We helped a client add $500,000/year in revenue in 5 months, and then after parting ways…he lost it all. Here are 3 common mistakes you need to avoid to not shrink your business.
1. Emotions don’t scale
This founder is a heart-driven CEO. Like me, he wants to help as many people as possible. The downside of this is that we want to ‘spread the wealth’ the second we start scaling.
Instead of calculating promotions of his talent, he made emotional promotions.
He began promoting talent too soon, over paying his team and eventually, he was overspending on talent by 30k/mo!
I must admit, I have done this too. I was promoted for the first time as a technical associate to head of IT years before he was ready. I gave him multiple raises, increasing his standards to a place that wasn’t feasible for him to get to.
It’s common. The short lesson here: don’t prompt and overpay talent before they are ready and your business is.
2. Details
This founder, like many of you, is a sales/marketing-driven founder who doesn’t like paying attention to details.
He over-delegated and over-trusted his team.
He didn’t catch that he was overspending because he wasn’t auditing finances
He didn’t catch that team members were leaking company information because he didn’t audit comms.
He didn’t catch that his head of sales was doing a piss poor job because he never audited any of his sales calls.
I want to stress: it is easy to scale quickly when sales are coming in. It is hard and tedious to continuously audit.
If you do not build a habit of auditing every part of your business, you will be putting out their fires later.
The best solution for this is implementing an end-of-day report for all data points and all project management statuses.
3. Scaling too fast
The final nail in his revenue cut in half: scaling too fast.
This one is pivotal for fast-growing agencies. The second you hop on the agency prison flywheel, it is VERY, VERY hard to hop off.
Here is how scaling to fast negatively compounds.
A- Sales come in very quickly and you say yes without fully assessing operational capabilities
B- You begin to hire more, pay more, and staff up in anticipation of continuous growth
C- Quality begins to drop because ops, training, and management processes aren’t built well enough
D- Fires begin popping up in several places inside your business
E- Clients begin to churn
F- You keep selling to avoid losing revenue & the cycle continues
At a certain point, you stop proactively building your business and begin reactively solving the fires that come up.
When this starts, it’s almost impossible to catch up to, and often takes 12-24 months to be able to slow down to start solving things correctly again.
How to avoid this if you are able to sell like crazy:
1. Cap monthly sales
Pick a conservative number that you can comfortably grow with. It will be less net new monthly revenue than you desire, but it will create a sustainable process to build as you grow.
Example: Agency A has the ability to sell 10-15 retainers per month, they cap out at 5
2. Build Everything
Everything needs to have a process:
- Operations
- Fulfillment
- Customer Success
- Training
- Management
- Client calls
- Souring
- Hiring
- Interviewing
- Succession planning
- Data attribution
- Capacity planning
…and so much more
If you don’t have defined processes that are followed, sustained & continually improved, you aren’t ready for sustainable growth
3. Hold a Weekly Business Review & Monthly Business Review
Encourage your team to learn how to make the business better & drive improvements via the weekly business review and monthly business review.
If you don’t know how to run these meetings, keep following my content so you can learn when I publish how!
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