Here’s the strategy to use building and selling 7 figure companies.
Logan Chierotti is the definition of a serial entrepreneur, by age 26 he had sold his first company and by age 33 he’s now sold 3 companies generating over $20,000,000 in sales.
I interviewed Logan and he told the the story of two different business, both start off in the same industry, both are selling the same product and both start with the same capital.
Business A reinvests its profits into systems, structure, process implementation, hiring and growth.
Business B takes all the cash out of the business and sticks it in the owner’s pockets. Early in his career Chierotti worked for a business that followed the model of business B, he saw this business ultimately fail and go out of business.
Fast forward 10 years. Chierotti has sold multiple 7 figure companies. In speaking with Logan he told me he believes there are 3 key elements in scaling to 7 figures and beyond.
“The very things that got you to six figures are the very things that will cause you to fail or continue hitting your head against the 7-figure mark. The scrappiness, do it yourself attitude, and the perfectionist all must be mentally broken down. You have to let go of these characteristics, you have to be okay with hiring others who might not do as good a job as you at certain things, but who can exceed in other areas. You must LEARN to become a leader and not manager or an employee, but an actual leader”
Here are the 4 keys in getting over the 7-figure hurdle according to Logan;
- 1) Automation — If you’re not creating automation in your business, then you’re not creating a business you’re just creating a job for yourself. With today’s technology, it’s incredibly easy to set up automated systems and process that allow you to focus on growing your business while still being in control. You should jump at the opportunity to automate any task you possible can. From hiring manuals, to sales scripts everything in your company should be well documented and automated. This makes for easy on boarding, easy sales and adds value to your company when it comes time to sell.
- Hiring — Sounds easy right? If you think hiring and finding good people is easy, then you haven’t done it. Yet this remains one of the most important aspects to scaling your business. You need to hire quality people, empower them and lead them. As the leader it’s your ultimate responsibility to delegate and find quality talent. If the CEO you hired ends up cutting sales in half, it’s not the CEO’s fault it’s your fault for not hiring the right CEO or not setting the right expectations and trainings in place. Hiring is tough, but if you want to build a scalable & sellable business, it’s essential.
- Use Strength based leadership — As a leader, focus on your strengths, If you can’t successfully execute and manage, then don’t. Even though it’s hard to relinquish control, your company’s growth will require that you play to your strengths and combine your efforts with others who bring complementary skills to the table.
- Know your numbers — Everyone says this, but as your grow the numbers you need to be tracking change and the organization of these numbers change. When you start to get to the $5,000,000 a year in revenue point you need to take a serious look at switching to accrual based accounting. Starting out, top line revenue is the number you’re likely most focused on, but as you grow it’s the bottom line number that you will need to keep track of. Breaking out your financials into categories and using KPI’s and % metrics will help you get a better feel and understanding for how things are changing month to month.
Once you have the foundation and model in place to break the 7-figure ceiling scaling up to around $5m is easy. Once you hit the $5m mark a whole new set of problems arise that require new skills. Business is a never-ending game of learning and adapting, the minute you stop learning is the minute you stop earning. In our next article we can get into what it takes to go from $5m and up.