Entrepreneurs are visionaries. Risk takers. Daredevils, even. They get through the early days on guts and adrenaline, lurching three steps forward, two steps back, living the dream. That works for a while. But inevitably, growth stalls. The dreamer who built a $5 million business from scratch is almost always ill-equipped to take it to $100–200 million. Reaching that rarified revenue range demands three big upgrades:
If your company steps up to the next level of growth, it’ll happen either thanks to you or in spite of you. My career crossroads came nine years in. Our revenues were $12 million, but expansionists had us gushing red ink. We couldn’t find good talent fast enough, and our lightweight systems were imploding. Desperate, I hired Dean Bachelor, a turnaround consultant, to stop the bleeding. After exhaustive due diligence, he sat me down and looked me dead in the eye. “Tom,” he said, “the biggest problem in your company is you.” My jaw dropped as Dean rattled off a laundry list of my transgressions and shortcomings.
Upgrade Your People
That meeting with Dean Bachelor took us from $10 million to $70 million nine years later. But it took lunch with Dick Schulze to set the stage for our next growth spurt. Dick, founder and board chairman of electronics giant Best Buy, was an important mentor to me. Over lunch in 1994, I casually mentioned that I was working harder than I ever expected. He asked how long my management team had been together. “Twelve years,” I told him proudly. He nodded and said, “There’s your problem.” I was stunned. Dick was right. We were reaching a lot of our goals, but our jackrabbit growth was noticeably outpacing the skills of some key execs.
Take the vice president we lured from a Fortune 500 firm. He floored me one day with a passing remark. “Oh, I forgot to tell you,” he said, “Darren, the manager of our Richfield store, told me he wasn’t happy about some things. I told him if he wasn’t happy, he could find another place to work.” “You’ve gotta be kidding,” I said, barely controlling my anger. “‘Like it or lump it is not the way we do things around here.
Serves me right. I never should have hired that veer in the first place. I fell for big cred, charisma, and championship schmoozing. I even short-circuited our own rigorous hiring process to get him. Not that he lacked for talent. He could shuffle paper, crank out memos, and market himself like a Midtown Manhattan pro. It took me a year and a half to realize he never actually did any real work. After I asked for his resignation, I discovered that everyone else had seen right through him. Wiping the egg off my face, I promised myself I’d never flip-flop that old adage, “Hire slow, fire fast.” Even as the gaping hole you’re trying to fill grows wider by the day, don’t panic. Be prudent. Plugging the wrong person into a key position is like applying a Band-Aid to an infected wound. By the time you realize you’re in trouble, you may have to amputate.
Upgrade Your Business Partners
In the midst of our executive team makeover, I began applying the same high standards to vendors, suppliers, and professional services. Our longtime CPA firm was a midsize regional shop. I learned we were their largest consumer-based business client, so I interviewed more sophisticated firms that could jump us to the next level. I was astonished to see what we’d been missing. We treated each candidate as a potential hire and made sure they shared our vision. We ended up switching to a larger firm with invaluable retail-chain experience.
With The Big Book as your guide, growing your company can be just as exhilarating as those heady upstart days. I hope it provided the knowledge and wisdom that’ll help you shed any remaining seat-of-the-pants ways. May it navigate your path to enlightened entrepreneurial leadership, and may the journey be fulfilling and profitable.