There are seven stages of business growth.
Start by recognizing where you at with your business. With this, you’ll be able to create a business plan that will help you go to the next stage.
Stage 1: Solopreneur
Solopreneur is the person who one day decided that they’re really good at what they do. So they quit their job and take their knowledge and skills and go make money with it.
For a lot of people, that’s like jumping off a bridge. But what’s interesting is most business owners can pinpoint that exact moment when they made that leap – when they decided they were going to become an entrepreneur.
Most people think they’re crazy, but their family believes and support them. It’s a stressful moment and a big milestone in people’s life.
What happens is, you start trading time for dollars. You might reach a situation where you’re going to tap out at a certain dollar amount or the number of hours you’re giving.
Stage 2: Partnerships
As things grow, you are leaning more into level two which is really needing to hire your first employee. You’re going from that 150k level to about a 300k level.
That’s when you start having to get into multiple systems to be able to manage not only the marketing, sale and database side – now you have an employee to train, to hire or fire.
As you continue to grow, if you think of it as a line graph, your sales are going diagonally upward. And initially, your employee engagement will start horizontally and starts to come up to almost meet the graph.
What ends up happening is your expenses go up as does your revenues because you’re hiring so many people. So as you start going through level three and four you’re hiring more people, you’re making more money, but realistically your profit is not keeping track with your growth.
As businesses started going through these levels, what ends up happening is the business will spike at a certain level, usually level two to three. Then a bunch of things happens:
- systems weren’t adequately imported, and they don’t keep up with the business;
- the employees are not actively involved in this because there’s not a foundation of core values that are built on the company to hire and fire the right people;
- customer service will start waning because you can’t keep up with orders.
Most business owners do not have a clear concept of what core value is.
For example, there was this company that had everything against them. Essentially the first thing that was advised to them was to have core values.
Core values should be what you live by, what the Why of the company, how do you want employees to interact with your clients, how do you want the average attitude to be in the office, what do you want to have people excel towards.
“We leave our ego at door.”
“Fast is better than slow.”
“We constantly improve.”
“We believe in businesses and their dreams.”
These are core values that if your employee comes in one day and they’re just feeling entitled, that’s against the core value.
So with the core values, that is the foundation about you build off of so that there’s no question on where the company’s going. Everybody from an executive level down to the person on the lowest pay grade will live by those core values.
That allows you to be able to scale more efficiently as you go through different seven layers of business growth.
Multiple things happen when a business fails. Number one, you have to have a decent product to be able to sell much. But when you’re hiring people who are around you – your brother-in-law, your cousin, your best mate from down the way – you’re just finding people that you already have an association with.
But if you have something that says, “This is who the business is for.” You will have a clear idea of what profile you’re going after. Having them follow the absolute core values they need to have to be able to succeed in your company, will make it so much easier for you.
The tertiary piece is the planning. Have they been able to adequately wrap their mind around systems?
When you make a hundred thousand dollars, there’s not a lot of systems you’re going to need. But what happens when you get 300 thousand and you have a payroll? Well now you have systems you need like a database system, a CRM system, marketing automation, you need reputation management on any social platforms to be able to send postings, you need to be able to track your Google pages.
There’re all these new systems that come into place and what happens is the person who took the leap in the first place, the entrepreneur, gets stuck in technician mode because it’s easy and that’s what they know.
When they’re in technician mode, they don’t think they have to start putting their CEO hat on and giving their technician hat to somebody else. So when they’re not making that decision, what ends up going on is they run faster and work harder with fewer results. That’s a big piece of a fail factor for small businesses.
You have to have the core values immediately. If not in the first year of your business, you have to have it as soon as you start hiring people.
Let’s look at a scenario:
Johnny entrepreneur decides to start his own business. He makes cakes and he’s really good at making cakes he wants to open a bakery. He gets capital he opens a bakery based on the past skills he has, and he said he’s handling all these things in a brick-and-mortar.
Since he’s small right now, there’s not too much he can’t just manage with the time but he’s still busy. After the first year or two, he’s having some success he has to hire Suzy. Suzy is somebody he knows from school or from down the way.
Johnny has this bag of tasks and stuff he has to every day that just drive him nuts and he doesn’t want to do it anymore. He shouldn’t be doing anymore as he needs to run the bakery.
So he hired Suzy and he gives her his bag of stuff. Now Suzy opens it up and she’s excited to be there because she got a new job, but she looks in there and what does she see? She sees a bag of trash. Which are miscellaneous junks that Johnny hates and doesn’t want to do anymore.
What ends up happening is after the first three months of Suzy’s “excited season”, it will drive her nuts too. She looks this bad trash that never seems to end and then she starts becoming disgruntled.
After about a month four or five and six, she’ll get sick and tired of coming in and dealing with chaos and multi-systems that aren’t really connecting together. She has to be the human USB cord in a weave between all these systems and she’s doing all the manual work.
There’s no core value, there’s no systems thought and there’s no planning. What ends up happening is Suzy ends up ticking off customers, doesn’t work on the business with Johnny and think of bright ideas on how to grow the bakery. And she’s certainly not doing anything to upsell, cross-sell or develop any kind of partnerships.
She’s actually costing Johnny a paycheck every month and she’s costing ticked off customers. They’re having customers or other employees see her as cancer.
So by eighth or tenth month, Johnny’s having to make her redundant and we have all these laws which make it hard to just fire her immediately. Johnny’s going to end up spending more money because he didn’t have a core foundation down, he didn’t have the basics.
Start your employees well, start properly like run a proper induction process, have the systems in place and show them your core values – what are you striving for, what’s the position really about – and make sure you do regular meetings to make sure that they’re getting the best out of the job. It is really about having systems set up.
A lot of businesses when they start up, they don’t get taught this stuff and they just get left behind. They don’t even know what an employment system is.
Realistically, unless you’re going into the corporate world, a small business owner needs to understand the fundamentals which are:
- Has the business acquired core value to hire and fire;
- Do future casting for systems that you’re going to need like a database and all their systems that need to come with that;
- Have the ability to understand the simple processes of hiring and firing.
There are other things too but there’s some there are some key doctrinal pieces we call “Business Doctrine”, because if you break the doctrine things don’t work as well.
Sense of Ownership
There’s a principle that we think a lot of small businesses forget which is the sense of ownership.
You have to give your team members a sense of ownership so that you have the right people building for profitability like we all want them to do.
When the employees understand the Why and they don’t just understand that mentally but they feel it, they’re vested.
They’re not here to be just a sticker and a paycheck and that’s called employee capital.
When you can build in the Why, into the core values and into the purpose of Why you’re there, all of a sudden that employee has something to hang their hat on. They know why they’re coming in every day, hoping that their big machine will work.
With the Why, if they’re set right with the values, they will build organically without having to be told what to do all the time. It’s no more adult babysitting for the CEO.
So when Entrepreneur Johnny gets asked what he thinks about a process to make it better, he then comes up with a plan and presents it. And all of a sudden there’s human capital that just got built into your company because you identified the Why, the mission and the purpose of the values with that employee.
You should literally be thinking about the purpose, the mission, the values right off the bat and then putting a hiring plan in place that meets the core value component with the balance of performance. You don’t want to have many people who love your business and love everything you’re saying but can’t back it up with the performance.
There has to be a performance component to any position.
The minute the entrepreneur decides to go into business there needs to be a Why. Not just a how, but a Why. And that Why needs to morph over time to become richer.
So even if you’re in stage two and you haven’t really cemented the Why, you can still go back and cement it. The Why is the most important piece on that question, “How do you move from a stage one where you’ve got one employee to a stage four where you’ve got $1,000,000 to five million dollars coming in?” It keeps everybody there moving forward.
You’re Why has to be business-centric. It needs to be like, you wanting to make the world a better place or you wanting to help your customers and not just about lining your pockets.
If you give people what they want, you’ll get what YOU want.
The true principles in building a small business even a medium-sized and enterprise, it’s in the services that you offer. Not just tangible services, but about the goodness of your product.
The piece of the product or service you offer, will it actually build somebody’s life to make them be a little happier, be a little more efficient or be a little more fulfilled in their life now.
Think about all the things that you have as a consumer. You might enjoy your Apple Computer because it makes your life simpler. It that saves you time and saves money because you have all your things in one place. That’s a tangible benefit to you and your family versus having a hodgepodge of devices
You can say it’s a product, it’s trivial… no, it’s not! It makes you happy because you can go and do things now that you typically have to go and spend time in frustration.
So does your product with the Why add happiness or fulfillment or peace of mind to other people? Therefore you can say, “I bless those people’s lives with my product. My Why is tangible it actually works. My vision and my mission and my purpose are clear to be able to continue doing more of that. Thus, my employees will rally behind it because it’s a good cause, it’s a quality cause.”
You’ve got a great foundational piece to then go and join partnerships. They’re going to be a partner because you have quality. Or if you want to go and raise your capital, you can have them look at your business because you have a good foundation now.
Don’t stop there. You got to keep looking at systems, at planning, there’s a lot more from there but it’s called Growth.
Level 3: Recognizing Where You At and Creating the Process to Move to the Next Level
The stages we’ve looked so far are:
The third stage is characterized as a steady operation. That means you now have between 300,000 and million dollars coming in revenue. You’ve got 4 to 10 employees.
With that, systems that you had in stage two have all broken or they’re getting extremely taxed and you have to shift systems.
You don’t want to shift core values, you don’t want to shift the Why. You can modify those things and make them better than they originally were.
In stage three, you have to really understand how you’re hiring firing you, you have to understand the systems are going to take you to the next two levels.
Level Four: The Systems Are Broken
So basically level four is the million to five million, with 11 to 25 employees. The systems that got you to that point are all broken.
One of the things that need to happen in this group that we’re looking at, which is level three, is are you meeting at least once a quarter to go over a SWOT analysis.
Are you going over S.M.A.R.T, strategic planning that basically allows you to understand where things are limited, where do they need to change, where don’t we need to invest money in, where does time need to be invested in.
If you’re having those SWOTs and SMARTs, you’ll have quarterly priorities that come from that which are very concentrated on growth.
A lot of these marketing firms, agencies, and businesses that are in level three is they’re so running because their business is running them. They don’t have that time or they don’t make the time to sit down as a C-level group and plan the quarter.
Entrepreneurs don’t realize there are different stages that they will morph into and they’re paralyzed by the unknown.
When entrepreneurs realize that there will be those shifting of gears as a necessity and if they have the foundation in place, there is no more fear because they’re prepared.
Fear is relevant because they’re not prepared.
As a business owner, you should be working ON the business, not IN the business. Should you be actually out there swinging the hammer or should you be there working on the business to be able to grow the business. Seeing what the numbers are in the business and play it to your strengths, which as an entrepreneur, should be the vision of the company.
Kirk had a client partner that he used to manage in Sydney. By default, they did really great work for a software company. The people loved what they did and they got a lot of word-of-mouth. They were husband and wife.
However, they did not want to sell. They did not like sales. They just wanted to be technicians. Kirk had to go to Sydney to meet with them. He sat them down and said that either of them should be the CEO of the business. They both looked at each other and said that they’ve never thought about that.
Right there and then, Kirk made them make a decision. The wife became the CEO and the Sales, the husband became the operations. And all of a sudden, they entered level two which is where they’re going to start hiring employees and partners.
The other lifehack for businesses is, do you have a functioning organizational chart that shows at least in the minimum of a three-year stretch pattern – where is the CEO? Where is the CFO? Where’s the mid-level marketer for the VP of Sales or for the Director of Sales? Where’s your operations manager? Who’s customer service?
All of these roles need to be built up. Even if you don’t have the bandwidth or the money or capital to get them yet, you know what you have to scale to work.
At first, you might have to build the organizational chart with you in every spot of the chart. Think which areas you would want to get out of and overtime, replace yourself as you grow in revenue and clients.
But if you don’t have a plan, if you don’t know where you’re going, sooner or later you’re going to have to make a plan. The worst you can do to a business is to halt momentum to create a plan.
So start with the plan and be able to pivot and change as momentum grows based on profitability and where the expenses are.
Let’s look at social media. People dive into the social media side of things and they don’t know what’s to post, they don’t know whether it’s working, they’re not on multiple social media platforms. So they end up just spending a bit of time all over the place instead of being on one consistent thing.
Instead, you can have one message, which could be your theme for the month and put it up on the social media. All that posting can be done one day in a month or one hour at the beginning of the month. This leverages your time.
If you sit down and have a plan to start with and strategize. And then use that strategy on your social media.
Our platform looks at the review side of things as well. When you’re getting people to send you reviews, you get notification of a review and then you can respond to them quickly. It engages them, helping with your Google rankings.
If you got somebody underutilized, you can train them up to use the platform. The idea is to make sure people understand what they’re doing, what their goals are, and what they want out the software.
First and foremost, the business has to do an internal audit. They got to say who they are, what value do they bring to the marketplace and what do they want people to say about them once they’ve used their service and that starts with your purpose, your mission, and your core values.
Once you have what is necessary for your business identity, then you can define that then you can hire towards that.
Also, do a self-audit on who you have internally that you can increase their value. Look at the people you got and look how to grow them into leaders and to create that sense of ownership in the business’s mission, purpose and core values.
Through technology and systems, you can really grow a sure foundation that will take you quicker and easily into those different stages of success in small businesses.
Another good thing about the EdentityPro software is because you can actually see things that are working on your website. You can see the reviews you’ve got posted, the people who you’ve sent invites to and so you can proactively make decisions about your business.
Once you get those tools in place you can make strategic decisions. You can make informed decisions.
It’ s like having Key Performance Indicators for your team. If you’ve got one rotten apple in there and they’re not performing, get rid of them quickly because it’s going to turn the rest of the team sour.
Without KPIs in place, you wouldn’t be able to tell whether they are working or not working. You also need to be able to see the feedback from your other team members.
Never assume that everybody else is succeeding and you’re not. You might be looking abroad and seeing success, but you’re not seeing the internal struggles that all small business owners go through.
To marginalize yourself in that doesn’t do you any good. Everybody’s a hot mess in their business, everybody has struggled, everybody’s trying to figure this out.
Being a business owner is absolutely challenging in every aspect because of all the things you have to learn and do.
However, having the right foundations makes it more manageable to be able to grow.
For all the small business owner, whatever the stage you’re in, realize that everybody else is figuring out the same way and there’s nobody that has the golden answer.
If you have the right things in place, it makes your life a bit easier to be able to scale and grow the business. So there’s a higher chance of success.
What’s after level four?
After level four, which is where you have the 4 to 10 employees and 300 million, you’ve got level five which is about 5 million to 20 million with about 26 to 100 employees.
Level five is like a managed organization, so you have full-fledged organization charts, you have systems that are talking to each other, you have personnel that is working closely on your planning. This is really where you’re hiring specifically to the vision and as a big deal.
At Level Six, you’re a mature company. You’ve got 20 to 40 million reoccurring revenue, you’ve got systems that are complicated in place, you’ve got 100 to 200 employees. Realistically at this point, the pivoting piece is strategy and planning.
From Level One, you’re selling your time.
For Level Two, you’re getting salesmanship.
Level Three, you’re doing more marketing services.
Level Four, you’re setting the vision.
Level Five, you’re hiring to that vision.
Level Six, you’re future planning.
By Level Seven, the corporate level, you’ve got 40 to 100 million, you’ve got 200 to 500 employees and really that’s leadership development. That’s a whole different process where you’re developing leaders to affect one-to-many.
It can go higher, but everything starts with the Why, and the mission, value, and purpose. These are all the foundational pieces.