results over time. Scalable organizations don’t rely on the
bandwidth of a few people. Instead, it can grow almost infinitely on the
strength of its systems.
We often cite the example of the owner of one grocery store vs. the owner of
100 grocery stores. Does the owner of 100 stores work 100 times harder?
No. In fact, with good systems in place, the owner of 100 stores is more likely
to be able to walk away from the business for a day or a week or a month,
and the company hums along without them.
What Does Planned Growth Look Like?
Early on, we researched what all successful companies have in common. We
discovered seven very clear steps to creating a large, successful business.
We used this research to form the 7 Stages of Business Success. Stage 1
is strategic planning when you get a compelling and inspiring set of ideas out
of your head and onto paper.
Then you go to Stage 2, the specialty stage. Whether you’re a solopreneur or
working with a team, in Stage 2, the owner becomes an expert in your niche.
They are thought leaders, speakers, consultants, or have a particular set of
achievements or awards. They are now recognized as an expert in their
niche. That expertise is an integral part of price flexibility. You need fat
margins early on to carry you through later stages; when you sell more, but
margins can shrink.
Stage 3 is the synergy stage. The business is expanding, and it’s time to
surround yourself with people that help get the job done. This is the time to
create a top-notch implementation team.
In Stage 4, you make a giant leap into the systems stage. You decide what
kind of business you’re going to be. Will you be a closed ecosystem like
Apple? Want to franchise someday? Should you be multi-location? Where do
online sales fit in (if at all)? You decide on your ecosystem and systematize
Stage 5 is all about scaling. Systems become the star. How you do it makes
you different, and that makes it easier to scale. Think of Starbucks, FedEx,
Panera, or Uber. These companies can show up almost anywhere, and you
know you’ll get the same experience (mostly) whether you visit in Seattle,
Sarasota, or Shanghai. Systems and processes allow these companies to
duplicate success in multiple locations.
Once you’ve got systems and scaling covered, it may be time to consider
Stage 6, the salability stage. This is when the company is an asset that can
be bought or sold. Yes, everybody is working hard in and on your business,
but your firm now has standalone value that is working for you. Suppose you
want to sell your enterprise. This is the time to polish the books, clean up
any debts, and make it an attractive asset to sell or take public.
Stage 7 is the succession stage. A business becomes a legacy, and you can
confidently fire your first employee (yeah, that’s you!) You are replaced with
a CEO, and the value of your business actually increases because the market
recognizes that the firm’s success is no longer dependent on one person: the
company has a great leadership team in place.
Is it Time to Turbo Charge Your Business Growth Cycle?
Whether your business employs one person or 1,000, it’s always a good idea
to strengthen structure, systems, and strategic plans. 7 Stage Advisors offers
coaching and mentoring to business owners to help increase predictability,
fortify margins, or even create an exit plan. Contact us HERE
What is Cross-Training and Why Does Your Business Need it?
In the sports world, cross-training is training in sports or activities outside the
athlete’s core competencies. For example, runners learn about weight
training. Basketball players do yoga. Swimmers add cycling. These athletes
learn new skills to use the effectiveness of one training method to negate
In business, cross-training is about creating redundancies. Having highly
trained experts for each part of your business all year long is essential. But
what happens when someone must take leave, gets sick, or accepts another
job? Cross-training key individuals in more than one area protects your
company from unexpected vacuums. When done correctly, it may also allow
your employees to use the skills acquired while learning another position to
negate the shortcomings in their own field of expertise.
Develop Recognition and Coverage
Cross-training in business takes care of two essential needs; recognition and
coverage. When team members learn another area of skills, they also
understand and value other jobs’ importance and value. While this may seem
like a soft benefit, it’s critical to a high-performance team. For example, it’s
natural for an employee to think that other departments are easier to
manage, especially if they are managing them well (because they make it
look simple). But with cross-training, employees begin to understand and
internalize what works and what is problematic in various roles.
Secondly, redundancies provide coverage. With cross-training in place, your
business won’t slow down as people come and go. For example, if your sales
manager leaves, a marketing director with cross-training could cover those duties until the firm finds a permanent replacement. Likewise, if your CFO
needs to take a leave of absence, a CEO with cross-training can keep things
running until they return. When key senior personnel expands their vision
and responsibility beyond their areas of expertise, they are well-placed to
take over in a crisis. And that means that you, the owner, can continue to
focus on building your business.
What are Muddy Water and Clean Water Fish?
Cross-training protects your business, but it can also help you identify critical
issues in your workforce. As you start creating teams focused on
redundancies, you will discover that you have two types of employees. I call
them muddy water fish and clean water fish.
Muddy water fish thrive when the waters around them are cloudy. They can
work in chaos and can move forward even if they can’t see the way. For
most companies, muddy water fish are critical employees in the early stages
of development. When the company is just starting, clear paths and well-
defined processes are rare. So muddy fish are an asset in the early stages.
Clean water fish work best with maps and plans. They like to see the future
and know what’s next. In earlier stages of your business’s growth, that need
for process may have been annoying or even impossible to satisfy. However,
clean water fish are process-driven individuals who make good candidates
for redundancies. They like to share their process. They like to create order,
and they want contingencies for every eventuality.
If you’re staffed with muddy water fish, they may resist redundancies. They
push against process and planning. Many of these types of employees resist
attempts to create methods, regimens, and order. As the business owner,
you’ll have to convince your muddy fish to swim in clean waters. If they
refuse, it’s time for you to reassign or find a replacement.
This Means Owners Must Also Become Clean Water Fish
Most entrepreneurs start as muddy water fish. Very few entrepreneurs have
a detailed 5-year plan that they follow to the letter. Instead, startups usually
avoid rules or regimens so they can adapt to a variety of market situations.
Early on, muddy water entrepreneurs surrounded themselves with like-
minded employees who were equally comfortable with ambiguity.
However, when it’s time to transition to the next level, it’s also time to foster
a shift in the corporate mindset. It’s time to say goodbye to the rebellious,
nothing-to-lose attitude that launched the firm. While muddy water fish are
great for startups, they can hinder an established company.
That means it’s time to review your team. Can your muddy water fish adapt?
Some of these employees fight cross-training and leave voluntarily. They’ll
see that your business is no longer a good fit for them. You may have to fire
others. But muddy water fish still have a place in departments with built-in
chaos and change such as R&D, sales, and marketing.
Build Security with Cross-Training
Yes, some employees will embrace cross-training, and others will run from it.
But creating redundancies is one of the only ways to develop corporate
security. If your company wants to experience fast, profitable growth, you’ll
have to protect against obstacles that stall your expansion. And unexpected
vacancies in critical positions can be significant obstacles. Without cross-
training precautions in place, a single resignation could stop development in
Push Through With Analytics
Every business owner has been there at one time or another: you get to a
certain point in your growth, and you stall. Maybe you’ve grown your
business a little. Perhaps you’ve grown it a lot. But if you’re reading this
article, you probably don’t want to be done expanding yet.
If you’re not growing as fast or as much or as profitably as you want to, you
can take your business skills to the next level. But to get to this next level,
you’ll need heightened abilities and better information. You’ll need analytics.
Take a Deep Breath and Commit to Spreadsheets
Most Business Owners or Entrepreneurs (I call them BOEs) like “doing.” They
like to pound the pavement or create stuff or hire people. By their nature,
BOEs gravitate towards tangible activities with well-defined outcomes. That’s
probably because “doing” got them started on the road to success. But being
a “doer” will only get you so far.
To scale your business dramatically and profitably, the founder will have to
leave the “doing” to others and start focusing on analytics. But, of course,
we all know that paperwork and analytics don’t provide the same immediate
gratification as tangible activities. Maybe that’s why so many business
owners avoid analytics. But if you want to grow your business into a 7- or 8-
or 9-figure enterprise that fires on all engines, you’ll need data, numbers,
It’s Business Pilates
If you’re not sure what Pilates is, it’s an approach to fitness that emphasizes
low-impact flexibility, strength, and endurance. It builds postural alignment,
core strength, and muscle balance. And it’s an excellent metaphor for
Benchmarking your business against industry norms is an excellent way to
build postural alignment. You’ll be properly positioned. You’ll understand
how to build your core strengths. The benchmarking process also measures
your strength and balance and identifies what you’re doing well and what
you need to do better.
Start by focusing on revenue generators (marketing, sales) and loyalty
functions (fulfillment, delivery, customer service). The goal is to assign
benchmarks to both the tangible and intangible parts of each division and use these benchmarks to empower your team in ways that help them understand where they are succeeding and where they need improvement.
Embrace the Power of Spreadsheets
Start your analysis by listing and mapping all your company’s tangibles. The
tangible part of your business is, by its nature, easy to measure. These
elements can usually be expressed with numbers, such as revenue, gross
income, cost of goods sold, net profit, expenses, and other measurable
quantities. You want all this information mapped out in ways that allow you
to compare your performance to the industry averages.
Where Do You Find Industry Averages?
Getting detailed information on your industry isn’t always easy. An industry
consultant may help. Many industry associations offer very detailed
competitive reports, usually for a fee. If you know people in your industry
that are not your direct competitors, talk to them. Call in favors. Pay experts.
Do what you need to do to get the information you need to see if you are
doing better, the same, or worse as other businesses like you. Learning
about the details of your competition is a great way to benchmark your
This kind of analysis takes a lot of time and energy, but it reaps big rewards.
Once you’ve mapped out your tangibles and can compare them to industry
averages, you’ll quickly identify problems and opportunities. Are you doing
better, worse, or the same as others in your field? When you evaluate and
compare the tangible categories of your business, you’ll get a better
understanding what’s average and what is exceptional, including:
– Your charges and prices compared to others in your industry
– Share of market
– Margin comparison
– Your facility costs and overhead
– Departmental costs in comparison to your competitors
– Material costs
Don’t Forget Intangibles
While it can be satisfying to tally up numbers and create charts, don’t forget
about intangibles. Things like performance, quality, service, and ability are
hard to measure, but your people still need to be better at all of these things
for your business to succeed. So how do you do that?
Instead of evaluating individuals, create benchmarks for positions instead.
Start by creating a set of ideal attributes required to do very well in any given role. Think of the position as a “personality.” For example, you may
want customer service employees to be friendly, empathetic, and outgoing.
On the other hand, maybe you want a CFO who is a conservative, dedicated,
Once you get personality benchmarks in place, it’s easier to make
dispassionate adjustments to your team. For example, if you believe your
accountants should be dedicated perfectionists and you have a team who
isn’t organized or passionate about your books, it’s time to make a change.
Of course, we’re talking about people, so there are no absolutes here, but
assigning ideal attributes will help you get on track to building an stronger
department. When your departments are compatible in style and
temperament, you’re giving your company the best chance for success.
Analytics Are Time-Consuming, but Worth the Effort.
This article is a fast overview of analytics, and these exercises just scratch
the surface. No matter how big or small your company is, analyses are a LOT
of work. But a solid analysis is one of the only ways to create more reliable
systems that will propel your business forward. So put in the work now, and
everything you do in the future will be easier, faster, and more successful.
Want to talk more about benchmarking and analyses? Email me at
[email protected] or check out my best-seller, The 7 Stages of Small
Don’t Rely on Luck: The 7 Stages of Business Success
Many business owners are looking for a break. If things just go their way, the business will succeed, the sales will zoom, and all their dreams will come true. But that never really happens, does it? Leaning on luck is a dangerous strategy, but we all know of businesses that just seem to grow and grow. Looking from the outside in, it can seem like hard work and effort have nothing to do with success. But the truth is, big profits don’t just happen. Some business owners might be “lucky” for a few months, or even a year, but not year after year.
Certainly the pandemic taught us that no matter who you are or what you do, “business as usual” can only get you so far.
That’s because growth and profitability don’t happen through luck. Every successful business owner out there – every single one – had to learn how to run their businesses in ways that allowed them to expand fast while maintaining margins. Luck had nothing to do with it.
Even when the odds seem to be in your favor, mistakes happen. Unless you know why businesses grow, how to move through the stages, what to do, and when to do it, even the luckiest business will not thrive.
The 7 Stages of Success
Once you put luck aside and start focusing on process, many business owners can grow their organization very quickly. By using reliable, predictable tools, companies can grow from a small enterprise into a major concern with dependable revenue in just a few years.
Conversely, if the founder doesn’t understand how to scale their business, they will get bogged down at the start, and that will prevent them from growing and increasing profits. 7 Stages is a methodology that I teach in my own consulting business, 7 Stage Advisors, but I’m also proof it works. Because I’ve used the 7 Stages process to grow three of my multi-million dollar businesses by age 40. I’ve
used it to help over 7,000 companies in 68 countries, so I know it works. The 7 Stages approach helps businesses determine what they need to do to grow and prosper reliably and predictably. Business success relies on strategy and process, not luck.
Stage 1: Strategic Planning Stage
How can any business grow dependably without a roadmap? It will be tough to make rapid progress if you don’t create a strategic plan that outlines goals, strategies, and timelines. Whether you started a business this week or ten years ago, it’s never too late to create a strategic plan. Once this plan is in place, it becomes much easier to understand what you need to do to succeed, and you have a tool to keep your team focused.
Stage 2: The Specialty Stage
In this stage, the business owner must become an expert in their field. This is also a time to fortify a point of difference. In Stage 2, business owners become known for their specialty and working at being the best at whatever they do.
Stage 3: The Synergy Stage
Maintaining control is a recurring issue for business owners. However, running a growing business is a team sport. That means the founder needs to build teams, create strong leaders, and delegate responsibility to handle different parts of the company. Even though it’s scary for many business owners, this is the time to stop doing everything and let others do their jobs.
Stage 4: The Systems Stage
Systems help your teams achieve success consistently and reliably. In Stage 4, owners create processes and systems for everything that needs to get done – from ordering copiers to training salespeople to onboarding new clients. By developing repeatable processes, checklists, and evaluations, the business owner empowers everyone to understand what they need to do and how they can succeed.
Stage 5: The Sustainability Stage
With expertise, teams, and processes in place, this is the stage in which businesses can grow fast. Intangible value becomes much more important in this stage. With everything in place, a company can add more locations, facilities, customers, and profits. Owners can scale product, operations, markets, and expertise in ways that allow them to increase profits exponentially.
Stage 6: The Salability Stage
Most business owners don’t want to run their businesses forever. However, for those who decide that they want an exit plan, this is the time to adjust the company in ways that make it a profitable commodity that is appealing to buyers, partners, or even family members.
Stage 7: The Succession Stage
Not everyone business owner wants to sell the business. Some want to step aside, step down, or step away from a company. No matter which option they choose, steps need to be taken to ensure that the firm continues to succeed after the owner is out of the picture.
Learn More About the 7 Stages of Success.
While listing these 7 Stages makes it look easy, growing a business is hard. And there isn’t any one-size-fits-all roadmap for success. But by internalizing the 7 Stages of Success, and follow the methodology in ways that build on strengths and eliminate weaknesses, you can become one of the thousands of people who own a multi-million dollar business. If you have questions or want to learn more, feel free to email me at [email protected]
Getting Ready to Sell the Business: Stage 6 of Business Success
We all love our businesses. We worked hard to build them into something impressive and profitable. But sometimes even the most successful companies are difficult, maybe even impossible, to sell. Why? Aside from profitability, the number one reason people don’t buy is that the owner is too important to the success of the business. However, if you’ve completed Stages 1-5 of Small Business Success, chances are you now run a high-value organization that has all of its systems working. When your systems are working, your business becomes a reliable money-maker. And best of all, you no longer have to be there to run it. You’re not important to the success of the business. (Sounds harsh, but this is a good thing, trust me.) Your firm no longer requires personal passion and drive to continue to be profitable.Like it or not, being profitable is just one part of a business valuation. How owners structure their companies is at the heart of true market value.
A Buyer’s Checklist
What do investors want to buy? What makes some businesses more valuable than others? Investors aren’t solely focused on a company’s P&L statement. These buyers are also looking for top management teams, sustainable systems, good locations, excellent distribution chains, strong customer relationships, or valuable equipment. Many factors determine a company’s value.You should have a good management team, especially in HR, Sales, and Financials. Your books have to look good. Your P&L needs to be strong. And while it makes sense to finessing the appearance of a firm before selling, this isn’t the time to mess with the systems. If you’re systems aren’t strong, you’re not ready to sell a business. You may have real estate, equipment, or even a market share to sell, but without systems, you are not selling a business, just its parts.
Get a Professional Valuation
To ensure you know a good offer when you see it, invest in a professional valuation early on. A professional valuation should include an exhaustive analysis of your company, systems, assets, and the value of everything in inventory. This kind of valuation will also help you identify issues and fix them in ways that increase the selling price.
Financials Must be Pristine
Like it or not, your buyer is going to be looking at the books. Disorganized accounting is a red flag so if you’re thinking about selling, get all financial records into pristine shape now, before putting a business up for sale. It’s also wise to take steps to improve the company’s credit. Take stock of financial liabilities and look for ways to minimize or eliminate them. While credit issues may not have impacted the performance of a firm in the past, they will affect a buyer’s interest and the size of their offer.Once your financials are neat, easy to access, and well organized buyers can easily see your strong P&L, plentiful credit, and minimal liabilities. And that’s attractive to any buyer.
Don’t Rush it. This is a Big Deal
Selling your business is the very DEFINITION of a big deal. Take your time to get your company financials in shape, polish up the appearance, and make sure your strong systems keep working. At this point in the game, even small mistakes can cost you. Taking the time to get it right can increase your profits before you even start negotiations.Want to learn more? Feel free to email me at CarlGoul[email protected] let’s talk more about getting your business ready to sell.
Stage 5 Scalability: Incremental Value and Exponential Profits
Sometimes business owners get stuck. They are not sure what they can do to grow the business. But most companies dream of becoming bigger and more profitable, and most organizations strive to be better than their competition. How do they make it happen?In Stage 1 of small business success, it’s time to create a strategic plan. Stage 2 requires entrepreneurs to start getting customers and become an expert in the field. In Stage 3, owners must begin delegating essential tasks to senior people, and in Stage 4, systems are created. In Stage 5, it’s time to scale up. Not only must you offer the very best product or service (and that’s no easy task,) but it’s also time to create an authentic brand that has meaning and value that goes well beyond the scope of your offerings. Creating a franchise-type system goes beyond whipping up a logo and a mission statement. A scalable business also has to meet the emotional and psychological needs of their customers. In Stage 5, a company must move beyond products or services and transition into the realm of emotional value.It’s time to think about how the business makes clients feel.
And most importantly, a franchise-type system creates a product and experience that can be successfully replicated again and again.By now, the organization should have a solid team to cover all the bases – sales, accounting, HR, marketing, operations – and the owner simply orchestrates the team in ways that create incremental value. In Stage 5 of Business Success, the owner must stop running the company and start leading it.
Peloton Doesn’t Sell Exercise Bikes
Peloton is an excellent example of a company that has mastered Stage 5. Peloton has only been around since 2012. By 2020, Bloomberg announced that the founder, John Foley, was officially a billionaire. That makes him one of the fastest billionaires in history. Peloton is just one of many companies in the crowded fitness category, but they didn’t do it by selling exercise bikes. In fact, they consider themselves a technology company. They built their success on incremental value. Peloton sells upscale exercise equipment connected to hardware and software that allows the company to stream fitness classes on a tablet affixed to a machine. Some classes are on-demand videos, but many classes are live. And to access the workouts, Peloton owners must pony up $39 per month, on top of the $2,000 initially spent on their bike or treadmill.
Peloton knew that selling really good exercise equipment wasn’t enough to rule the market. So instead, they created a virtual gym. They invested a lot in training and promoting engaging, inspiring instructors (they’re so good that some have become social media sensations.) Peloton equipment includes software that fosters interactive communities who can share aspects of their workout with each other. Peloton created incremental value by marrying home exercise with the motivation and social benefits of a gym. And they created fanatics in the process.
Three Reasons to Love Stage 5
1. ScaleAt this stage, you can grow a business exponentially. With sound systems in place, a strong leadership staff, and well-defined incremental value, it’s possible to successfully expand distribution, open new locations, or even bring in other owners.
2. Better MarginsOnce you create a business with incremental value, you no longer have to match the competition’s low prices
3. Your Business Can Run Without YouWhen a business masters Stage 5, the owner will find that they don’t need to steer the ship every minute. At this stage, an owner can leave for a day (or a month) and find the business continues to run successfully without them at the helm.
Want to find out more about the7 Stages of Small Business Success? Take a look at my best-selling book, listen to my podcasts, or book me as a featured speaker at your next big business event. And if you want personalized coaching from an industry leader, contact 7 Stages Advisors for personal assessments, coaching, and recommendations.
If You’ve Reached Stage 4 of Business Success, You’re in the top 1 Percent
Let’s face it – many businesses will fail. Others will stop growing well before they reach Stage 4 of Business Success. This article is for the fabled 1 percent who grow and grow and reach a stage in which they have a team of people doing the work, producing goods, and providing services. These top-achieving businesses are pretty rare. In fact, only the top 1 percent of all companies will ever reach Stage Four of business success – the systems stage.
Stage 4 = Implementing Systems
Stage 1 focuses on Strategic Planning. Stage 2 is the time to specialize and build a reputation. Stage 3 is about synergy – finding smart people to run every part of your business. Once that is all in place, it’s time to create systems. The hard truth is that there’s no room for winging it in Stage 4. It takes focus, discipline, and organization to master Stage 4. Maybe that’s why so many businesses never make it this far.
Not Sure What Business Systems are?
In the beginning, business owners tend to do everything. But by Stage 4, the business is set up, so the owner doesn’t HAVE to do much. In fact, in Stage 4, the owner can take off for a week or a month, and the business runs just fine without them. That’s because, with sound systems in place, a BOE no longer has to be there to ensure things get done. Because they created systems, every part of their business runs predictably, consistently and reliably. Systems assign responsibilities, establish checks and balances, and produce predictable outcomes.
Ready to Tackle Stage 4?
Yes, creating systems sounds great, but every BOE knows how much time and effort it takes to get them into place. It takes an extraordinary commitment. And it takes patience because few people, at any level, can change their routines and adapt to new systems without skipping a beat. Your team will stumble a few times as they adapt, but that’s normal.
As you optimize your systems, you must look at every process and think about ways to automate it, schedule it, digitize it, or even outsource it. A great example is a new payroll system. Many companies have gone through the uncomfortable process of transitioning payroll into a cloud-based system.When this happens, employees must be trained to go online to check remaining vacation days, sick days, or request time off. Accounting must enter data into a new system. Managers must report sick days. Everyone complains. But once everything is up and running, suddenly, a cumbersome process becomes easy. HR spends much less time tracking employee time off. Managers feel more confident granting vacation time. Once the system is up and running, it automates several time-consuming tasks and makes review and analysis quick and easy. For example, if you’re sending someone to the office supply store every week, get the office store to deliver to you. If your breakroom and vending machines are a mess, get a food service company to run it for you. In many cases, you’ll find that outsourcing to a specialist is cheaper, more consistent, and requires less input from you or your employees. Should you outsource payroll, HR, accounting, marketing, sales, customer service, warehousing, mailrooms, transportation, legal services, and more? Think about your specialty and what your business is known for and focus on that work. If you manufacture hardware, it makes sense to keep most of your manufacturing in-house, but why not source out HR? If you’re a gym, instructors and equipment are part of your core value, but you may be able to outsource the juice bar and find a specialist to handle marketing.
Monitor and Optimize
Once systems are in place, BOEs must measure and monitor. I often advise starting a system by trying to make every business area just a little better, and then measure and watch to see if your improvements are working. In the earlier example, I recommend doing deliveries of office supplies. Let’s say it took your staff six hours a week to create an office supply list, go to the store, return, and unpack everything. When you transition to deliveries, you’re looking for an incremental improvement. So maybe your new system still takes five hours a week ordering and unpacking. Your employees may tell you it’s just as much trouble to order it as it is to go and get it. But when you monitor and measure, you’ll know you’re saving an hour a week. It doesn’t sound like much, but what if you saved an hour a week for every employee? For every task? Even small efficiencies add up quickly.
How Systems Helped My Own Business
Like many companies, when my 7 Stages Advisors office brought in a new employee, we used to scramble a bit. We hurried to find a “buddy” to show the new hire around, slapped together some training sessions, and passed the employee around in a desperate attempt to get them up to speed without disrupting everyone’s day. It wasn’t ideal.We took a dose of our own medicine and created a system. Now we have a new employee how-to manual for each of our training programs. We eliminated the last-minute drama that had been part of training and instead developed a well-thought-out process, with predictable steps, that everyone understood. And best of all, once we did the work upfront, we saved a lot of time during the training process. Honestly, some people resisted the system approach. They insisted that each employee and training should be completely customized for each person and each job. Others said that creating a system took more time than preparing on the fly. Of course, they were wrong. We no longer have to rely on one person to lead orientations—instead, several people in our office onboard new employees. The process is methodical, measured, and easy to repeat again and again. Did it take effort upfront to set it up? You bet it did. But the last-minute panic has disappeared, and training is just another thing we do over and over—no big deal.
Are You Ready to Join the 1 Percent?
With systems in place, your company can run like clockwork. Once you see some successes, you’ll want to return to improving the quality of your offerings. That doesn’t mean looking over everyone’s shoulders, but you should keep an eye out to make sure systems are working. Good systems are more than time-savers; they improve quality and consistency. That’s why Stage 4 businesses are in the 1 percent.
Watch out for Blind Spots in Stage 3
We’ve all heard of blind spots. When you’re on the road, the blind spot is the portion of the view obstructed by the frame of your car. If a driver ignores blind spots when driving, they might get sideswiped.There are also blind spots in business. No one can see the entire picture: parts of the view are obscured. Entrepreneurs don’t have the skills to do everything equally well. Most business owners have a set of talents that have been nurtured because they are good at them. People like doing things they are good at, and tend to spend more time doing them. Conversely, it’s easy to avoid areas in which we lack talents.
Nobody can do Everything Well
When we look at legendary business leaders, it’s easy to spot strengths and weaknesses. Virgin founder Richard Branson championed the company’s strategy and vision for decades, but he left the finance, HR, accounting, and development work to other people. Steve Jobs is usually recognized as a business icon, but Jobs left the software development to others while he focused on branding, design, and marketingIn fact, most successful entrepreneurs’ skills are not limited to running a company; they are also very self-aware. A successful business owner must know how to play to their strengths and compensate for blind spots by bringing in experts to run various parts of the organization.
Start by Identifying Strengths
What part of your business do you love? Why did you start this kind of company in the first place? What activities, no matter how demanding, inspire you to get out of bed, energize you, and give you the greatest sense of satisfaction? Business owners must ask themselves these types of questions to identify their strengths. This kind of self-analysis enables entrepreneurs to become more confident about delegating other responsibilities. After all, different people love working in different parts of a company. Some people are great at HR; others are good at accounting. To scale an enterprise, the owner mustfind employees who can handle every part of the company. A successful entrepreneur must recognize personal weaknesses and hire strong leaders tohandle those parts of the business.
Generally, the activities of most firms can be divided into four quadrants: Direction, Income, Systems, and Controls, or DISC. A business owner is probably very good at one of these quadrants. They might have skills in each of them, but the goal isn’t to master all four areas. Instead, an entrepreneur must identify experts to lead each of the four areas. Once the business owner knows where their strengths lie, they can admit that they also have weaknesses, and they need to accept help in these areas.
Business owners who are good at Direction are big-picture people. People who excel at Direction are usually good at long-term planning, competitive analyses, new product or service ideas, and sharing their visions with others.They enjoy creating a vision for the organization, an inspiring mission, and a ten-year plan that gets people excited.
Income people are the sales and marketing wizards who know how to find prospects and convert them into revenue People with strong Income skills tend to be relationship builders, networkers, salespeople, and account management pros, and they can close a deal.
Systems people like details. They are organizers and doers. Business owners who excel at Systems enjoy taking care of the things that need to be done daily, weekly, monthly–even if no customers call. These people create Systems for answering emails, managing IT, and handling accounting.
Entrepreneurs who are good at Controls like to create checks and balances. They analyze performance, but they also develop fail-safes in the form of insurance, legal counsel, a good credit report, and proper employee training. Business owners who are talented at Controls enjoy analysis. What percent of sales efforts converted into income? How long do people stay at your company? What does the average sale cost?
A Successful Business Masters Each Area of DISCoverY
While a single person won’t excel in each area of DISCoverY, a business must become expert in all four areas. A business owner must find leaders to head up each area. To scale, firms must find a leader to drive the Direction of the business. Another individual will lead the Income functions. A third expert will focus on Systems, and a fourth will handle Controls. Owners oversee all four areas. And it’s natural to gravitate towards spending time on one or two specialties. However, if an entrepreneur spends a lot of time in one or two areas, that means they’re spending less time in others. Even though a good business owner must accept that they’re not good at everything, they can’t afford to ignore other areas.
People change throughout their professional lives. Things that seemed difficult in the past can become easier over time. Business owners get better at all parts of the business as they grow and expand.That’s because weaknesses are not permanent qualities. A successful entrepreneur is always looking for ways to improve their faults or compensate in ways that eliminate the shortcoming. For example, absent-minded people use calendars, phone alerts, or assistants to remind them of tasks, details, and deadlines. With suitable systems in place, we not only compensate for weaknesses, but we also eliminate them.Business owners who struggle with long-term strategy hire consultants to help develop a 1-year plan. A good accountant is a surefire way to clean up slopping bookkeeping. An experienced sales manager knows how to rectify income issues. An effective COO can ensure all facilities are in good working order.
Conquer Stage 3 Before Moving to Stage 4: The Systems Stage
In Stage 3, the business owner must bring in some important people to shore up weak spots. Sometimes revenue won’t immediately jump to cover these new expenses, so margins may be lower in Stage 3. However, as the business team grows core competencies, the corporate structure gets more robust. This lays the groundwork for the incremental growth that comes at Stage 4: The Systems Stage. Want to find out more about the7 Stages of Small Business Success? Take a look at my best-selling book, listen to my podcasts, or watch for me as a featured speaker at your next big business event. And if you want personalized coaching from an industry leader, contact7 Stages Advisors for personal assessments, coaching, and recommendations.
Stage 2: Achieving Excellence in the Specialty Stage
BOEs – Business Owners and Entrepreneurs –spend Stage 1 of the 7 Stages of Business Success working on a strategic plan that will set them up for profitable, continued growth. Once that strategic plan is in place, it’s time to move onto Stage 2. In this stage, the most crucial task is achieving excellence and getting the credentials that will instantly establish you as the smartest person in the room. It is excellence and expertise that will catapult BOEs through Stage 2: The Specialty Stage. While everyone agrees that sales are significant, the larger goal at this stage is to create credibility and industry leadership. Once that’s done, the desire for your products and services will balloon, and strong sales will follow. To grow into a 7- or 8-figure business, BOEs must create a company that customers and clients desperately want to work with. That’s why the goal in Stage 2 is to attract customers to you because they trust you, they want the best, and they know you are THE expert.
How to Become the Best in Your Field
To succeed in the long-term, you must be perceived as the smartest person in the room. That’s easy enough to say, but it’s a little harder to achieve. Start by deciding what you are the best at. That means you will need to narrow your field of expertise. Highly-paid doctors do this all the time. For example, eye doctors make a good enough living checking your vision and prescribing glasses or contacts. There are thousands of these doctors, and it’s unusual to say that one eye doctor is clearly better than all the rest. LASIK eye doctors are a bit rarer and can charge more. An eye doctor who specializes in retinal health is even less common and in more demand. Specialists in neuro-ophthalmology are top-level specialists and attract patients from a hundred miles away. As is typical in most fields, top doctors usually go through more training and have more difficult certifications to obtain. Your local optician can’t just “decide” to start doing LASIK or neurosurgery. Their training and certifications are important (which is why they prominently display their graduation certificates in their offices.) Training, expertise, certificates, and awards are essential in any industry. A plumber with a degree from a trade school, certificates of apprenticeship, who speaks at the National Hardware Show, and who shows up as an expert on the local news has high-level credibility and instant trust from potential customers. This guy is a celebrity! Of course, he gets top dollar to work on your plumbing, and his company is going to get a steady stream of new customers because that company is perceived as “the best.” Being a highly-training and highly-recognized expert is one way to achieve excellence, but going back to the medical example again, specialization is also helpful. Eye doctors will have a much harder time standing out as the best without specializing in a less common aspect of eye health. But that doesn’t mean they CAN’T stand out. Opticians can be the most upscale choice, with a desirable address, opulent offices, and very high-end eyewear choices. They could specialize in children’s eye health or seniors’ eye health. The idea is to be different, be specific, and be the very best at your specialization. When you become laser-focused on one part of the business and stop trying to serve every aspect of the industry, you can get much better in the process. Your business can become known for a specialty, which will draw customers from a broader region and allow you to charge more for your expertise.
Being the Best: The Checklist
In addition to offering a specialized product or service, as the owner, you must back up your skills with proof of expertise. Here are a few questions to ask yourself.
- What are the highest certifications, accreditations, or designations that you can receive?
- Should you get a college degree or advanced degrees such as a Master’s or Ph.D.?
- What professional organizations can you join? Can you become an officer for those organizations?
- Are there professional seminars you should be attending (or speaking at)?
- Can you become part of a trade group or networking group?
- What clubs are you a part of? Can you hold office in those organizations? The higher the office, the more credible your industry leadership becomes. Can you create relationships with your local newspaper, radio station, or TV station? Can you be their go-to source for information in your field?
- Do your company communications reflect your expertise? What does your webste look like? Are you portraying yourself and your company accurately on social media?
- Remember that some credentials are experiential. What have you done in your past that makes you an expert now? Did you overcome a significant obstacle? Have you spent time with the leaders in your field? Did you win a big account, climb a big mountain, lose weight, overcome illness, invent something, or outperform your peers?
The Owner is the Star in Stage 2
As an owner, you build a company based on your personal experience, expertise, and abilities. You are the best at what you do, and you’re making sure your products and services are also the best in your category in your market. In Stage 2, the owner is the star of the business. Being the best attracts customers. Your personal and professional excellence helps your fledgling company gain momentum and increase sales. When the owner is the best, they can get testimonials and recommendations for the company.
Beyond Stage 2
While we all do what we have to do to get our business going, some business owners and entrepreneurs don’t want to be the center of attention in the long term. For these BOEs, Stage 2 is just that–a stage. It is a necessary step in a bigger strategic plan. Step 2 must be mastered before moving on to Stage 3: the Synergy Stage. Want to find out more about the 7 Stages of Small Business Success? If you want personalized coaching from an industry leader, contact 7 Stages Advisors for personal assessments, coaching, and recommendations.
You Don’t have to do it ALL! Scaling your Business
You Don’t Have to do it all! Start Scaling Your Business
Listen, if you’re like the typical BOE – Business Owner/Entrepreneur – you’ve probably done almost every job there is at your company. Most BOEs do a bit of everything in the beginning. They do it in part because they must, but also to prove that they can (and maybe to save a buck or two in the bargain). I know many BOEs who are perfectly happy to empty trash, change lightbulbs, write checks, and even paint the break room when needed.That hands-on, can-do attitude can be fun (and necessary) for a while, but it can also become unprofitable. That’s because the real value of a BOE lies in maintaining company vision, ensuring quality, and developing strategies to help the company grow profitably. And while it may sound elitist to some, there comes a time when a business owner has to stop restocking their own toilet paper. Any BOE who wants to scale their business must spend time doing the things that add the most value to the company and delegate the rest.
What’s the Difference Between Scaling vs. Growing?
Scaling really is much different than growing. When you grow a business, you’re doing more to get more. That means you work harder or sell more or do more. Let’s look at how this works with restaurants. If you own one restaurant and want to open a second, you may find that the second restaurant costs just as much as the first, that you have to hire just as many people, and that you make about the same profit. As the owner, you may find you have to spend just as much time managing the second restaurant. This is a classic example of growing. Scaling happens when processes are in place that support the business with some efficiencies of scale. That means you’re not necessarily asking people to sell more, do more, or be more. Instead, you’ve put processes in place that automate certain aspects of the business so that people work more efficiently, and your personnel costs don’t double when your business doubles. So, in the restaurant example, owners can scale by using a good payroll service, great recruiters, savvy buyers, smart managers, and a head chef to manage multiple locations. You can use this same team to help you open two or three or even four hundred restaurants. The additional restaurants rely on the systems you have in place to run smoother and be more profitable. And as owner and CEO, you won’t work 400 times harder to run four hundred restaurants. Growth happens because you do more. Scaling happens because you’ve created processes that expand your ability to do more. Both growing and scaling can multiply a company’s size, but scaling helps you do it in ways that fortify margins and expand the scope and possibility of your business without running you, the owner, into the ground.
So, how do You Know When to Delegate?
When you’re in the thick of running a business, the idea of delegation seems IMPOSSIBLE. How do you utilize a team? When should you hand off a task, a job, or a division of the company? I tell my clients that, as business owners, they should think of themselves as the highest-paid employee at their company. Maybe they make $200, $500, or even $5000 an hour. Once we have an hourly rate in mind, we’re able to evaluate the task’s worth by comparing it to their hourly rate. Would you pay someone $200 an hour to empty the trash? Would you pay an accountant $5000 an hour? Would you hire a recruiting firm that charged $500 an hour? It’s pretty easy to see that many activities can and should be handled by someone else and that BOEs should focus on the big picture.Think about how you spend your day and delegate the jobs and tasks that are, literally, not worth your time. Instead, spend time doing things that help you become more profitable and more successful.
The Ugly Truth: Delegation Requires Training
In Take the Stairs, author Rory Vaden talks about a formula of significance. He wrote that training people to handle recurring tasks takes time upfront (painful to do, right?), but it will save time in the long run.So, for example, if you’re going to meet with a designer to redo your office just once, it may be more trouble than it’s worth to train someone to work with that designer. However, if you plan to redecorate the lobby, the office areas, and other locations as well, or if you plan to make regular décor updates, it’s smart to train somebody else to handle these design tasks. To save time and be able to scale, you must identify the repetitive activities in your life and train someone to do them for you. Yes, you will need to spend more time training than doing, at least during the first few lessons, and most people dread teaching someone to do tasks that you can complete without much thought. But when you tabulate the time you save over a week, a month, or a year, you will see the value of delegating. For example, getting your mail and sorting through it might take five minutes a day. Deciding what to do with important mail can take another ten minutes. Fifteen minutes a day doesn’t seem like much. And training someone to take care of your mail, and answering their questions over the coming weeks could take two or three hours of training and follow up. However, it would only take about two weeks for the training time to pay for itself. And over the course of a year, you’d save forty hours or more. You’d get an entire week of time back.
Stop Doing. Start Delegating.
A successful BOE must focus on finding ways to build and scale their company. One way to do that is to look for ways to build systems, automate, create processes, and build an organization that runs well, whether you are in the building or not. Look for ways to scale and expand without investing an equal amount of your time and effort. Remember, as a BOE, your job is to orchestrate, refine, and build. Once you free yourself from the endless small tasks that fill your day, you’ll be able to dedicate yourself to strategic activities and long-term success. And once you do that, the sky is the limit.
Business Growth – Stage 1
Don’t Skip Stage 1
Look, we all want to get things done fast. So why not look for shortcuts? But when it comes to the 7 Stages of Business Success, it’s not smart to skip any of the stages. Especially the one many BOEs (Business Owners and Entrepreneurs) want to skip most: Stage One, the strategic planning stage. It’s easy to understand why this stage frustrates so many BOES. When you launch a business, you want to get started NOW! Whether you plan to make, create, or sell – whatever your business model – you probably want to start doing it and start making money. Strategic planning may feel like a stall or even a waste of time. That mindset is a mistake. The most profitable, sustainable businesses know how to sell things even before they make them. They have a strategic plan in place that helps them decide what to sell, how to sell it, what makes it special, how to price it, and more. Consultants like myself, for example, have to find customers before we can “create” anything. We sell ideas, promises, and results–not widgets. So we HAVE to start with a strategic plan. This “sell first, make later” approach takes a little discipline, but it’s worth it in the long run.
Already Started a Business? It’s Not too Late to Create a Strategic Plan
Yes, ideally strategic plans are in place before a business gets started. But if you’re already running a business without a strategic plan, it’s time to take a step back to Stage One. Even if your company has been in business 100 years, it can benefit from creating a formal business plan. Businesses without a plan are still sending messages to current and potential customers. Whether it’s part of an intentional plan, or it just sort of “happens,” everything your business does or doesn’t do is building (or destroying) value.However, if you take a step back, and develop a well-considered strategic plan, the things your business does will start working together to create momentum, and your business can start growing in the ways you want it to grow. Companies that operate day to day, without a roadmap, are probably sending out inconsistent, contradictory, incompatible, or even destructive signals and messages. There are a million idioms to describe the need for concerted efforts – get your ducks in a row, marching to the same drum, get in the boat and row, gather the troups, in it for the long haul, on the same page – that talk about the value of working together towards a common goal. When you have a solid mission statement, a well-articulated vision, and a set of values, you have guidelines. These guidelines help you grow methodically, intentionally, and reliably. A strategic plan not only enables you to identify the things you should be doing, but it also allows you to understand why some things just don’t make sense for your business.
Create a Vision for Growth in Your Strategic Plan and StickWith it
Business owners may achieve an initial burst of success, but without vision and focus, they suffer in the long run. The vision you create in the strategic planning process not only provides motivation, but it also helps you and your employees understand what you are building and how large and profitable you want your company to become.Don’t be afraid to think big. With a strategic plan in place, you’ll understand what you need to do to be very successful. While you may not reach your goal this week, you’ll be surprised how aggressive growth goals affect the way you run your business. Your plan will help you understand what you want your company to become, so you can stay on track, make decisions that lead you down your chosen path, and help end up with a successful seven- or eight-figure business. And the only way to get a clear vision is to develop a plan you can follow as your business expands.Want to know more about strategic planning, mission statements, and vision? Check out my best-selling business book, The 7 Stages of Small Business Success, or contact me at my consulting firm, 7 Stages Advisors.
Managing in a Crisis
How to Manage Your Business During a Crisis
2020 was a challenging year for businesses. The COVID-19 pandemic has been very tough on most businesses around the world. While it’s been challenging for companies to adjust to the “new normal,” by now, most of us realize that this pandemic will have lasting repercussions, and the need to pivot and adjust will probably be around for some time. If you’re a person who opened, bought, or expanded a company recently, you are probably angry. You didn’t ask for this. It isn’t fair. But this is one of those extraordinary times in history that robs us of the chance to collect our thoughts so we can confidently predict the future. We must make time-sensitive decisions. We must take action to survive the crisis.
Running a Small Business Requires a Focus on the Long View
For most small business owners, the great majority of their net worth is wrapped up in their organization. When a crisis like this one comes along, it can feel like your world is falling apart.
Some Business Owners and Entrepreneurs, or BOEs, are seeing years of hard work dissipate in front of their eyes. This can make you feel the urge to panic, so you must stay focused on your business’s long view.Reviewing the purpose of your company will help. Why did you start your firm in the first place? Who are you trying to serve? What are you trying to do? Who is ultimately going to benefit? As a BOE, who are you going to become during this crisis and how will these challenges force you to evolve personally? If you can reframe this crisis into a chapter in your life instead of considering it as a permanent state, you can start to think about what it takes to weather this storm. When you go back and focus on the “why” of your company, and reconsider what motivated you initially, it can help you stay sane. But just as importantly, it will help you stay driven.
Small Businesses Always Face Risk, so Don’t Fixate on the new Risk of This Crisis
These are scary times, and I am not suggesting for a second that you ignore the risks out there. In fact, I’m saying the opposite. Now is the time to acknowledge risk for what it is. Think about ways to balance and counterbalance possible risks, and make a plan for operating in this new typeof risk environment. Be realistic about risk, and plan around it. You can’t avoid it. But if you can stay nimble and manage risk for the next year and a half, go for it. Because the truth is that while they may ebb and flow, risks never really go away.
Honest Communication is Critical to Keep Your Customers and Employees Motivated
Uncertainty is a part of any crisis. Uncertainty is unsettling, even upsetting, to the people around you, including your employees, your customers, and even your family. However, you can provide some degree of stability just by being open and honest. Tell the people around you, “Here’s the situation. Here’s what we’re doing. Here’s my plan. Here’s what we’re going to look like on the other side.” Of course, there will always be people who don’t care or who don’t like your plan. Some employees will want to leave. Some customers will go away. Some family members may be angry. However, your honesty and transparency will help the people around you understand that every company goes through challenges and that greater forces are at work right now. As any business owner who has worked with histeam through hard times can tell you, times of exceptional stress and challenge bring companies together. Being upfront can help galvanize your team.
If You Established Healthy Margins in Good Time, You now Have More Flexibility
If your margins were already razor thin, you’re probably struggling now. Having healthy margins in place in good times allows for price elasticity when needed during a crisis. If you have enough gross margin, you can discount without losing everything. Maybe you can give your customers more generous payment terms. Bigger margins may also allow you keep your staff, even when sales fall. However, a business with thin margins has no choice but to become part of the crisis when the world tilts.
How to Give Your Small Business an Extra 30 Days of Credit
Don’t underestimate the value of giving yourself extra time. For example, say you have a credit card with a $20,000 limit, $20,000 cash in the bank, and a $20,000 bill to pay. My advice would be to ask yourself, “When do I absolutely have to pay that bill?” If you have 30 days to pay that bill, take 30 days. Then look at your credit card and think about when you’ll get billed for this charge and when the payment is due. Usually, the amount won’t show up on the credit card bill for another 30 days AND you’ll have 30 days to pay it.By using credit to your advantage, you can give yourself up to 90 days before you have to spend the $20,000 sitting in your bank account.
Cash and Credit are Essential Business Tools: Know how to use Them
Even if you avoided credit in the past, don’t ignore its usefulness now. Using a credit card is essentially a bridge loan. Even when you pay a little bit more in interest, you still have a lower monthly payment. In today’s lending environment, borrowing is relatively inexpensive. So whether it’s a credit card or a line of credit, credit is worth having–and using.
Even When COVID Goes Away, There’s Always Another Crisis Around the Corner
As of this writing, the development of highly effective vaccines has been announced, and it looks like we can virtually eradicate this strain of COVID. But it’s unlikely that this is the only big crisis we will see in our lifetime. Health, weather, politics, and even world events act as external pressures onour businesses. These external pressures can increase at any time, sometimes overwhelming us. The good news is that preparing for a crisis helps your business weather the storm. The bad news is that eventually, storms will return or arrive in a new format. Your business will always face challenges. But with the right structure, preparation, and plans in place, you can come through challenges stronger than ever.