Consider for a moment that 90 percent of entrepreneurial training is focused on how to start and grow a successful company from an idea to a full-fledged award winner.
Do you know how you'll scale your business from $1 million to $10 million? Or from $10 million to $100 million?
Powering a growing company into the stratosphere presents an entirely different set of challenges. What, then, are the right strategic steps for a meteoric company to reach full potential?
I recently met with a fast-growing company that was seeking funds and advice. This was their question:
"How do we build a company that can generate $100 million in annual year-end revenues?"
Whether a firm is small or large, the same key drivers of hyper-growth apply. This unusual startup, no more than 5 years old, had achieved double-digit, year-over-year growth. It was adding large clients on a monthly basis. Experienced and dedicated employees were executing with distinction. Word was spreading in the industry that the founder's solution was best in class. Angel investors were happily providing financial fuel to power the flourishing enterprise. Clearly, the company was well positioned to be a top-notch organization.
We decided to work backwards from their goal to learn what they needed to do to achieve $100 million in sales.
The following questions form the foundation of a forward-thinking strategy:
• What is your annual revenue goal five years from now?
• What's the average selling price of the product you sell?
• How many months does it take to sell a product, from the first contact with a customer until you collect payment?
• How many salespeople do you have?
• How many system engineers are working today in the field to install and support your customers?
• How many customers do you need to increase sales by $90 million?
• How many potential targeted clients are there in the world?
• How many new customers can a salesman close in a year?
• How many salespeople do we need to land 360 new clients in five years?
• In a like manner, how many system engineers will you need?
• Will you need growth equity capital from investors?
• Will there be sufficient gross margins to cover all expenses and leave earnings equal to 15 percent of revenues?
• Can expenses be controlled so as not to exceed the budget?
• Lastly, has anyone on the team grown a business this large and this fast?
With a clear road map to exponential growth, we turned our thinking to three fundamental areas: 1) Selecting the right priorities; 2) Deploying the most important resources; and 3) Implementing the most efficient processes.
We arrived at this list of specific priorities:
• All employees should be focused on selling and retaining satisfied clients who will make referrals. Going forward, we want to be known for having a sales culture.
• We will begin hiring great sales people and system engineers.
• Employees will be generously rewarded for their performance.
• Marketing will identify and cultivate every potential client who might be an early adopter of our products.
• Marketing will provide a thoughtful brand to differentiate our unique offering.
• The sales team will have a list of prospects, a quota, the best resources available and a compensation plan to reward excellent performance.
• The system engineer and customer support teams will be in place and properly trained. They will actively support clients to ensure a high level of satisfaction.
• Managers and the new CFO will manage expenses carefully. The budget will be based on our key priorities, resources and processes.
• We will raise money to cover the expenses of growth.
• All managers should feel ownership for his or her assigned area. They should feel empowered and responsible for their performance.
• We will hire an experienced CEO.
• We will also hire an experienced technology officer to guide software development. We need to make sure our products continue to be relevant and best in class.
• We see the need to establish a professional board of directors.
• We agree as a team to report on our progress on a regular basis and to be held accountable for our efforts. We pledge to be persistent in our efforts and to avoid complacency.
The next items for consideration include important and urgent resources, specifically the following:
• Hire the best people for each job. Make sure they clearly understand what's expected of them.
• Ensure there are sufficient funds to achieve the plan.
• Ensure there are supportive systems, tools and equipment.
Each prioritized task should be carefully delineated, documented and taught to appropriate employees. Each process should be implemented, followed and monitored and be examined and improved on a regular basis.
I welcome your thoughts. You can reach me via this column, at @AskAlanEHall, or via my personal website at www.AlanEHall.com.
cpomerleau 19 Sep, 2012
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