Scale: Seven Proven Principles to Grow Your Business and Get Your Life Back - Hardcover

INTRODUCTION

In 1992, a 22-year-old undergrad dropped out of college to launch his own business. He wanted to be his own boss and decided to build a company selling health products. His sisters told him he was a “*$%*&^@” idiot, and his befuddled parents asked him softly if he wouldn’t rather finish his degree first. But he was committed to make this, his first real attempt at formally building a business, a massive success. He bought the wholesale rights to a line of health products and invested his life savings ($3,200) in stocking inventory and setting up a small office, then spent long hours marketing the line, personally posting thousands of flyers and making hundreds of sales calls.

Eight months later, the business had failed; his family graciously never said “I told you so.” But the story doesn’t end there. The good ones never do.

After taking some time to lick his wounds and salve his bruised ego, our now 25-year-old recent college grad made another go in a totally different business. His earlier failure had taught him some crucial lessons (including a sorely needed dose of humility). Cataloging his talents and interests, he decided on a new industry—info-marketing. He made a list of the top ten business leaders in this industry and approached each one, asking for the opportunity to interview them about how they had built such successful companies, and asking for any advice they could give to someone just starting out. Initially, these big players ignored him, but he was persistent, hounding them until he finally got eight of the ten to meet with him. In their interviews, these leaders spoke candidly about the lessons they had gleaned after decades in the business world, climbing the same peaks our young businessman wanted to scale. He took their advice to heart, following up on skills and topics they said he would have to understand to be successful. He read dozens of business books and made a study of how to successfully build a business.

Eight years later, he was an “overnight” success, the owner of one of the top real estate training companies in the United States, having trained more than 50,000 investors who went on to buy and sell over $1 billion of properties. With no debt or outside investors, his company generated over $3 million of annual operating profit and was valued at $10 million to $16 million. After he sold this company, he went on to found and build half a dozen other successful companies, each time leveraging the lessons and experiences from his earlier businesses.

In 2009 a mutual friend introduced him to a business superstar—a guy who had helped launch and grow one of the fastest-scaling companies of all time, Priceline.com, which had grown from $0 in sales to over $1 billion in less than four years. When the two of them met in Atlanta, they talked for hours, realizing they had a lot in common—especially their shared passion for mentoring and coaching other business owners. One had built several multimillion-dollar companies and personally trained more than 100,000 business owners; the other helped build a multibillion-dollar company that revolutionized an industry. But they both loved coaching and mentoring business owners to scale their companies.

You may have already guessed that the college dropout turned successful entrepreneur was David, and the Priceline.com superstar was Jeff. Like David, Jeff launched his first start-up, a software company, while still in college. Unlike David, Jeff and his team nailed it with their first company, which they later sold to American Express for millions. Priceline.com was actually Jeff’s fifth start-up, and after the company went public and Jeff transitioned out of the business, he went on to be the CEO of uBid.com and RedTag.com. He even launched a very successful entertainment company, Black Sky Entertainment, which went on to generate over $100 million in sales.

We’ve both lived the life of serial entrepreneurs, not just launching companies, but leading them through those all-important middle years when a business must either stay stuck as an extension of the founder, or scale and grow independent of the owner. Over the years, we’ve grown our friendship and shared the stage teaching at various business conferences. During that time, we came to realize that we shared a complementary skill set and approach to growing companies. And we also learned that we had shared experiences of those scary, absorbing, and exciting years when these businesses began to grow at triple-digit rates or faster. We joked that at times it felt like we were on the back of a rodeo bull, holding on with all our might, praying for that eight-second buzzer to sound. The thing we discovered is that whereas in the rodeo those eight seconds are literal, in your business the buzzer doesn’t go off for years.

We also realized that we shared a frustration with the existing business books that addressed scaling a company. Too many told readers what to do, but didn’t have the details on how to do the what to do. That’s why we decided to pool our years of experiences to write this book. We wanted to put in one place a structured, systematic approach not just to create growth, but, more important, to show you how to survive and enjoy that growth by leveraging the systems, team, and internal controls necessary to sustain that development over the long term. Following this methodology, not only do you get growth in sales and profits, but you’ll also enjoy increased freedom as the business owner. You can build a company that is stable, vibrant, valuable, and a joy to own. This book contains the guiding principles and the concrete formulas you can apply to consistently create the dual results of business growth and personal freedom.

We are primarily serial entrepreneurs, not authors. We love building businesses, and have been fortunate to enjoy some big successes, and to have survived the stupid, messy mistakes that, looking back, were both predictable and avoidable. While we wouldn’t trade our paths, we wanted to catalog and share our real-world lessons about how to do it better, smarter, and faster. This is the book we wished we had read when we were struggling to grow our earlier businesses.

Everything you read here has been tested and validated. It is proven to work; we’ve used it to build more than a dozen successful companies with combined sales in the billions. More important, over the past ten years, we’ve taught these ideas to more than 100,000 business owners around the world, and the results they’ve gotten have proved the concepts, strategies, and tools are transferable and get results. We wrote it so that you can read any chapter, put down the book, and immediately apply several of the key ideas the very next day in your business—generating immediate results.

The ultimate goal for a business owner is to build a company that he or she can one day sell, continue to scale, or even own passively. Most business owners reach for growth by working harder and personally trying to produce more. This is a flawed model that at best will lead to only moderate growth. At worst, this strategy can literally put your entire company at risk.

Instead, we will introduce you to the Level Three Road Map, a comprehensive model for building and scaling your business. Essentially the Level Three Road Map will help you go from a Level One business (a start-up), through Level Two (an owner-reliant company), to Level Three (a rapid growth or “exit stage” company).

The bottom line is that scaling your company and reaching the ambitious goals that you really want requires that you move beyond an “owner-reliant” business to one that is systems driven, with a solid management team and intelligent business controls in place—a Level Three business.

Overview of the Book

First and foremost, this is a book about rapid growth, and how you can build a scalable business that not only consistently grows, but also sustains that growth over time. What you’ll come to learn is that a direct by-product of building your business the right way is that you’ll get your life back. It is a broken model that says you must work 80-hour weeks and sacrifice everything to grow your company.

You don’t have to choose between your business and your life. Rather, if you do it right, you get your business and your life. In fact, we strongly believe that the only way to build a truly scalable business is by radically reducing its reliance on you, the owner, and supporting that rapid growth through systems, team, and internal business controls.

Part one of the book focuses on building a solid foundation. You’ll learn the essence of the Level Three Road Map. This structured formula to scale your company not only will help you create and sustain rapid growth, but at the same time will help you dramatically reduce the company’s reliance on you. It closes with a simple tool to help you clarify your business context—the market you serve, the competition you face, and the position you want to claim in the market. We’ll approach all three of these key dimensions of your business context in a radically different way than it’s likely you have ever done before.

In part two, you’ll identify the fastest leverage points to grow your company and how to turn those leverage points into a winning business strategy. What’s more, we’ll give you our step-by-step process to create a clear, actionable, one-page plan for executing your strategy on a rolling, 90-day basis. You’ll also learn how to read the rapidly changing world around you in order to continually keep your business fresh and relevant to the marketplace.

In part three, we’ll walk you through how to overcome the predictable obstacles to scaling, pillar by pillar. From lead generation to lead conversion, operations, finance, HR, and leadership, we’ll give you proven solutions to dozens of the toughest challenges you’ll face as you scale your company. You’ll learn how to build “expert systems” to pull out the key know-how that currently is locked in the heads of a few, expensive employees and replicate that expertise in scalable systems; systematically grow your sales; manage your cash flow; fund your growth; and create a culture of accountability inside your company.

In part four, you’ll find out how to leverage your time to scale your company. We’ll give you a brand-new model to think about time, and six simple time mastery strategies that will help you upgrade eight hours a week of time you are already working for higher and better uses to grow your company. We’ll also give you a clear plan to implement the ideas from the book in a manageable way.

Whether you’re a small, 3-person retailer doing $350,000 a year in sales, or a 22-person service business with annual sales of $2.5 million a year, or even a 255-person manufacturing company with $26 million a year in sales, this book will give you clear, actionable insights to grow and scale your company. Not only will the systems we share help you sustain long-term success, but you’ll also see fast results.

The road map we’ve laid out for you to follow will enable you to scale your company the way you’ve always dreamed you could. We hope you’ll reach out to us after you read this book, and share your own stories of success. (Our contact information is at the end of the book.)

7 Free Online Tools to Help You Grow Your Business

Because we know how important executing on these ideas is to help you enjoy the growth you want, we created a special Web site with seven tools to help you get results. This free value-add for readers like you includes downloadable PDF versions of all the strategy tools shared in this book, along with dozens of valuable video training sessions to help you scale your company and get your life back.

To get immediate access to these tools just visit www.Scale YourBusinessToolkit.com. (See the appendix for full details of all seven valuable tools.)

PART I

Building on a Solid Foundation

Sometimes it feels more like my business owns me than me owning my business. I’m reasonably intelligent and self-motivated. I’m willing to put in the work to grow it, I just need the right road map to show me the best path to grow my company and get my life back.

—Comment by anonymous business owner at recent conference

PRINCIPLE ONE

BUILD A BUSINESS, NOT A JOB

The year was 2007 and Tom was burning out. He was running a successful wholesaling business in Florida, but the 80-hour workweeks were getting to be too much. He had two young kids at home whom he wasn’t seeing enough, and he felt torn between the demands of the business and being present with the important people in his life.

And if Tom was tired, so was his wife, Lee. She was tired of Tom missing out on family dinners, not being more involved in family activities, and of watching Tom’s long hours impact his health.

Tom and Lee knew they needed to find a way to get out from under the crushing pressures of running the business day-to-day, but they didn’t know how. Nor did they want to lose the momentum in the business. They felt the same way so many of us do—trapped by our business, like Atlas, holding the world on our shoulders, afraid to take a step back to reevaluate our position for fear that the whole thing could come crashing down around us. We dream of a way to grow our businesses without sacrificing our lives. But for Tom and Lee, as for a lot of us, it just wasn’t obvious how to do this.

So Lee went online to research potential solutions. That’s when she learned about a business workshop we were hosting in Arizona to raise money for several nonprofit charities.1 The goal of this workshop was to teach business owners how to design their businesses both for growth and for reducing their reliance on the owner. Lee wanted to encourage Tom to continue to grow the business but to do so in a way that allowed him to spend more time with the family and didn’t take such a harsh toll on his health. She bought him a ticket to the event and arranged his travel.

That workshop taught Tom many of the same tools, strategies, and principles that you’ll be learning in this book. When Tom returned home, he immediately began implementing what he had learned and watched as his business blossomed. He also saw his family and his personal life bloom as well, since he finally learned how to manage them both together. Our goal in this book is to help you achieve that same balance of business growth and personal freedom.

Prior to the workshop, Tom thought his business needed him to oversee each and every detail. He believed he had to be there every moment of the day to drive his team forward to produce results. We introduced him to a new approach to scaling his company, one that he could implement in his business in bite-sized chunks that fit in around his responsibilities running the day-to-day. Quarter by quarter, he watched his business grow and its dependencies on him shrink. By 2013 not only had he scaled his $5 million a year wholesaling business into a $23 million per year venture, but he had reduced his hours in the busin...