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- 3 Keys to Getting Your Growth Unstuck
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Let’s dive in…
I wrote last week that I commonly see businesses getting stuck at the $1m, $5m, and $15m revenue thresholds.
I’ve also noticed some themes in what gets them unstuck and growing again.
Every business is different but the reality is once you strip away some window dressing, they all pretty much taste like chicken.
So here are the most common problems I see at each level:
$1m in revenue: Just go sell more.
In a company this small, the owner is key to just about everything. He also doesn’t have money to hire really good and experienced people.
But out of everything making demands on the owner’s time, only one is paramount: sales. No sales=no company.
My recommendation is to try to use cheap offshore or 1099 talent to offload anything non-sales related.
Invoicing? Payroll? Client service? Etc. These can all be delegated but only the owner can really sell.
$5m in revenue: Hire some managers.
Now that you’ve sold enough to get to approach $5m, the most common problem is owner overload.
While you have hired that cheap offshore labor and figured out how to keep all the plates spinning while you sell, you’re most likely in hub and spoke mode.
You’re the hub and every employee spoke is coming to you to get decisions made.
It’s unsustainable. At about $3m in revenue, I recommend that owners go try to find their first real manager.
You need someone who can operate at least semi-independently and begin to create another hub.
I usually see this person being a back office or client service focused hire. Sales still sits with the owner.
$15m in revenue: Building a leadership team and systems.
It’s around the $5m mark, that you need to start documenting processes and creating systems to run your business.
The owner can’t be involved in everything anymore. You need to create a process so that new people can learn to do whatever the task is at about 85% of the effectiveness of the owner.
The second key area is building from that first management hire to eventually having a full leadership team.
At around $10m, you’ll start needing managers for operations, sales, and finance/admin. That’s really the minimum and as you grow past $15m, you’ll likely split out people/HR, maybe marketing, etc.
Somewhere after $5m and before $15m is when you need to transition sales from the owner to a real process and system that a team can run. The owner is still involved but every sale can’t depend on him anymore.
I’ve seen lots of owners confuse these stages. When you are at $2m don’t worry about processes. You need to sell more. Most people are working with you directly anyway so they don’t need a process.
Similarly, I see owners at $10m trying to work with inexperienced people running major functions of the company. That always ends badly.
Know where you are in cycle and focus your time accordingly.
Keep growing,
Alan
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