Have you ever wondered how some entrepreneurs seem to effortlessly build multimillion-dollar companies, while others seem doomed to live in the six-figure club?
On my own way to one million in sales, I can remember convincing myself that there simply had to be a formula to get to that milestone.
Well, there is -- and it turns out that there are six essential elements of building a million dollar business that most business owners get wrong:
1. Make sure your product or service solves a market need.
Whether you're a product or a service company, the thing you sell can mean the difference between scaling a company and remaining small.
One glaring issue is the product-market fit, where you've (hopefully) properly assessed what your target market is, who your target persona(s) is, what pain points currently exist that your product solves, and how to best reach those people in the first place.
It's remarkable how many companies are just two degrees off when it comes to the product-market fit. Trust me, it's possible to grow without a perfect fit, but we found that our sales eventually hit a plateau without that magic combination.
When we realized what was happening, we reassessed our target market strategy, slightly tweaked our core value proposition and got right back on the growth track again.
2. Don't run your business; run your systems, instead.
Systems exist everywhere in your company -- from how you create your product or service to how you find talent to how you onboard clients to how you pay your bills.
So, either you've designed excellent systems and your company is on its way to multimillion-dollar status, or your systems have organically arisen from your daily operations and they're causing you pain and grief.
Without great systems, fast growth will burn up your time and your cash while you figure things out on the fly. For that reason, we spent the past year at my agency creating a "GEM Process Binder" that contains all of our company processes, because we don't want to scale our sales only to have the agency's operations fall apart and lose all of that momentum.
3. Get the right people in the right roles.
The good news is that you don't have to scale your company; your people will do that for you if you employ the right kind of people in the right roles.
The bad news is that getting the right people and roles into your business can be difficult to strategize and even more difficult to achieve, if you don't know what you're looking for in the first place.
In fact, the former CEO of Cold Stone once told me that one of the first things he recommends entrepreneurs do is force-rank employees on a ten-point scale and cut anyone who isn't at least an 8. He knows what every successful entrepreneur knows: once you have a business full of employees that are 8s, 9s and 10s, your company will skyrocket.
4. Invest in your own leadership development.
As the leader, there are certain things you must do to properly lead your company to higher and higher revenues, profits and returns.
You can probably guess what some of your responsibilities are: learning new business skills, hiring and firing appropriately, setting the strategy, delegating and making sure you pay your bills.
But great leaders know that they have far more responsibilities than that, particularly with your soft skills -- like learning empathy, gaining new experiences and illuminating your blind spots to be a more effective leader.
Over the past few years I've heavily invested in myself by joining Entrepreneur's Organization and going back to business school. Although those commitments are costly in terms of both time and money, the more mature perspective and eye-opening personal development I've received in return have far outweighed any of the cons.
5. Build the proper network.
In business, as in life, your network matters -- tremendously. Building and maintaining a network can mean the difference between collecting a $50,000 per year paycheck or scaling and selling your company for $50,000,000.
For instance, you could build a local network of customers that brings you steady, predictable business.
Or, you could build a network of bankers, franchise experts, marketing strategists and venture capitalists that teach you how to scale a global enterprise and sell it for millions.
Building a proper network is one hidden strategy that super-successful entrepreneurs use over and over again to create wealth. in fact, all of the biggest goals I've achieved -- like building an Inc. 5000 business and getting a book deal -- would never have happened if I hadn't spent years cultivating a strong and diverse network.
6. Get yourself educated about financial accounting.
Without cash, your business will starve and go out of business. As the saying goes: revenue is vanity, profit is sanity and cash is king.
However, while many small businesses use cash accounting because it's easy, that system might be hiding big problems within your operations that you could only see with accrual.
To understand this effect, ask yourself: What do your numbers look like on an accrual basis, and how do your financial ratios look? How are you preparing your books to secure debt instruments that you can use to fuel your growth? How are you reinvesting your profits?
If you think you're too small to think this way, think again: big companies get big because they focus on their financials and watch their net asset value grow, not the other way around.
Ironically, I realized the power of proper accounting during my pursuit of personal development, which is one more reason to always have a mindset of lifelong learning.
Smart entrepreneurs avoid mistakes by getting the help they need.
Most entrepreneurs have to figure all of this out on their own, over many years and lots of mistakes.
As we move into 2018, get the mentorship and education you need to get to that seven-figure mark. With these six essential elements, you can!