My formula to scale a business to £1m
From 5.5m private businesses in the UK, only 4% will ever hit the £1m mark. So, that tells me, 96% of business that don’t hit this milestone fall into 2 camps. Those that strive for years to get there and don’t. And those where the conscious decision of the founder, is to create a lifestyle business. A lifestyle business is primarily set up with the intention of maintaining a certain lifestyle for the founder, its existence is one of a supporting role to the owner, rather than having growth ambitions of its own.
A few years ago, I went on a group holiday. In our party was a friend who had a lifestyle business. He had always been vocal about keeping it on the smaller side. Understandably not wanting the stress and time toll a larger operation always seems to have on the Founder. At the time the business I Co-founded had 60 employers and a £70m turnover. For the 6 days we were away, he received 3 or 4 calls a day, often into the evening from the small team he had left behind to take a short break in Europe. In comparison, I didn’t receive a single call. Not one. Lifestyle businesses are great, until they interfere with your lifestyle.
In terms of the strain on your life and often your sanity over the long term, I personally think it’s harder to maintain a lifestyle business at sub 7 figures for 20+ years than it is to grow something way into the millions and beyond before the decade is up. At that level, you have choices and a management team hungry to learn and take things on. Lots of people talk about balance, but I don’t see work life balance in terms of my day, week or even year, I see that balance will occur at some point over a lifetime. We have built our business into 9 figures in 12 years. We started with 2 laptops in a garage and are now the Sunday Times Best 10 Company’s to Work For and the Investors’ In People Platinum Employer of the Year of the whole of the UK. Looking back, I can see whole half years and quarters that were totally wasted, with well-intended mistakes. Knowing what I know now, I think I could walk the same path in maybe 6 years or less. This is the message and the lessons I push regularly on my social and email list. To benefit from my 2020 hindsight vision…here are the 5 steps I suggest you take if your goal is to scale your business to 1 million.
1. Nail your hiring
Depending on the nature of your business, you can get to 6 figures on your own with a few outsourced partners. To get to 7 and beyond, you will need the assistance of other people. As a recruiter, I am biased, but hiring is always my number 1 priority to get right. Decide on the personal attributes you are looking for, hire on those. Everything else can be taught. Experience and qualification (outside of the medical field and things like architecture) are vastly overrated.
You will make mistakes. We have recruited almost 10,000+ people for our clients, and then 200 people internally, and I still get it wrong. You just need to have a robust probation period in place, I would always recommend 6 months. Use that process as a proper assessment of whether the individual is capable, coachable and possess the personal attributes and core values you are looking for from a team member.
2. Culture: Use of language
Once you have hired the right people, the next task is to retain them. Our team retention rate is 92% annually. We have people walk into our business and ask how we have created such a culture. My answer could take 6 months to formulate if I was to hypothetically sit down with them and explain it. In short, there’s no silver bullet. I see company culture as a game of Jenga. Many blocks stacked upon each other very carefully, one after the other, piece by piece. It can take a long time to build, but if one piece is harmed or removed at the wrong time, it can take only seconds to come crashing down. One of the most important blocks of culture is the use of language.
I never refer to our people as “staff”, they are team members. Staff gives me connotations of Victorian times. Those from a lower class that lived and worked in the basement of large family houses, serving the more affluent family members. It gives totally the wrong vibe for a collaborative working environment. Our people are team members, we work together towards a common goal, a single mission. We have different roles, but none more important than the other.
No one “works for me”, our people work for the company, they work for their families and ultimately, we “work together”. How you describe someone, and their role has an impact on their identity and how they feel they can contribute to ideas and solutions, rather than simply serving the Founder. You need to lead the action, be the first, and live the values you wish to see in others.
3. Sticking with your strategy
A lot of people try and overcomplicate business. In its rawest form, it can be a very simple process. You can scale to £1m and beyond with a simple model. You need to understand it takes time to gain traction even in a market where you are an expert. If you have changed course every 6 months and have a 5-year-old business. Have you been in business for 5 years, or do you have history of 10 companies that effectively died on month 6? Back yourself, your original strategy probably isn’t too far from the path you need to be on. Always look to improve, always look to tweak and systemise the bottle necks, completely changing course will mean starting again and will result in staying small for longer. I would outsource absolutely everything that isn’t your core skill or function on the way to 7 figures, as you approach 8, for us it made sense to start to bring these functions back in house, once a solid base has been built.
4. Crystal clear vision, a compelling mission
You need to formulate a big “why”. Why does the business exist, what is it going to achieve, by when, and how will it be done. Every 6 months, our leadership team meets to review our company vision and ensure the objectives we set from this vision for the next 2 quarters are aligned with our long-term goals. In our last meeting of this nature, 6 Directors met for 4 hours, and the outcome was a 142 word vision. 6 people, 4 hours, 142 words. It’s that important. Every member of the team needs to know where the business is going, and what their role is in this mission. The CEO should change their title to CRO, Chief Repetition Officer. This vision needs to be repeated in everyway as often as it can be. It needs to be communicated and received using the different senses of the team multiple times a week. On email and the wall for those that read, talked about in meetings and even in the lift for those where audible communication resonates more. As a Founder you need to evangelise where you are going as a team, specifics are key. This really helps with retention and to help people see their role as a career, a long term shared project, rather than just a job. You also need to be aware of the personal goals of your team. Expecting your team to know the objectives and mission of the business when you don’t know the basic life ambition of your team isn’t going to get the long term, 2 way buy in you are looking for. I know who in my team wants to buy a house, who wants to get married, and who wants to go on holiday and where. I ensure in return for their hard work towards the business mission, the business does all it can to help them on the way to theirs personal goals too.
Revenue of £1m is a result of creating a machine that operates independently of the Founder. The Founder’s input daily, although not required, is there to give the machine a huge boost, a supercharged “power up”. To achieve this, you need to systemise and process everything. The earlier you can do this, the better.
In our business, over the years, I seemed to receive many nicknames, the two I can reveal(!) are “Prince of Process” and “Captain Boring”. My desire to process, process, process was (on the face of it) overkill in the early days. I had lots of comments and questions as to why a process was needed for this, or for that when the company was only at 5 people. But we weren’t creating processes for 5 people, we were creating them for 100+.
The sooner you can process, the quicker it gets engrained into the culture of the business. What’s harder than brining in a process for credit control when the company is only 2 people? Bringing in a process for credit control at 30, or 40 or 100. Changing to a new way of doing something is always harder than implementing it early. With each way you do something or every piece of software you are considering, you need to ask yourself, “will this get us to £1m?”.
The “it will do for now” approach is the dream killer of small businesses. If it’s ok for now, it will be ok for 3 years’ time. Before you know it, your back office, your promotion procedures, and your annual reviews are all cobbled together “for now” cultivating a slapdash environment that soon becomes the norm. There’s never a good time to systemise that bottleneck. It only ever gets harder as time moves on. The biggest push back is the cost of the software and the price of the systemisation. People that struggle to get to £1m see everything as a cost, and not as an investment. The real cost is your 4 holidays a year and leased range rover you bought yourself for breaking £750k. Forgo all luxuries, your business and your people deserve better. Build properly and build early. You can’t expect a mighty oak tree to grow in 3 inches of soil. You need to ensure deep fertile ground.
And finally, and probably most importantly. The way to get to 7 figures more quickly than your competition, is to aim for £5m, not £1m. By thinking bigger, far bigger, you will hit the £1m mark far more quickly when you cast a vision to yourself and your team way beyond the 7 figures. You can see £1m as the end goal, or just the beginning, in my experience its simply a choice you make. For me, even now, every day I come in, it isn’t year 12, its day one.