The past week I had the opportunity to look closely at two different businesses. These two different companies are actually equal in terms of potential and technology. However, as I consulted and carefully examined both I found that there were three major differences that separated the businesses. The question I have for you today is do you want a $30 million business or a $3 million business? Let me outline the three key factors that make the difference for these companies and confidently will make the difference for your company.
The first business actually is a fun, exciting, exuberant, really good little $3 million dollar business that’s been around for about seven years. The 2nd business was established three years ago and has grown rapidly to $30 million dollars. What’s the difference? Well, here it is:
Number One: Cash Flow and Access to Capital
In all of my books I state that cash flow is the number one reason small business fail. Now let me boldly add to that statement and say that access to capital is the number one enabler for growth. It sounds like I’m contradicting myself because everyone knows that I’m a big fan of bootstrapping and largely hesitant to seek out Venture Capital funding. The reality however is that if you can get cash in the bank, avoid taking exorbitant salaries, and control your expenses early on then when you are ready to grow your business you are in a good financial position to scale aggressively with capital. This does require at times taking loans and, depending on your business’ individual circumstances, taking appropriate financial partners. The number one difference I saw between the $3 million company and the $30 million dollar company was access to capital.
Number Two: Escalation
You say, “Escalation? What do you mean?” The $3 million dollar company CEO was the ultimate decision maker and mover and shaker on every decision. If he got into a negotiation he could make a decision in a snap. You may think that’s a good thing, but it is not. If there is a problem and you as the CEO are not getting any results you have no one else to step in and add to the conversation. However, if you can separate yourself a biy then you are then in a position so others can escalate important problems to you and can get more direct results by bringing in the CEO to the conversation.
Escalation indeed is the second most important factor in being able to rapidly grow a big company. Through all my years of bootstrapping and creating businesses I’ve never seen a large and significant company that did not properly escalate and have delineation of roles in place. If you find yourself as the jack-of-all-trades and are the main decision maker then FIX IT. If you want more information on this read Chapter 14 Act Big Play Small in Bootstrap Business. I give some really good tips on how to do this.
Number Three: Defining the Hunters vs. Gatherers
My blog post last week was all about Hunters vs. Gatherers. Since I already covered this thoroughly last week I won’t delve into it again, but I can guarantee that $30 million companies know who are the Hunters and who are the Gatherers. You will also find that they each play their roles well. Identify who in your organization are the Hunters and who are the Gatherers and have them play those roles properly.
You want a $30 million business, rather than a $3 million business? These three principles can quickly get you on the way to that growth. Good luck, Zigzaggers.
Image from http://hbcumoney.com/