The S.C.A.L.E. Formula™ to Grow Your Company and Get Your Life Back David Finkel, CEO of Maui Mastermind and WSJ Best Selling Author Tom, owner of a $5 million per year company in Florida, was burning out. Sure his business was successful, generating $1 million per year in profit, but he was working 80 hours a week, missing his family, hurting his health, and damaging his marriage. Tom was torn between his desire to see his business succeed, and being present with the important people in his life. Feel familiar? Too many business owners think they must make a choice between growing their business and having a life. But this is inaccurate, old-school thinking. If having helped thousands of business owners build billions of dollars of sales and enterprise value has taught me anything it’s this: the best way to sustainably grow your company is to focus on less, so that your business can produce more, and in the process, you greatly simplify your task of reducing your company’s reliance on you the owner. Done right, you get your increased sales and profits, and you get your life back again. Let’s go back to Tom to hear how the story turned out. After 7 years of applying the S.C.A.L.E. Formula to grow his company (which I’ll be sharing with you in this article) Tom grew his sales to $20 million. Best of all, he reduced his working hours in the business to fewer than 10 hours per month. Tom Santilli (far left) enjoying a celebration with his business owner peers in Maui. Seven years after first applying the S.C.A.L.E. Formula, Tom grew his company to sales of over $20 million and transitioned to own his business passively. The main point of this article is to give you better formula of the key steps to grow your company the right way. A formula that doesn’t require you to sacrifice your health, your family, or your life to get that growth. It’s my hope that this formula sparks you to think about your business in a new way. And to reconnect with the possibility that you can fall in love with your business again. A Question Can Change Everything Have you ever had someone push you to rethink your core business with a sharp, piercing question? Well that’s what happened to me a few months back when I was meeting with one of our newest vendors. I guess without realizing it I had grown complacent in our core business coaching practice. After all, the results our clients were enjoying were superb. On average, the annual growth rate of clients who had been with us for 6 months or longer was 64.2%, and at the same time these same clients had increased his or her company’s “Owner Independence Index” score by 194.5%. They were working fewer hours, enjoying their businesses more, and earning a lot more money. But when this vendor said, “David, I’ve read SCALE and loved the book. But it was almost overwhelming with all the good ideas. It was too much. Couldn’t you make it simpler?” I asked him what he meant, reducing our best ideas on scaling a company down to one 272 page book was excruciatingly difficult. It literally took me and my friend and co-author Jeff Hoffman (co-founder of Priceline.com) a full year of work to complete it. He said, “David, I’m already feeling overwhelmed by my business with too much to do and not enough time in which to do it. Couldn’t you teach me your formula for building a business in a simpler way… you know, give me just the must-have essentials and a game plan to start using it to get results right away and leave everything else out?” Initially I got defensive and was put off by his question. But his earnestness really struck me, and I kept coming back to his question. Had we really arrived at the best version of what we do with a coaching client? Was there a way we could reformulate our core business methodology so it was simpler, easier, and faster? What if I only had one “lecture” during which to share with a hungry audience my very best formula for sustainable business growth, what would I teach? How would I teach it? I started like I always do by writing notes to myself in my business journal. I kept turning this question over and over in my head. I’ve obsessed over it really. I kept asking myself, “What would I leave out?… What would I need to cover?… How best should I sequence these steps?… How could I simplify this?… What would be the most common stumbling blocks, and how could I pave them over to make it easier and more automatic for a business owner to get the desired results?… What is most essential to start with?…What should I save for later?…” In fact, if you were to look into my business journal you’d see dozens of pages of thoughts and ideas I played with until one day I took up some dry erase markers in my office and just started to write on the 4’ x 6’ dry erase board in my office. (See below for picture.) And the ideas just clicked. When I was done writing about an hour later I had the entire “formula” down on the board as an outline. The outline of the S.C.A.L.E. Formula I came up with hanging on my office wall. The Big Picture of the S.C.A.L.E. Formula Here’s the big picture outline of the actual formula for growing your business and getting your life back. It’s based around the five letters of the word, “SCALE”. Say Yes to Building a Business Not a Job The “S” stands for “Say Yes to Building a Business Not a Job”. It has to do with the internal game of business by which you recognize that not only is it possible for other business owners to build a business independent of themselves, but that – gulp – it’s possible for you too. My Story I started my first “real” business at age 23 when I dropped out of college to start distributing a nutritional product in San Diego, California. Until then, I was a semi-professional athlete training for the Olympics. (I played on the United States National Field Hockey Team for seven years.) I was excited, ambitious, and ready to take on the world. That was until nine months later when I went bust. What happened? I’d jumped into a business I didn’t understand and didn’t have a real passion for. I hadn’t even bothered to write out a business plan. I’d never invested the energy to learn the skills needed to build a successful business. I was simply chasing after the glitter of easy profits. That was my wake-up call. They say the first sign of progress is admitting you have a problem—and boy, did I have a problem. I was scared, overwhelmed, and feeling stuck. I didn’t understand how to sell or market; I had no skill in how to structure or run a business; and I had no clue how to manage cash flow and build financial controls. I had let my ego-fed pride blind me to my own ignorance and isolate me so I didn’t look for the right mentors, advisors, and peer group to guide me. Going bust helped me to break through my fear-based bravado and understand that I had a lot to learn. And learn I did. I studied. I read. I experimented. I found mentors to teach me and partners to contribute their best talents. I paid attention and focused on learning the key skills that had eluded me the first time around. The result? Seven years later, I was an “overnight” success—a multimillionaire with two successful companies and a bright entrepreneurial future ahead of me. But now I had another problem—a serious problem. I was totally burned out and overwhelmed. I was working 70 hours a week, and on the road two weeks each month. And if that weren’t enough, I was in danger of losing my passion for the business because of all the “details” I was responsible for overseeing. Sure the money was great, but this wasn’t what I’d signed up for. I originally started my own company because I wanted to be in control of my own destiny. I didn’t want to work for anyone else (that is, if anyone else would’ve had me). But in the end, I wanted one thing more than anything else. In fact, this one thing was the single deep desire that had sparked me to open up shop. It’s what drove me to keep going when tough times hit. I wanted freedom. Freedom from people telling me what to do and how to do it. Freedom to do things my way. Freedom from having my future depend on the whims or decisions of others. And—gulp—time freedom. Instead of constantly working to feed my business and feeling trapped, I wanted to let my business work for me. The cash flow was great, but I always had to anticipate the pressures of the following month, with its payroll, overhead, necessary sales, and “emergencies” I knew I’d have to handle. I wanted out of the pressure cooker, to escape the long hours and demands. Was it too much to ask for my business to support me instead of me working to support it? It was at that point I made a decision. I’d build a business that would work without my showing up each day. I focused on it, obsessed over it, took action on it. And little by little, my business started to mature. I found key team members, built strong operational systems and internal controls, and slowly weaned my company off of its dependency on me. Over the next 36 months, my income skyrocketed, but best of all, my free time kept pace. I had reduced my working hours from 70 hours per week down to an average of 35 hours a week. I had increased my vacation time from never to two to three months a year. I was doing the things in the business that I loved out of choice, not obligation, because I’d crafted a role for myself in the company that was both sustainable and enlivening. At this high point, I got such a good offer to sell the companies, I decided to do it. I took the money—along with everything I’d learned about building a successful business—and started fresh, and did it again. The reason I share this with you is simply to illustrate a point – it is not only possible to build a business that doesn’t rely on you, but that should be your goal. In fact, the first element of the S.C.A.L.E. Formula calls on you to make the concrete decision that one of the stated goals of your business is to build it to be sustainable independent of you. Claim Back Your Time The “C” in the S.C.A.L.E. Formula stands for “Claiming Back Your Time”. Here’s the thing, you’re already working enough hours. I don’t want or need you to work any harder. You just need to carve out a small percentage of the 40-50-60+ hours you’re already working each week, and to invest in higher order activities to help you scale your company. But when you first try to do this everything in your business day is going to fight back to make it hard for you to claim back these hours. Your staff is going to need you… your customers are going to cry out for you… your vendors are going to ask for you… You’re going to say, “But David, I’m already working 70 hours a week. I just don’t see how I can fit in the suggestions you’re making.” This is why the second step of the S.C.A.L.E. Formula is to help you structurally find 4, 6 or 8 hours each week of your best time to reinvest in upgraded uses in your business. In all the formula outlines 5 proven “time mastery strategies” to carve out these 4-8 hours each week of your best time, giving you the starting point to apply the rest of the formula. Most importantly of all, these 4-8 hours won’t be in slivers of 5 minutes here, 15 minutes there, but will be in blocks of 1-4 hours so you are able to concentrate and get valuable work done. Take the example of Bob, owner of a successful industrial products company in the western U.S. Bob’s business worked, generating a healthy 6-figure income for Bob, but he effectively owned a job that required him to be there each day to run the day-to-day operations and manage his small team. He felt torn because while there was a part of him that wanted something more – more growth, more profitability, and more time freedom, he just didn’t think he had the time to do anything about it. Think about this for a moment. How many business owners do you know who, like Bob, are so busy doing the “job” of their business that they don’t make the time to step back and build their business as a business? Too busy to get outside help to make it better? Too busy to try out new solutions to chronic problems in the business? That makes about as much sense as the person digging a hole who says, “I’ll stop digging as soon as I reach the bottom of this hole.” So the key with this stage of the S.C.A.L.E. Formula is for you to structurally claim back 4-8 hours of time each week, hours that you were already working, and redirect these hours into higher value activities. When Bob followed the formula and did this he grew his sales 33% (taking his sales to $2.4 million) while increasing his profit margin. Best of all, he also increased his company’s “Owner Independence Index” by 133%. So while it may be easy to blame how busy you are as the reason why you can’t scale your company, doing so is both non-productive and misleading. You do have the time. It’s hiding in the very hours that you’re already working. You just need to claim back a small percentage of them (in Bob’s case he started with just 7% of his working time) and invest those few, precious hours into upgraded uses growing your business the right way. Align Around Your “Fewer, Better” Now that you have reclaimed a small block of your time each week, what should you invest that time to do? This is where the “A” in SCALE comes into play. It says to, “Align Around Your ‘Fewer, Better’”. On one level this is where you personally will be focusing your freed up blocks of time. On another higher level, this stage in the S.C.A.L.E. Formula means to systematically get your whole company to focus its best resources of time, attention, and money around those things that make the biggest difference to your company’s success and growth. You don’t need your team to do more, you need your team to do better. What are those fewer, better things that if you and your team consistently invested your best resources in would yield the greatest growth and progression for your company? This section of the formula is based on 4 simple tools that work wonders helping you to identify your top leverage points and then to consistently organize your resources to take best advantage of them. These four tools are: The “Sweet Spot Analysis” Tool Your “S-O-O-T Review” Tool The “Starve Your Losers; Feed Your Winners” Tool Your one-page “Quarterly Strategic Action Plan” Tool Leverage Your UBS as the Doorway to Start Systematizing Your Company To increase your company’s capacity, sustain your growth, and increase your company’s Owner Independence Index, you’re got to build, use and refine systems and controls. This is why the “L” in SCALE stands for “Leverage Your ‘UBS’”. Your “UBS” is the master system of all your systems, and it’s the doorway to begin the process of systematizing your company. I’ve been helping business owners for two decades now create systems driven companies, and the UBS concept is by far the single most effective best practice to enroll and enlist your team on becoming a systems driven company. Execute with “ACR” The “E” in SCALE stands for “Execute with ‘ACR’”. “ACR” is the missing ingredient for actually turning the S.C.A.L.E. Formula into tangible, reliable results for your company. It’s the 3 layered fuel to get you to execute and implement on the other four elements of the formula. Without taking action, the formula is just a dead methodology. But when you take action and follow it, the results are amazing. Results like: Paul Robinson, of Ensunet Technology Group, who over the past 24 months, took his one man, high end I.T. consulting company to sales of over $1 million per year, while increasing Owner Independence by 400 percent. Liz McDonald and Patrick Blood, of Blackwell Realty, who over the past 24 months, grew their boutique property management and brokerage company by 463 percent, at the same time increasing Owner Independence by 600 percent. Caleb and Tobias Preston, of Alaska Financial, who over the past 24 months grew their financial services firm by 121 percent while at the same time increasing the Owner Independence of their firm by 60 percent. Dr. Tom Umbach, of Blossom Bariatrics, who grew his surgery practice by 50 percent while at the same time increasing his practice’s Owner Independence by 280 percent. If you would like to get the in-depth details of how to apply the S.C.A.L.E. Formula to grow your company and reduce its reliance on you, then please join me for a special webinar training I’m doing that’s coming up very soon. The webinar is FREE, and you’ll learn the full formula and get a detailed progression for the best way to apply the formula in your company so that you can see results starting in as little as 28 days. Essentially this web training is my very best version of what I’ve been teaching business owners to do for 20 years now. It’s helped them create billions of dollars in sales and enterprise value, and this is your chance to learn the complete formula for yourself. Simply click here to register to join me for this free training.