Million Dollar Hurdle - Part 7 of 7

November 10th, 2011

Business growth is both a nebulous task and a common ambition among all business owners and managers.  In the SMB IT community there are common challenges and predictable steps to achieve growth.  Also common and predictable are the obstacles, challenges, and warning signs in growing a business to be over one million dollars in sales.  This is the Million Dollar Hurdle.  It is the aim of this article, in whole and with each part, to illustrate how to overcome the Million Dollar Hurdle and achieve the ultimate coveted goal of nearly every business owner – scalable and predictable business growth.

This article is the last of a seven part series with each article focusing upon an aspect of the Million Dollar Hurdle.  The complete set of articles can be found at www.AmbitionMission.com/blog.  The concepts included in this multi-part article are:
1. Defining The Million Dollar Hurdle
2. “Hitting the Wall”
3. “Sizing up the challenges”
4. “Letting Go”
5. “Breaking through Barriers”
6. “Process Driven Success”
7. “The Next Hurdle”

The “head fake” of learning how to overcome the Million Dollar Hurdle is that the process prepares you and your business for the next hurdle – and all that follow.  Businesses grow in stages and often in spurts.  Often a business will plateau or stall at or around a few revenue milestones.  While not an exact science, the milestones that represent “hurdles” and therefore fundamental changes to a business that are needed to grow forward are $1 Million, $5 Million, $10 Million and $50 Million.

Businesses that have less than $1 Million in sales have similar issues as other sub $1 Million companies, as is true in each of the other groups.  The six concepts discussed in this article’s previous parts are each relevant in overcoming each subsequent hurdle as well.  Thus in learning how to overcome the Million Dollar Hurdle, all milestones are possible.

The steps required are virtually the same:  1) Identify the hurdle itself, what it represents, what in the business must change in order to overcome it etc… 2) Look for stress fractures in the business.  Where are the balls being dropped?  In what department does the well-oiled machine seem to be breaking down?  3) Determine in detail what resources and tasks must be brought to bear to remedy each of these issues.  4) Evaluate current staff and determine who can move up and who may need to move out.  Create new job descriptions and responsibilities that match the new version of that department.  5) Tackle the challenges in making the necessary changes understanding that these trials are required passage over the upcoming hurdle.  6) Define all new processes within the company.  Revamp all existing processes that need an over-hall.  7) Last, with each hurdle, have a vision for what the next hurdle looks like and plan for it.

When looking ahead at the potential growth of your business, it is important to have a vision.  Planning for that vision is akin to opening a sketch pad and drawing one’s “dream house.”  It does not mean making foolish decisions that depend upon significant and aggressive future growth.  That means one should not overcommit on a new expensive house or car based upon future results to “force success.”  On the other hand, I once knew an entrepreneur who was assigned to run a branch office for a company for four months during an evaluation period who signed a 3 year office lease because he believed in his own success.  Sometimes success belongs to those who believe in it the most and the longest.

Million Dollar Hurdle - Part 6 of 7

October 19th, 2011

Million Dollar Hurdle – Part 6 “Process Driven Success”

Business growth is both a nebulous task and a common ambition among all business owners and managers.  In the SMB IT community there are common challenges and predictable steps to achieve growth.  Also common and predictable are the obstacles, challenges, and warning signs in growing a business to be over one million dollars in sales.  This is the Million Dollar Hurdle.  It is the aim of this article, in whole and with each part, to illustrate how to overcome the Million Dollar Hurdle and achieve the ultimate coveted goal of nearly every business owner – scalable and predictable business growth.

This article is the fifth of a seven part series with each article focusing upon an aspect of the Million Dollar Hurdle.  The concepts included in this multi-part article are:
1. Defining The Million Dollar Hurdle
2. “Hitting the Wall”
3. “Sizing up the challenges”
4. “Letting Go”
5. “Breaking through Barriers”
6. “Process Driven Success”
7. “The Next Hurdle”

Process.  It is a single word that has the potential of forever changing a business and the most important concept in overcoming the “Million Dollar Hurdle.”  A process is a way of doing things.  A process is a method for which challenges are overcome.  Having a defined process for every action a business performs is vitally important to achieving scalable growth.

When a company is small or just starting out, processes are created unknowingly or inadvertently.  Each person within an organization performs tasks a certain way and this “way” becomes the company’s de facto process for that action.  The challenge of course arises as the company grows and new people are added to the organization.  The lack of definition and documentation of a given process translates to mostly negative consequences.

According to the E-Myth (by Michael Gerber), the goal of documenting process is to create an operational manual or a “this is how we do it here” document for everything the company does.  As a company approaches the Hurdle and begins to document process, it should start with those company tasks and actions that have the greatest impact to the success of the company.  For instance, documenting how a customer service call is to be handled, routed, and acted upon is likely more impactful than documenting how a check is deposited in the company’s bank account.

Make it a point to jot down the steps and procedures to a given company task each day.  Create a folder (physical or digital is up to you) and fill it with notes, bullet points, and other information related to the different company processes that are to be documented.  Each week, have a goal to complete the documentation of one major process for the company.  Decide what process is most important to be documented as a team during a weekly meeting and execute.

When documenting a company process there are often two glaringly different approaches.  First is to identify how something is currently done.  The second is to identify how something should be done.  For the former, rely upon current staff to unapologetically explain how something is currently accomplished.  Do not discount this explanation.  Resist getting angry or frustrated.  Accept the fact that the company has grown to the point it has by doing it that way.  Then, have a discussion with the person, department, or team as to how this action should be done.  The challenge is to both empower staff as well as ensure enthusiasm for the “new and improved” way of doing things.

When documenting a process, identify the Who, What, Where, When, Why, and How of that company action:  Who (what role) should do that task within the process?  What is the objective of this company action and does this process help meet that objective in the best possible way?  Where (physically or logically) should each task be completed?  When, or in what timeframe, should each task within the process be completed?  Why is this process necessary (why is it important that this is done the same way each time)?  And finally, How is each task to be completed (what do we know will work)?

Once each step or task in a process is defined, and a documented process is created, implement it.  Tweak the process as necessary.  Repeat.  Adjusting a company’s process is a continual task.  Ideally, this article has helped in outlining a process for defining processes within your company.  Document and create a process for everything in your company that can be repeated and performed properly by different (new) individuals and your company will soon be over the Million Dollar Hurdle and on its way to the next Hurdle.

Next Issue – Part 7 “The Next Hurdle”

Million Dollar Hurdle - Part 5 of 7

October 19th, 2011

Million Dollar Hurdle – Part 5 “Breaking Through Barriers”

Business growth is both a nebulous task and a common ambition among all business owners and managers.  In the SMB IT community there are common challenges and predictable steps to achieve growth.  Also common and predictable are the obstacles, challenges, and warning signs in growing a business to be over one million dollars in sales.  This is the Million Dollar Hurdle.  It is the aim of this article, in whole and with each part, to illustrate how to overcome the Million Dollar Hurdle and achieve the ultimate coveted goal of nearly every business owner – scalable and predictable business growth.

This article is the fifth of a seven part series with each article focusing upon an aspect of the Million Dollar Hurdle.  The concepts included in this multi-part article are:
1. Defining The Million Dollar Hurdle
2. “Hitting the Wall”
3. “Sizing up the challenges”
4. “Letting Go”
5. “Breaking through Barriers”
6. “Process Driven Success”
7. “The Next Hurdle”

Anyone who knows me knows that I enjoy movies and quote them often.  One of my favorites is Apollo 13 (1995 Universal Pictures).  While there are numerous scenes and elements that can be referenced as business analogies, the scene that always grabs me is the meeting in mission control shortly after the emergency occurs.  One of the people in the room stated that the equipment was designed to land on the moon when he was interrupted by Ed Harris’ character of Gene Kranz – NASA flight director.  He asked rhetorically, “Well, we’re not landing on the moon are we?” followed by stating that he didn’t care what the equipment was designed to do, but rather what it could do.

How often do we find ourselves in business in a similar scenario?  Faced with a problem, it can be difficult to let go of the original intention enough to see that so much has changed, a fresh approach is needed.  Breaking through the barrier of the Million Dollar Hurdle is no small feat.  It is difficult.  It is also simple.  All one has to do is be willing to change anything.  Everything must be put on the table.  It is not as much of readjusting the pieces on the chess board as it is clearing the board altogether and deciding what pieces to play with in this new chapter of the business.

If you haven’t already read The E-Myth by Michael Gerber, do it now.  It may be the best $12 you’ve ever spent.  The book assists a business owner by putting change in perspective, embracing process, and above all, providing a sort of soul searching journey for the business owner who reads it.  In my opinion, a person should be made to read the E-Myth prior to applying for a business license.

The good news is that you’re not alone.  There are probably a million business owners facing the same types of issues you’re facing this year.  Reading the E-Myth is one way to realize this.  Connecting with your peers at conferences, events, in online forums, peer groups, etc… are all effective ways to realize that others have these issues also.  When chatting with peers, while it may be fun to swap “war stories,” don’t be afraid to share challenges and ask what challenges he/she has.  Candid, up front conversations accomplishes two main goals that are helpful in breaking through the barrier of the Million Dollar Hurdle.  First, learning that another has faced a similar problem teaches that it’s not the end of the world.  Second, obtaining valuable insight into how another has either solved or is attempting to solve a similar issue.  Both bring the business closer to success.

Most importantly, a change in mindset is required to break through the barrier.  You must act like you are an investor in your company.  As an example, if you invested in a technology company run by a guy who ran the company like you are running yours, would you fire him?  What if he managed people, spent money, made decisions, paid attention to the financials, treated customers, and conducted business planning like you?  Would you hire you?  Would you, as an investor, say that YOU are the best person for the job of running your company?  My suggestion is simply to begin thinking like an investor – because you are.  Begin thinking like the owner of a business that has value, rather than merely “this is what I do.”  When people asked me if I had invested in the stock market, I always answered that I was 100% invested in a small, but growing technology consulting firm on its way to redefining what business can expect from a technology partner.

A popular animated cartoon character of our childhood would look at the business and say, “If (your name) had created a process for this first, this never would have happened.”  There is a process for everything.  Understanding the need for a process and a procedure in each business area is a critical step in breaking through the barrier.  The next installment of this article will explore who to create effective processes in every area of the company.  In the meantime, ask two questions when confronted with an issue.  1) Is what the company is doing now working?  And 2) what should the process be going forward?

Next Issue – Part 6 “Process Driven Success”

Microsoft Partner App on iPhone???

June 13th, 2011

My friend Eric Ligman at Microsoft just crafted an interesting blog about the fact that Apple is not allowing the Microsoft Partner app on the iPhone…

http://blogs.msdn.com/b/mssmallbiz/archive/2011/06/13/want-the-microsoft-partner-info-app-on-your-iphone-maybe-you-should-let-apple-know.aspx

I’m calling bullshit Apple!  Not only did I tweet what Eric suggested, but I think Apple is acting in a manner which demonstrates fear.  With all the apps that are available, not allowing this app is just Apple acting the bully.  Partners are loyal to Microsoft because it serves them and their customers.  these same people are loyal to thier Apple products for the same reason.  All this move by Apple does is make one question motives and wonder why… Does THAT help you Apple?  My advice is to chalk it up to an “oops, sorry… under further review, the app will be available for download.”

Who knows, more “actions” like this and in a few years it will be the the “US vs. Apple” in antitrust lawsuits… you’re headed there, Apple…

Happy Hunting and Let Ambition Be Your Mission!

Matt

Social Media question - How many friends read your updates?

June 6th, 2011

Like most, I enter a Facebook status update every once in a while.  Sometimes I get some comments and/or people “liking” what I posted, while other times, there is no interaction.  For a while, I just figured that with everything going on on FB, my comments are “far down” the page so quickly, that many folks don’t see it.  Or, that what I posted was not that interesting…. Since then I have decided upon a new attitude on the topic.

What I noticed is that while interacting with people in real life, many mention they saw a post I did on this or that who - according to what I experienced on FB, never even saw it!  It got me wondering… What is the ratio to how many people read or see someone’s post compared to how many people “like” or comment on it?  1:5?  1:10?  1:100?

Like so many aspects of business and life, we are unaware of the impact we really are having or can have.  So for me, today, I am humbled and enlightened…

Just my thoughts…

Matt

Million Dollar Hurdle - Part 4 of 7

June 3rd, 2011

Million Dollar Hurdle – Part 4 “Letting Go”

 

Business growth is both a nebulous task and a common ambition among all business owners and managers.  In the SMB IT community there are common challenges and predictable steps to achieve growth.  Also common and predictable are the obstacles, challenges, and warning signs in growing a business to be over one million dollars in sales.  This is the Million Dollar Hurdle.  It is the aim of this article, in whole and with each part, to illustrate how to overcome the Million Dollar Hurdle and achieve the ultimate coveted goal of nearly every business owner – scalable and predictable business growth. 

 

This article is the fourth of a seven part series with each article focusing upon an aspect of the Million Dollar Hurdle.  The concepts included in this multi-part article are:

1.      Defining The Million Dollar Hurdle

2.      “Hitting the Wall”

3.      “Sizing up the challenges”

4.      “Letting Go”

5.      “Breaking through Barriers”

6.      “Process Driven Success”

7.      “The Next Hurdle”

 

My first sales manager and mentor Rick taught me an important lesson about business.  He called it “the power of delegation.”  Being able to delegate effectively is indeed powerful.  Rick told me there are two rules regarding delegation.  First, accept that the person to whom you delegate will almost certainly NOT do the task as we as you can.  Second, he asserted, “If you don’t delegate, you’ll never grow.”

 

The first rule is not pleasant to contemplate, but considering the second rule, it is something every business owner who wants to grow must confront.  Letting go is not easy.  Giving up the reins on even the tiniest aspect of your business seems unnatural, scary, and causes stress.  Even something as benign as having someone in charge of the ordering office supplies can be difficult to let go.  Worse yet, the delegated task being performed “incorrectly,” only causes fears to be realized.  What it perceived as “wrong” is, at worst, simply not the best way and, at best, simply another way of doing it.  Either way, this represents growth. 

 

Even if the person to whom is delegated makes a mistake that costs real money, aggravation, or both, delegation is still required for growth.  In numerous cases, the reason for this is lack of proper communication from the delegator.  The first time a particular task is performed within the company, mistakes are likely.  This also holds true when a new person takes over that responsibility.  Mistakes can be avoided by providing that person the benefit of the company’s experience in this regard.  Otherwise, as an example, simply telling a new office admin to “order ink for the printer” may result in the purchase and un-packaging of $300 of ink for the broken printer that sits next to the working printer.  Oops. 

Be careful when giving instructions on the task being delegated.  Providing too much information can overwhelm the person to whom the task is to be delegated.  This may instill fear and/or communicate your lack of confidence in that person.   Worse still, the person may feel their intelligence is being insulted.  Instead, provide as much information as is needed on what needs to be done while merely suggesting a way that it could be done.  The great news here is that people often surprise the delegator with new and improved methods of addressing an issue or task.  Followed up with an “Atta boy” or “Atta girl,” delegation becomes a way to truly instill confidence and empower staff. 

 

Another significant key to the art of delegation is to begin with little things and work from there.  A tremendous illustration of when and how to delegate within the company is contained in the book Fierce Conversations by Susan Scott (2002).  In this book, the concept called a “decision tree” is introduced.  The tree is described as having roots, a trunk, branches, and leafs.  Each part of the “tree” represents a different level of impact to the company.  Ask, “What is the impact to the company if this decision is made improperly?”  Begin delegating tasks that represent the least impact to the company is mishandled.  These levels of impact, accountability and authority are:

 

1.      Leaf Decisions: Make the decision. Act on it. Do not report the action you took.

2.      Branch Decisions: Make the decision. Act on it. Report the action you took daily, weekly or monthly.

3.      Trunk Decisions: Make the decision. Report your decision before you take action.

4.      Root Decisions: Make the decision jointly, with input from many people. These are the decisions that, if poorly made and implemented, could cause major harm to the organization.

 

Finally, there is an emotional aspect to letting go as well.  Someone who starts a company from scratch and builds it throw blood, sweat, and tears over several years is emotionally tied to nearly all aspects of that company’s past, present, and future.  Recognize this is normal and is akin to leaving one’s children with a babysitter for the first time.  There is an attachment to ALL tasks within the company.  Remember Rule #2 of delegation – “If you don’t delegate, you cannot grow.” 

 

Next Issue – Part 5 “Breaking through Barriers” (coming by 6/10/11)

 

~Happy Hunting

 

Matt Makowicz 

Million Dollar Hurdle - Part 3 of 7

June 3rd, 2011

Million Dollar Hurdle – Part 3 “Sizing up the challenges”

 

Business growth is both a nebulous task and a common ambition among all business owners and managers.  In the SMB IT community there are common challenges and predictable steps to achieve growth.  Also common and predictable are the obstacles, challenges, and warning signs in growing a business to be over one million dollars in sales.  This is the Million Dollar Hurdle.  It is the aim of this article, in whole and with each part, to illustrate how to overcome the Million Dollar Hurdle and achieve the ultimate coveted goal of nearly every business owner – scalable and predictable business growth. 

 

This article is the third of a seven part series with each article focusing upon an aspect of the Million Dollar Hurdle.  The concepts included in this multi-part article are:

1.      Defining The Million Dollar Hurdle

2.      “Hitting the Wall”

3.      “Sizing up the challenges”

4.      “Letting Go”

5.      “Breaking through Barriers”

6.      “Process Driven Success”

7.      “The Next Hurdle”

 

Take a look at your business.  Really take a look.  Pretend you’re a potential investor asked to evaluate a company for its viability and growth potential.  What would excite you?  What would scare the heck out of you?  What processes are documented and systematic?  What aspects of the business are inconsistent? 

 

Create a bulleted list about every aspect of your company that is an issue.  Keep in mind that an “issue” could be either be A) an identified problem, or B) an aspect that could be performed better.  To ensure the list created is complete, be sure to jot down at least three bullets for each of the following aspects or departments of your company:  Finance & Accounting, Customer Service, Support Case Management, Sales, Marketing, Human Resources, Administration, Purchasing, and Service Delivery/Implementation.  Review the list and ensure it is complete.  Next, prioritize each section’s items.  This will aide in the identification of what issue is most pressing within each area of the company.  Before continuing, review the list once more to ensure it seems complete and accurately prioritized. 

 

Believe it or not, the exercise detailed above is the easy part!  Examine the list again.  This time, jot down the consequences of each issue if left unaddressed.  Be as detailed as possible.  Think “what if” scenarios.  For example, if an issue identified under “Purchasing” is that equipment needed for projects is sometimes not correct or delivered on time, then write down exactly what would occur (or not occur) within the company if that issue continues.  Apply the “what if” scenario of the company executing 2x, 4x, or 10x more projects than currently being undertaken.  How big is that issue under those conditions?  Clearly outlining what NOT addressing an issue means for a company accomplishes two important milestones.  First, motivation to address a particular issue is clearly established.  Second, clarity of what issue(s) most urgently need to be addressed is established. 

 

Not performing the above exercises is not only cheating oneself, but it causes a dangerous practice which can be called “band-aide on a bullet wounds.”  A deep and complete assessment and understanding of one’s company is the only way to ensure issues are address properly, in the correct priority, and completely.  It also may be helpful to include the staff in this endeavor.  Often, an implementation engineer’s assessment of a company’s or department’s issue vary dramatically from the owner’s perspective.  In fact, not including the staff – at least on some level – can cause paranoia in the mind of the business owner. 

 

I remember this time in my MSP company.  One morning upon arriving at my office, I was surprised to discover no one was there.  After 45 minutes and several dozen texts, calls, and voicemails to my staff, I learned they were all at a “meeting.”  This was not a good feeling or a good situation.  My lack of communication caused my paranoia to become reality.  Don’t let it get to this point.  Even if it has, I urge communication with your staff.  They don’t need to know every last detail, but how about simply stating to them:

 

Our company is in a period of exciting growth.  Most companies experience change and challenges during this time.  Frustration, challenges, and obstacles are to be expected.  The good news is that we recognize what’s happening and that these changes will ultimately be a good thing.  We absolutely need to work together and over-communicate during this period.  No feedback, comments, suggestions, or concerns will be silenced.  Even if your idea is not implemented, I assure you that our company will be better with everyone’s input.  The great news is that once we figure out and get past some of these issues, we’ll have a much stronger company that will be prepared for significant growth!

 

Including staff is important.  Empowering them to having a significant part to play in the company’s growth is critical.  The above dialogue does not denote weakness.  Rather it demonstrates strength, leadership and confidence.  All qualities your staff looks for in management and/or owners – even if they’ve never said so!

 

Another cautionary tale must be stated.  That is spending blindly.  An individual in a depressing financial situation may leave mail unopened, block out financial responsibilities and spend money inappropriately.  This is destructive behavior for an individual or business and has absolutely devastating consequences.  During this period of growth, change, and anxiety, perform a financial reality check at least monthly!

 

Nature abhors a vacuum.  Something has to give.  Change has a way of making things seem hopeless and unrecognizable.  It is also true that progress is not obvious until a project is completed.  Ever witness a construction project or a remodel?  The last 24 hours of a six month project is when real progress can be observed for the first time.  Paint a picture in the mind’s eye of the perfect company.  Focus upon that picture as the end result when the changes occurring cause stress and depressing thoughts.  Let your mind create the future.  “Sizing up the challenges” may not seem so, but it is the step in the process that represents a turning point.  Once completed, the company is closer to the desired end result.

 

Next Issue – Part 4 “Letting Go”

 

~ Happy Hunting

Matt Makowicz

Million Dollar Hurdle - Part 2 of 7

June 3rd, 2011

Business growth is both a nebulous task and a common ambition among all business owners and managers.  In the SMB IT community there are common challenges and predictable steps to achieve growth.  Also common and predictable are the obstacles, challenges, and warning signs in growing a business to be over one million dollars in sales.  This is the Million Dollar Hurdle.  It is the aim of this article, in whole and with each part, to illustrate how to overcome the Million Dollar Hurdle and achieve the ultimate coveted goal of nearly every business owner – scalable and predictable business growth. 

 

This article is the second of a seven part series with each article focusing upon an aspect of the Million Dollar Hurdle.  The concepts included in this multi-part article are:

1.      Defining The Million Dollar Hurdle

2.      “Hitting the Wall”

3.      “Sizing up the challenges”

4.      “Letting Go”

5.      “Breaking through Barriers”

6.      “Process Driven Success”

7.      “The Next Hurdle”

 

Long distance runners call it “Hitting the wall.”  It is a term used to describe an invisible barrier that gets in the way with little or no warning.  Businesses approaching the Million Dollar Hurdle experience a similar “wall.”  The major difference is, however, that the obstacle is not typically as obvious to the business owner.  The first sign that the business needs help is when balls begin to get dropped.  At first, the “balls” being dropped are not significant and carry few consequences.  Over time, however, commitments to staff, vendors, and customers are missed. 

 

Sooner rather than later, new problems begin to arise.  In some cases these new issues stem from missed commitments.  A company that approaches the Million Dollar Hurdle also often experiences its first HR related issue.  Cash flow issues begin to become more significant as well.  At this stage, a business owner suddenly realizes that there are numerous “hats” being worn – certainly more than a year ago!  The forced focus on these new issues typically translates in a drop in sales and a plateau in revenue.  A business owner begins to question his staff, question his business, and question everything.

 

A good friend of mine was running a growing IT business and returned from a business trip to learn that his staff had not backed up a customer’s data, who subsequently experienced a data loss.  Worse, his staff had authorized over $8,000 in services to a data recovery company.  My friend’s company was in the transition of the Million Dollar Hurdle.  After fielding a substantial dressing down from the customer, he called his staff into the conference room and in an expletive riddled rage, told his staff that he could have burned money on his recent trip and it would have been more profitable than employing them.  Clearly, my friend had hit the wall on his quest to overcome the Million Dollar Hurdle.

 

His staff had not acted in a way he had hoped or expected.  All the company’s new issues and problems had been building until this point.  The good news is that my friend recognized this “wall.”  He subsequently took steps to put systems in place, communicate more effectively and openly with his staff, and the following year, crossed the Million Dollar Hurdle. 

 

Scientists have learned that if a frog is placed in a pot of scalding hot water, it will immediately jump out of the pot.  Interestingly enough, however, if the same frog is put in a pot of cold water, and that water is slowly heated, the frog will remain and boil to death.  What’s going on with your business?  Is the water being brought to a boil?  Are there situations that are acceptable today that would not have been a year ago?  Two years ago?  What are the consequences if these issues are not addressed?

 

Hitting the wall is about identifying problems.  It is about taking stock.  Questioning everything is not necessarily a bad thing if it leads to healthy conversations (either internally or with a business coach/advisor).  You, as the owner, are the only non-replaceable employee.  And until such time as you can exit the business as a self sustaining enterprise, you cannot be afraid to make difficult decisions like replacing staff, changing spending habits or business practices, or investing in tools, technology, or training to improve the company’s operational efficiency.

 

This time in a business is a crossroads.  Continue to make easy choices, and eventually, those same issues will force difficult decisions to be made.  Use the crossroads before the Million Dollar Hurdle as an opportunity to make the difficult decisions.  Doing so will pave the way for easier management of the business and allow for the Million Dollar Hurdle to be overcome!

 

Next Issue – Part 3 “Sizing Up The Challenge”

 

~Happy Hunting

 

Matt Makowicz 

Million Dollar Hurdle - Part 1 of 7

June 3rd, 2011

Million Dollar Hurdle – Part 1 “Defining the Hurdle”

 

Business growth is both a nebulous task and a common ambition among all business owners and managers.  In the SMB IT community there are common challenges and predictable steps to achieve growth.  Also common and predictable are the obstacles, challenges, and warning signs in growing a business to be over one million dollars in sales.  This is the Million Dollar Hurdle.  It is the aim of this article, in whole and with each part, to illustrate how to overcome the Million Dollar Hurdle and achieve the ultimate coveted goal of nearly every business owner – scalable and predictable business growth. 

 

This article is the first of a seven part series with each article focusing upon an aspect of the Million Dollar Hurdle.  The concepts included in this multi-part article are:

1.      Defining The Million Dollar Hurdle

2.      “Hitting the Wall”

3.      “Sizing up the challenges”

4.      “Letting Go”

5.      “Breaking through Barriers”

6.      “Process Driven Success”

7.      “The Next Hurdle”

 

The Million Dollar Hurdle is a term used to describe the unique set of challenges associated with a business growing to and through one million dollars in annual revenue.  While certain rules in business remain constant no matter the size of the organization, the operational realities of running a business varies dramatically depending upon the business’ size.  In fact, the principles of running and growing a business can change so dramatically, that it is more common for a business to fail when approaching the Million Dollar Hurdle than to be successful in breaking through that milestone.  The concepts and techniques outlined in this article apply primarily to achieving one million dollars in annual revenue but also apply to other Million Dollar Hurdles at $5 million, $10 million, and $50 million in annual company revenues. 

 

To successfully navigate the Million Dollar Hurdle, one must be able to change.  Change itself can be a scary word.  What worked before may not work anymore.  Staff members who were invaluable assets may now be holding back the company’s growth.  The role of the owner is dramatically different as the company grows.  These changes are frustrating and difficult, but also necessary.  First, read the book Who Moved My Cheese to gain an excellent perspective on dealing with change.  Next, accept that everything in the business may change.  Hold on to nothing. 

 

Imagine running a business like playing a game of chess.  At some point, the game gets complicated.   Simplicity gives way to chaos.  Often in a game of chess, a player asks himself “How did I get here?”  Business owners, like competitive game players, refocus to get through and make the best of the situation he has found himself in.  Unfortunately, that approach doesn’t provide adequate time to both reflect upon how the situation became reality and how to prevent such an occurrence in the future.  The better way to deal with this is to clear the board.  Ask, “What if I started over today?” followed by, “What would I do in this situation then?”  Playing hundreds or thousands of games of chess over a lifetime makes one better than playing one, tremendously long game. 

 

This is not meant to advocate firing the entire staff and starting over – although sometimes that’s what’s needed!  Rather, challenge all assumptions.  Assumptions are statements that begin with “I can’t…” An example:  “I can’t fire George even though I should.  All my customers love him, and I don’t have the time to do what he does.”  This is bull.  The truth is it may be difficult to fire “George,” but any statements containing “I can’t” limit one’s ability to think clearly and “clear the board” which allows fantastic new ideas to come about. 

 

Why change?  Answer - the consequences of not changing can and often are disastrous, including up to the destruction of the company itself.  Add to this that as the company has grown, these consequences have become more severe.  For example, if the company only has ten clients and an employee or staff member is rude, obnoxious, and offensive to clients, they should likely be fired.  The consequence is replacing an employee when he/she may be only one of two or three in the company.  Fast forward to a point when the company has 8 employees and 50 customers.  A much bigger problem now exists in that 50 clients are being negatively affected.  Ignoring problems in business often makes the problems larger.

 

Another obstacle that makes up the Million Dollar Hurdle is that of scalability.  Tasks that were easily accomplished up to this point in the company’s growth can no longer be accomplished in the same way, by the same people, or without a documented procedure.  Purchasing hardware or software for a customer’s project may have initially been an easy task performed by the business owner.  As the company grows to doing a project or two each month, it quickly becomes apparent that with documenting the procedure, dedicating a resource, and focusing on that task as important, larger consequences occur.

 

Now that it is understood what the Million Dollar Hurdle is, how to recognize it, and what the consequences of doing nothing can be, prepare for things to potentially get worse before they get better.  Next issue, part 2 “Hitting the Wall” discusses new problems that develop when approaching the Million Dollar Hurdle and how to handle each. 

 

Facing the Million Dollar Hurdle prepared and with knowledge improves the likelihood of success.  Knowing what’s coming, realizing that these challenges are both common and predictable changes everything!  The lack of which is akin to being a pinball unwittingly bounced around.  When running your business, do you feel like you’re in control of the flippers, or are you the pinball? Knowledge without action is wasted.  Take control, recognize the Million Dollar Hurdle, plan for the challenges, and act. 

~ Happy Hunting

Matt Makowicz 

Marketing ROI by the numbers

April 21st, 2011

It has been stated that all money is spent (all sales are made) emotionally first, and then rationalized logically.  While that may be true, I am appealing to your logical side of the brain for a moment and asking one simple question: 

What does a new Customer mean to you in terms of revenue?  Forget about “lifetime” and answer in terms of the first year.  Let’s call this number “Revenue” 

If you can answer this single question, we can work together to craft a marketing campaign that delivers REAL R.O.I.  I’d ask a few follow up questions and/or insert some industry and channel averages that I know to be true and viola – we can go to market! 

As a follow up – what is your firm’s threshold of pain for cost of acquisition?  Put another way, how many dollars is your firm willing to spend to get $100 in Revenue?  Industry average ranges here from 3%-10% with some companies in growth modes spending as much as 50% to gain market share…   Let’s call this number “Marketing.”   

Another follow up question could be:  What is your company’s average conversion of a qualified lead into a Customer?  We can call this “Closing ratio.” 

An example:  If Revenue = $2,500, Marketing = 5%, and Closing Ratio = 25%, then… 

A marketing spend of $10,000 must yield 320 qualified leads 

(320 leads x 25% closing ratio = 80 new customers x $2,500/ea = $200,000 in Customer revenue x 5% marketing budget = $10,000)

If you cannot measure, you cannot improve.  Maybe your company is not ready for marketing, maybe you are not ready to grow the company, or maybe, just maybe, all you have to do is start answering questions about your business in order to be able to create a predictable, scalable marketing engine…

 

Happy Hunting!

 


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