Ones and Threes in Business
Ones and Threes
(c) Melanie Parish, 2014
Someone told me recently that in business, the ones and threes are hard.
“What does that mean?” I asked.
“It’s the ones and threes that matter.” He said. “When you first start in business, it is really hard to get to $100,000. You have to figure it out. After you get to $100,000, you have to change almost everything in order to get to $300,000. Then, everything has to change again in order to get to a million in annual revenue. After a million, everything has to change again to get to 3 million, and so on….”
“That’s really interesting,” I said.
“It’s true for employees, too. The first one is hard, then it is hard at three, then ten, then thirty. The ones and threes are hard for employees, too.”
“Hmmm,” I said.
I love this. It fits exactly with what I do as a coach. Probably the biggest One in business is the very first dollar and the hardest employee is the first one. That is why so many businesses hang their first $1 bill on the wall and why so many entrepreneurs think, “I’ll just do it myself!” In order to take that first $1 bill, all the parts of the business have to be in place and operational. In order to hire the first employee, the business owner has to start making explicit what they have been doing intuitively.
In my work as a business coach, I help people figure out what has to change in order to get to the next milestone. Many times there are a few levers that free the business up to slide more easily to the next level. I start with businesses that are ready to reach for a new level. Often, I come into the business around the ones or the threes.
With business owners who are pretty successful at the $100,000-300,000 range, I find a leader who has big dreams and who wants to leave some kind of legacy–they want to bring something new to the world that will make an impact. When people hear that I can help business owners achieve a million dollars in annual revenue, I am sure they think–“Doesn’t everyone want to make a million dollars?” But the people I actually work with are toiling at dreams that are much more about delivering something innovative to the world. The journey from $300,000 to $1,000,000 often isn’t all that profitable. There is a profitable trajectory but the beginning is more about building equity than cash. The leader at this level is learning how to bring other people into their business. One of the biggest challenges I hear with leaders at this stage is trying to get their staff to do what they want or even what they tell them to do. In order to move more quickly to the next level, the leaders need to learn how to release some of the control and to empower, guide, and train staff to think on their own. It can be a mucky process as staff may be part-time and may not be fully committed to the business at this stage.
As my clients top $1 million in annual revenue and are still growing, the journey continues. I once heard a fast growing company described as a hungry baby – it needs a constant supply of capital to allow it to grow. Cash is often the limiting step as to how many opportunities a fast growing company can pursue. The challenge at this stage is also about finding qualified staff and making the jump from part-time people to full-time people. There are so many different roles to be filled, so often staff members need to be more generalists than specialists. The CEO is still filling some roles as the company goes from entrepreneurial start-up to full-fledged company.
Between $1 and $3 million in annual revenue, the development of staff becomes paramount. Well executed systems with people performing well-defined roles is what is changing in companies of this size. They are duplicating positive results on a larger scale and speed of delivery is what takes them to the next level. At this stage, the company is still relatively flat but the staff has become more professional, more full-time, and more specialized. The CEO will be most effective at this stage if other leadership roles are filled by other team members in order to keep the focus on the big picture.
Between $3 and $10 million, the budget processes change dramatically. No longer is the budget being done by one or 2 people, but a leadership team. The CEO is looking more strategically forward. Day to day operations are mostly handled by the leadership team with reporting functions to the CEO. The CEO is focusing on future growth opportunities, company culture, and leadership development. The CEO at this stage may struggle with what their role is. If the CEO is managing well, some time may free up. CEO’s who need to feel like they are working in the business or who need to feel important can get in the way by micromanaging at this stage or creating arbitrary rules as they experience fear. They are erring on the side of control in a business that needs less control and more flourishing under the executive team leaders.
Between $10 and $30 million, the development of the individual teams under each leader becomes the focus. The CEO is setting the big picture direction for the company and collaborating with business partners and internal leaders. As the CEO is further removed from team members, the organizational culture sets the company drive and productivity. Each department needs a well designed vision and the ability to improve independently from the rest of the organization. The CEO’s job is to make sure they, as a company, have created a culture that translates all the way through the company how important the work they are doing is to the world. People who find meaning in their work are willing to work harder and will be able to be more productive and the company will thrive. Focus on sales generation at this point becomes extremely important as predictable sales and marketing structures are put into place. An organization of this size needs to be able to set a budget for growth rather than relying on luck. They know if they invest a certain amount, they have sales and marketing structures in place to ensure the sales growth they are investing in.
At each one of these stages, the leaders and all of the employees are experiencing rapid and uncomfortable change. Some people thrive on this and some people find it stressful and unpleasant. As a coach, I find it to be exhilarating to embark on this trip with my clients to help them try to see the pitfalls and to learn to be the leaders they need to be to take their companies to the next level. What a ride!
What stage is your business at right now and how do you need to change as a leader to get to the next level?
