The First Step to a Sustainable 7 Figure Business
HOW TO CREATE THE TIME AND MONEY YOU NEED FOR EACH STAGE OF GROWTH
As humans, we focus on what comes first. That’s called “The Primacy Effect”. It’s not a coincidence that my first article related to building a Sustainable 7 figure business is about this behavioral principle.
Whatever comes first is more important than what follows — at least in our minds. Try this exercise from Mike Michalowicz’s book, Profit First. One set of words below describes a sinner. The other set describes a saint.
EVIL, HATE, ANGER, JOY, CARE, LOVE
LOVE, CARE, JOY, ANGER, HATE, EVIL
Which set describes the sinner? The first one, right? Great! That means you’re human. It also means you just experienced the Primacy Effect, and your business will thrive with the Profit First system. 👉 Checkout my offer at the end of this article.
Now look at those sets of words again. They’re identical, just in the opposite order. The words EVIL and HATE shifted our bias toward sinner. We prioritized those words simply because they came first.
Do the Right Things for the Right Reasons
You probably started your business to make more money, time, or impact. That’s your personal purpose, but time, money, and impact are (or should be) only results of your first priority as a business owner: your company’s purpose. (i.e. Your Why)
Why does the world need your company? If your purpose doesn’t start with your customers and how you’re going to solve their problems, then vision, values, and all that other “soft” stuff will never matter. More on those later.
Customers need to solve a problem
You need a product that solves that problem
Lucky for you, good entrepreneurs are good problem solvers. Figure out who most values what you do best (i.e. your ideal customers) and then keep iterating your product and positioning until you’re making consistent, repeatable sales without too much friction. Product-market fit is your most important goal at this point. Prove the market needs and wants your product before passing Go. And collecting $200.
👉 Sales matter most if you’re stuck or a startup
Sales is the best measurement for your go-to market strategy. Strategy is about making choices to differentiate yourself in the marketplace. It also provides the guidelines and guardrails you’ll need later for your team to execute effectively.
Different is better than better — Sally Hogshead
Profit Powers Purpose
Money is like oxygen. You need it to survive, but it’s not your purpose. It’s a result of effectively executing your strategy. As the owner of your company (i.e. shareholder), you deserve a fair return on your investment.
👉 Profit is your reward for working ON your business
The traditional accounting equation (Sales - Expenses = Profit) implies that profit is a “nice-to-have” if there happens to be anything leftover. Much like contributing to your 401k however, the Profit First system teaches us to prioritize our long-term financial health and then support our company’s “lifestyle” (i.e. operating expenses) with what’s leftover.
Scaling an unprofitable company is not sustainable. Investing your profit back into your company can help you reach the next stage of growth, but be clear, this is not the same as overspending on operating expenses. You MUST take your profit first. And then, if your company provides a better ROI than any other investment, you can feel good about investing more of your hard-earned money to keep growing your company.
Get the Right People in the Right Roles
As an Owner Operator, you are the owner and the operator (i.e. an employee). And I’ll bet you are your best employee. How long would you work for a company that can’t pay you? Not paying your best employee a fair market wage is not sustainable. Pay yourself fairly for the work you do IN your business ASAP.
Now that you can feed yourself, it’s time to build your team. When you’re stuck in the day-to-chaos, you don’t have TIME to focus on what matters most. Long-term growth is not sustainable without a team of people you can trust. You become your company’s biggest bottleneck when you won’t let go.
👉 Your job is to create jobs
As your company grows, purpose starts to matter most again. Only this time, the purpose of Purpose is to attract the right people (i.e. culture fit) and align their actions. Vision, values, etc. serve as your compass to keep everyone pointed in the right direction. Additionally, you also need to make sure everyone — including you — is doing work that leverages their natural strengths. Don’t try to fit square pegs into round holes. Move your square pegs to square holes. 🧊
Do the Right Things Right
Purpose and strategy are all about effectiveness — climbing the right mountain. The journey itself, however, is all about efficiency. And consistency. You need well-designed, documented Standard Operating Processes (SOPs) to build a scalable operation. You freed up some of your time by hiring the right people. Your people can free up some of their time by implementing the right systems.
You will never scale your profits if your people have to stop and think through every decision, every action. We would’ve never heard of McDonald’s if Ray Croc didn’t create efficient, standard processes.
👉 Get the process right first — don’t automate a bad process
Start with SOPs and then leverage technology to make them more efficient. Paper and pencil are older technologies. Software and AI are simply newer technologies.
Reach the Next Level
Reaching the next level requires change. Don’t want to change? Don’t strive for the next level. But if you’re still striving, take a minute to look back at where you’ve been, what you can learn from it, and what needs to change in order to reach the next level.
👉 What got you here won’t get you there
These steps are a priority pyramid. Every business from startup solopreneurs to the Fortune 500 needs to meet the minimums for every step every day. It’s just that your “Critical Constraint” changes as you grow. Profit margins aren’t holding you back if you don’t have any sales. Process isn’t your critical constraint if you don’t have the right people. Solving each step enables you to focus on the next higher priority.
Companies tend to grow in 1’s and 3’s. Growing from $100k to $300k looks different than $300k to $1 million. Or $1 million to $3 million. The people and processes you needed to support $300k are very different than those you’ll need for $3 million. And even if you wanted to, you can’t afford the $3 million-stage people and processes without first building a profitable $1 million business. Each stage of growth serves as the foundation for the next stage.
These five steps are a virtuous, upward cycle. It begins with purpose and profit, but you’ll never reach the next level without the right people and processes for your current level. When you do, circle back to uplevel your purpose and profit. And then your people and processes again. Rinse and repeat.
The best part is that your potential expands with each pass through this virtuous cycle. Potential is a direction, not a destination. How far do you want to go? The sky’s the limit. ✈️
I am currently accepting new coaching clients who are ready to increase their profit. Mention this article for a special offer. 👉 Apply now
The Joy of Striving is brought to you by Scaling Profit, where my core purpose is to help you build a Sustainable 7 figure business. Check it out if you’re curious.
