8 Mistakes I Made Scaling My First Business
You can wait to fall into the common traps that will make your business struggle and stifle your growth, or you can learn from the mistakes other entrepreneurs have already made. In this episode, Chris shares the eight big mistakes he made when scaling his first company.
You’ll learn what you need to avoid when it comes to hiring and training a team, how you need to spend your day as the CEO of your business, and what you need to do to ensure you’re built to grow.
Chris also digs into specific exercises you can try in the next year to see how they impact your organizational structure and profit.
You don’t have time to run into these expensive problems yourself. Take time to prepare yourself today so that you’re not slowed down tomorrow.
The speed at which we grow is directly determined by how fast we can learn lessons and then systematize those lessons so that we’re not doomed to keep repeating those lessons over and over again.
In this Episode:
- Why you need to avoid software cycle so you can focus on your zone of genius
- Are you hiring used or new? Find out what Chris learned the hard way about bringing in talent
- Why you need to focus on training leaders instead of building teams
- The biggest mistake you can make with your employees that will destroy your team’s culture and trust
- The one thing you must measure in your business (hint: it’s not revenue)
- One exercise you need to do in the next year to improve your organization and increase your revenue
- How to effectively study your competition so you can differentiate yourself and your company
- How to seek advice from mentors at each stage of growth so you can scale faster and more effectively
Find out exactly what aspect of your company is the current weak link that, if fixed, will help you scale faster and more successfully.
Enjoy the show? Check out the most popular episodes of Built to Grow!
- How to Start and Grow Your First 8 Figure Company
- How to Stay Focused on What Really Drives Growth
- Avoid These Culture Killers
After scaling more than a dozen companies, four of which are eight-figure companies, and helping more than a hundred other entrepreneurs to push through these new levels of growth, I’m sure that the fastest way to grow any business in any industry and in any economy is this: Avoid mistakes that normally kill growth.
I know that’s simple, and I know that you’re going to hear gurus tell you, “Oh, mistakes are essential,” but I promise you this, you have 10 competitors around you right now who are biting at your heels and one good promotion away from overtaking you, and the seconds that you save by not getting slowed down by mistakes is going to determine if you will succeed or if you’re going to be constantly struggling to stay ahead.
I’m a firm believer that the speed at which we grow is directly determined by how fast we can learn lessons and then systematize those lessons so that we’re not doomed to keep repeating those lessons over and over and over and over again.
First Business Scaling Mistake: Trying to Learn Every New Productivity Software
So what I want to give you here is an overview of eight mistakes that I made scaling my first business. That way you don’t have to learn the hard way, because each of these were very costly and stressful and you may see my eye twitch a few times when I’m going through them and I’m remembering this shit, so I apologize.
But the very first one is trying to learn every new productivity software. Now, there’s a learning curve to every single new app or software that comes across the board and your teams, especially if you’re dealing with vendors and independent contractors, may tell you, “Oh, we need to, we need to use Basecamp, or we need to use, you know, Scrum, or we need to use this or that.”
And a lot of those are outstanding for them to be using, maybe even for people inside your organization to be using.
But for you to learn those apps or those pieces of software, will slow you down and take your mental bandwidth away from what really drives your growth.
If you’ve watched any of our videos in this series, you know that I’m a firm believer that you’ve got some kind of stupid human trick. You’ve got something that you are so very, very good at. That’s why you’ve earned the spot as owner in your business. And the more we can get you to focus on that, 80% of your time focused on that, 20% of your time focused on the other stuff, 80% of your time focused on your powerful stuff, 20% of your time focused on the other stuff. 80%, 20%, 80%, 20%, the more we could get you there, the faster we can get you growing.
Second Business Scaling Mistake: Hiring Inexperienced People
The second mistake I made was hiring inexperienced people instead of paying for real talent. I will, from this point forward, hire used not new.
I would rather pay for experience than pay the price for hiring somebody I have to train and retrain. Then maybe after 12 months that’s when I could figure out if they are the perfect fit for us. No, I want to hire somebody and have momentum already started. I want to hire somebody and have them bring a Rolodex of relationships with them. I want to hire somebody so smart that they’re training me on how to improve what they’re good at. That’s huge and that has allowed us to escalate significantly faster than most other companies around us.
Third Business Scaling Mistake: Not Training Leaders
The third mistake that I made early on was not training leaders, just getting employees or just building teams. Now, one leader, I promise you, can change everything in your business for the positive.
Time spent developing leaders has probably been the most profitable use of my time in any business. Whether it’s in the legal industry or in the media industry or in the publishing industry or in the health industry or any of the other industries that I’ve been in.
Developing leaders in there has been transformational to us and it’s helped them to develop teams underneath them so that I could pull away and so that I could work on other ventures, or I could think bigger and grow the company doing other things. So that’s huge.
Fourth Business Scaling Mistake: Allowing Non-performing Employees to Stay
The fourth mistake that I made was allowing employees to stay on even after they’ve stopped performing. And it — by far, that’s the worst decision that you could make because it destroys your culture. When you have an employee who is not performing, what is happening is the other employees on your team or the other vendors or independent contractors or anybody else that you’re working with sees that. They always see the weak link, and then their performance drops down to the performance of the weakest link, number one.
Number two, they lose respect for you. Because when you have A players on your team, when you have people who are truly driven, who drink the Koolaid with you every single day, who really want to grow and have a passion for growing this company, when you have that kind of a person in there and they see you putting up with somebody who is not at that caliber, they lose respect.
The minute they lose respect for you, that’s when all shit hits the fan and you want to stop that. So please don’t do that.
That was a big lesson that we learned from, you know, after the first company.
Fifth Business Scaling Mistake: Not Knowing What to Measure
The fifth mistake was not knowing what to measure. Like, I literally went into business and didn’t know what the heck to measure. Like most people, I looked at, well, how much money is coming in? Or how much money is, you know coming — how many sales are coming in? Or how many customers are we touching? Every company is different. However, there are key metrics. Normally in my organizations, there are three to five key metrics that I absolutely need to know. When I know those key metrics, I can look at them every single morning and see what the best use of my time is. What do I absolutely need to measure? Keep my finger on the pulse of so that I know that everything else in the company is growing?
If those key metrics are moving in the right direction, then everything else is moving in the right direction.
The most important thing to measure in any organization that I’ve ever been part of is not revenue. It’s your profit is better than revenue, but it’s not always profit either. It’s the actions that create the most revenue and growth for your company. When you can reverse engineer your revenue and the number of sales you need to make and the number of customers you need to touch, when you can drop that down to the actual actions that create the numbers and the growth and the reach that you want to create in business, and you manage just those actions, your team will be a lot happier, you’ll be a lot more fulfilled, and you’ll literally be doing what is best for that small amount of time that you’re spending in the company that day, whether it’s three hours, four hours, or 12 hours, it doesn’t really make a difference.
You’ve got to be focused on the most important use of your time while you’re in there, and you not only know that when you know the actions that create the most growth for you.
Sixth Business Scaling Mistake: Not Building to Sell
The sixth mistake that I made was not building to sell. Now, I don’t care if you want to sell your company or if you don’t want to sell your company, it’s irrelevant.
If you’re not building your company to sell, then you’re missing out on massive organizational structure, massive growth potential, because when you build a company to sell, you become more streamlined, you become more systematized, you become far more focused on what really matters in that company.
My challenge to you, if you’ve never thought about this one thing before, is to go out there and meet with a couple of bankers. Just — don’t do it now, just figure within the next 12 months, you’ll go out there and you’ll meet with a banker or two and say, “Hey, if somebody were to buy my company, if somebody came to me and they wanted X amount of money for my company…” You’ve got to go in there with an intelligent number, right? Like let’s just say if your company is worth $1 million, then go in there to a banker and say, “Hey, listen, if somebody is really looking to buy my company and they’re serious, but they need funding from you and they want to buy this company for $1 million, just can you please go through the exercise with me and tell me, what are you going to want to see from me as a company?”
And they’ll say, “Well, we’re gonna want to see this and this and this and this.” You don’t have to do all of them. But if you do some of them, it will make you more organized than the more organized you are, the more streamlined and the more profitable you will become.
It’s a tremendously different way to look at things. And it will improve your revenue and everything else inside your organization. I promise you.
Seventh Business Scaling Mistake: Not Studying My Competition
The seventh thing is not studying my competition. Early on, the very last thing I ever wanted to do was study my competition. I was mad at them because they were taking food off my table. They were taking sales out of my pocket. I got really smart and I literally studied every aspect of them. If they’re an online company, I would buy their programs.
If they are an offline company, I would go in there and I’d shop them. I’d know they’re employees and I’d know where they’re marketing. And I know generally what people thought about them and the area.
I want to know everything about my competition. The smarter I became about each one of my competitors, the easier it was, the clearer it was to differentiate myself, my company, my marketing, and my branding in a way that literally attracted people like a magnet to my organizations and helped us grow significantly faster.
Eight Business Scaling Mistake: Not Seeking Advice
The eighth mistake I made was not seeking advice from those who have already done what I want to do. I’m talking about mentors. Without a doubt, the number one important asset in our growth was access to people that I’ve got inside my contact list.
Smart people who have done it over and over and over again. And if you’re just starting out, then that might mean just reading books or watching videos like this. And that’s okay. That’s how I started out. That’s how everybody starts out.
But once you get a little bit of momentum, then you’re going to need to hire people, right? Look for people who have a track record of doing what you want to do. Look for people who have achieved what you want to accomplish multiple times. Then do whatever you need to get time with them.
Checkout Our Board Series
So if you’re a novice, you’re going to read books and videos. If you’ve got a little bit of momentum, you’re going to go out there and hire somebody. Maybe you need a board of advisors or a board of directors.
And if you’re at that level, then you should watch our Board Series. I think we’ve got five or six or a dozen videos in there. I’m not even quite sure at this point.
And you’ll see how I locate great board members. You’ll see how I manage a board meeting and the paperwork that I use to set up boards. You’ll get everything that we do to attract and create these boards that help us scale faster.
Now, those were eight mistakes that I made scaling my first company. I probably made a lot more that I erased from my memory. But each of them cost me a lot of time and a lot of money to learn. I’ve acquired dozens of companies since then and I never made those mistakes again. Because after making a mistake, we find a solution, and then we systematize it. So that no company that I’m ever part of has to be slowed down by that mistake ever again.
So initially, your goal is to learn from each of the mistakes so that you’re not doomed to repeat them. But then after you start making money in business, your goal is to learn from the mistakes of others. Through this, you can scale faster and more predictably.
MEET CHRIS GUERRIERO
Chris is an entrepreneur, investor, bestselling author, and advisor to a handful of high growth companies.
He has built four 8-figure companies, developed winning leadership teams in six industries, and designed business systems that predictably grow multi-million dollar brands.
He’s been featured in financial periodicals such as: Success, Inc, Bloomberg TV, and in Entrepreneur as a top entrepreneurs of the time.
In addition to his own companies, Chris is also an advisor, investor and equity holder in companies across a variety of industries, including health, medical, digital advertising, legal and real estate.