4 Entrepreneurial Success Principles You Must Follow
Content was originally published on Inc.com on August 3, 2017.
Recently I was invited to give a keynote address at a large industry conference of business owners on the east coast. The organizer wanted me to share what I thought were the most essential principles that would make any entrepreneurial venture successful.
Reflecting back on the thousands of business owners I’ve coached, and the companies they owned, I settled upon four bedrock success principles that I think any successful company must keep firmly in mind if they want to successfully and sustainably scale.
Here is a quick summary of all four principles.
Principle #1: Commit to Building a Business, Not a Job.
No business can ever sustainably scale if it is totally reliant on the personal production of one or two charismatic founders. There is a limit to the production they can give and to the pace they can sustain. This is why I strongly encourage you to build from the very beginning from the mindset that you will incrementally grow your company to be independent of any one key person, including you the owner.
With our business coaching clients we call this passing the “hit by a bus” test. If you, or any of your key team members, were hit by the proverbial bus, would you business still be able to thrive? The only way to pass this test is to build on the solid base of a strong, well rounded team; sound business systems and internal controls; and a clear, consistent culture.
Bring your team into this work early. Make it a stated goal of your company to build an autonomous organization that has a depth beyond any one person.
Principle #2: Break the link between one hour worked and one unit of value created.
You don’t get paid for time served; you get paid for value created. The same thing is true of your team. When you realize this and then analyze the activities you do for the business you see that there are clear value grades of the tasks and activities you do for the business. Your job is to role model the discipline of consistently focusing your best time and attention on your most valuable activities.
Rather than look at the day as “8 hours” of doing, doing, doing, instead block out a minimum of one hour of your best time every day to focus on your most valuable contributions to the company. This may be crafting a strategic plan, cultivating a key strategic partner, or working to groom and develop your leadership team.
It is no longer enough for you to just put in the hours, you need to relentlessly strip out of your day all the low value, time sucking activities that rob your business of your best attention.
Principle #3: Build with a “Level Three Mindset”.
There is a simple model I’ve shared for over a decade now about the predictable stages of growth all businesses progress through. I call this the Level Three Map.
Level One is the start up. This frenzied rush is the launch of a new company racing to reach profitability and sustainability in the market.
Level Two is the owner reliant stage. Here you have a business that works, but only because the owner is there every day to make sure things work. Many business owners get stuck in Level Two having built not a business, but rather a “job” for themselves.
Level Three is the freedom stage of the business. It’s here that the company is enjoying the benefits of the deep, cross-trained team, well documented systems, internal controls, and established, winning company culture. A Level Three business can be easily sold, scaled, or transitioned to be owned passively.
Building with a “Level Three Mindset” means that you solve the challenges you face and seize the opportunities you spot with the clear understanding that you must consistently work to mature your company and reduce its reliance on you or any one team member. Never again will you be satisfied with one-off measures; instead, you’ll look for scalable, systems-driven solutions that you can build on as you scale.
Principle #4: You Can Do It, and the Rewards Are Worth the Effort!
All too often business owners say, “Sure, so and so can do it. But not me. Not us in our industry or with our business model.”
But the fact remains that you can do it. I’ve watched doctors scale their family practices to over 100 providers and 1,000 employers generating massive patient value independent of the founding physician. I’ve seen blue collar contractors mature their contracting business so that they never touch a tool in the field anymore and yet still provide incredible value to their marketplace. And I’ve seen I.T. consultants who once were “one man” shows 10x their companies and blow right through the false limitation of their own personal production. So can you.
And here is the thing – what if you never reach “Level Three”? What is you just get part of the way and then get stuck or satisfied? The work of maturing your company will help you expand sales, improve your margins, and free much of your time. So what if you never reach Level Three? Advanced Stage Level Two (on the cusp of reaching Level Three but never quit reaching it) is still a much better place to be that a fully owner reliant organization.
Take the example of Ryan Arnold, a former business coaching client and owner of a successful HR services company. Ryan diligently worked to follow the first three principles I shared and scaled his company into a regional powerhouse, even if he was never able to fully wean it off of all of its reliances on him. He ended up selling his company for $5 million in an all cash sale. If you were to ask him if he ever thought he’d succeed the way he did, he’d be the first to tell you he struggled with the same doubts and fears you do.
So hold on to the knowledge that your efforts to mature your company and increase its independence from you following the first three principles listed above will be more than worth it.
If you enjoyed the ideas I shared, then I encourage you to download a free copy of my book, Build a Business, Not a Job. Click here for full details and to get your complimentary copy.