19 Sep Beating the Odds: From Startup to Multi-Million Dollar Business – Part 1
Most startups will fail within the first two years of being in business. It’s easy to see why – the landscape is difficult, and the training for entrepreneurship just doesn’t exist on a mainstream level. Piecing it all together and giving it everything you have will give you a good shot at beating the odds.
I’m going to summarize as concisely as possible the things I’ve learned that have contributed to escaping the “startup” phase and shifting into a well ran business, generating millions in revenue, while being as profitable as possible and growing as quickly as possible.
This will be a two-part post, as there’s quite a lot to cover here. By no means am I even done learning or know everything, in fact, I’ll make the case that I’ve just begun. Throughout the entire journey, one thing has always remained constant – and that’s making “outside your comfort zone” the new normal, and doing things others aren’t willing to do. It’s pushing forward and finding a way even when you fail. Constant growth, and constant evolution. With that as the main theme, I’ll explain what I’ve learned, in the best chronological order that I can.
1. Starting Out
Your Strengths and Natural Abilities
You’ll have some natural skills and talents; ways of thinking and being that others don’t. That’s your edge – use it. If you don’t know what these are yet, I recommend picking up Strength Finder 2.0, a great resource to identify it.
It’s also important to know your personality type when choosing career or business paths. The Myers-Briggs 16 personality types work really well at categorizing this while offering suggestions and actionable items based off of your test results. Take the test right here and print it off for reference. Also get to know all of the different personalities out there. The most common people you will find are likely to be “ESFJ”s, which can contrast greatly with strong leadership personalities like ENTJs.
The most important thing you can do when starting out is to know what you’re good at and really work those skills to become a master. Once you’ve mastered something meaningful, the doors can open.
Your Weaknesses and Shortcomings
I’ve never been a stellar sales person. Despite many, many sales calls, books, online courses, and mentors – I became “good” at sales, but never great. It’s not my forte. This became very apparent to me when I saw a friend doing sales calls and realized he got 10x the result with about half the effort – and had barely read anything on the subject of selling.
I realized I needed to outsource this skill to maximize my results. However, since it’s arguably one of the most important skills in business, I shouldn’t outsource or hire for it – but to instead partner with someone with that particular strong skillset. And that’s exactly what I did – and when I made that move, the business grew 500% within the next 12 months.
The lesson I learned was to focus on what you’re great at, be competent at what you’re not, and team up with those who have opposite skillsets.
2. Branding and Positioning
I used to think branding and market positioning didn’t matter, only sales systems and taking the right actions towards top line growth. But the fact is that a strong, well-crafted brand that connects with your niche market makes the sales process much easier and your business ends up thriving faster.
The reason I ended up with Executive SEO wasn’t by mistake or chance but through market feedback and catering to the type of clientele I wanted. Initially, and even still today, law firms and professional corporations make up the majority of our revenue.
In the very beginning when I first started doing internet marketing, I was using the brand of “Gustindustries”, a play on my last name with “industries”. I thought it was so clever, however, it confused most of the potential clients (and even friends) as to what exactly I did. I decided to rebrand and keep trying under “Executive SEO”.
The next re-positioning step our organization will be taking is a big one – moving away from just an “SEO” provider and transitioning into a full-service agency.
This is a big change, and will involve a substantial rebranding and rethinking of how we go about approaching new business. It’s the difference between approaching prospects as a “tactician” (an executor of a specific marketing tactic) vs. a strategic partner (who aligns with their goals, gives roadmaps to achieve them, and sets their marketing budget). I’ll get into this more in future posts as it evolves.
3. Mentors & Coaches
I realized the true value of mentorship much later than I would have liked. If I could start over, I’d actively seek out:
- Business owners of any industry with 20+ years of success and experience (even moderate success)
- Industry mentors and coaches willing to help out new startups
- Clubs and events with similar level entrepreneurs
There’s a distinct difference between a mentor and a coach. A mentor is there for guidance and consulting, giving valuable insight to help you avoid common pitfalls, and pitfalls they have made themselves. This is the value you gain – years of someone else’s trial and error.
Coaches are people who actively show you how to perform a set of business tasks, strategies and develop skills in real-time. They show you through the process, giving tough love and feedback as you improve. The quickest way to get good at anything, whether it be tennis, poker, business or chess – it’s always best to hire a coach. They are able to identify your blind spots, weak areas, and opportunities from a different perspective than your own. It’s like shedding new light on your business processes.
Sales and Profitability = Above All
Sales Systems & Accountability for Predictable Growth
The most important metric in any business is profitability. Without it, you have no business – not for long. This is the first and foremost driver of success, and your number 1 duty as an owner. This duty manifests itself in every business process – driving sales (more customers), operations (delivering on what you promise), customer service (making sure customers hang around) and even accounting (measurement of business health).
One of the first systems you’ll want to tackle is sales. Predictable, profitable growth means you can make a lot of important business decisions you wouldn’t otherwise be able to. Like when and how fast to expand, which channels are bringing you in your desired customers, and how quickly you can actually grow (cash flows/predictable revenue forecasting).
Systemizing sales will take a lot of work. First, you’ll need be using a lead tracking tool like Salesforce or PipeDrive to manage, categorize and measure your lead flow. I recommend using PipeDrive for growing businesses due to the wide range of easy to use features, team/email activity capability, and the unique visual layout. You can drag potential deals through the pipeline as they progress, and even great a new “Current Clients” pipeline to move them to for account management once they have been closed.
Using your CRM software, if you figure out it takes 30 cold calls to get a solid lead, and 3 solid leads to make a sale, then it becomes a math formula of which you can continually optimize for.
- How many hours and overhead does it take to generate those 30 leads?
- How can that be improved?
- How can you go from closing 1 in 3 to closing 1.5 or 2/3 leads?
These are questions you can ask, analyze, come up with solutions, test solutions, and better run your business for growth.
There’s a concept we took from College Pro, a large painting franchise that does this sales system really well. The concept is holding weekly sales “GSNR” meetings, which stands for “goal setting and review”. (By the way, taking ideas from other industries and implementing them in your own is a great way to take advantage of cross-pollinating success).
In these weekly meetings, we review where we are in the month, quarter, and year – in contrast of our goals and where we strive to be.
Weekly goals are set, usually by the number of leads generated, moved through your sales funnel to the next steps, and how many have been closed or pending closure.
This information can also be passed along for financial forecasting purposes. Once you know the average deal size of a customer and how long it takes to close a deal, you can predict fairly accurate your 3-month top line growth. One step further, once you know how long it takes an average customer to pay, you can calculate your cash flow forecast, allowing you to make investing or hiring decisions.
Know Your Ratios
Financial ratios become key once your business starts growing quickly. Here are your most valuable numbers:
- Net Profit (both $ and %)
- Net profit change from previous period (both $ and %)
- Cash flow change from previous period (both $ and %)
- Return on assets
- Return on equity
- Current ratio
- Cash ratio
- Net working capital
- A/R turnover
- Debt ratio
- Equity ratio
- Debt-Equity ratio
I won’t be going into all of these here, however, this website is great resource for learning these calculations:
It’s important to know and understand these numbers as they trend monthly/quarterly and annually. Especially cash flow and net profit being the lifeblood of your business – I’d suggest monitoring this each month. If you don’t know how to do cash flow projections, I’d suggest putting this high on your priority list. Most startups fail because they actually grow too fast and crumble from the inside out. Don’t be that guy.
QuickBooks software makes a lot of the financial work autonomous, quick and easy to do. I’ve been using it as our accounting software for several years now.
That’s all for now. In the next post I’ll be talking more about leadership, team development, the hiring/firing process, turnover and deliberate company culture. Stay tuned.