It’s a novel idea to think of your business as the actual property you have for sale, but of course it is.
Few of us spend time—initially—thinking of our businesses that way. We think of the things our businesses do for people, and why they’ll pay us for that product or service. That is probably the biggest mistake an entrepreneur can make. And this is where we become trapped as we grow.
Get back ‘on’ your business & your eventual liquidity event
Serial entrepreneurs that have had a successful exit already understand the premise of the ‘business’ as the product. But there are millions of first-time business owners who aren’t thinking of their businesses in these terms.
You may have heard the phrase ‘working on your business, rather than in it.’ Michael Gerber coined the phrase, but if you’re under 30, you may not have heard of him.
He published a book in 1988 called, The E Myth, Why Most Businesses Don’t Work And What To Do About It. It was, and is to this day, a mind blower. He has a new book, his twenty-ninth, Beyond The E Myth, The Evolution of An Enterprise that may set off a series of eureka moments for you. He calls them ‘Oh sh*t moments.’
Despite the fact that Gerber is 80—actually precisely because he’s 80 and has worked with over 100,000 growing businesses—his advice could be what you need to reimagine what you’re on about everyday.
Inc. Magazine has called Gerber America’s #1 Small Business Guru. That ‘small business’ label might cause some entrepreneurs to shy away from his content, because they identify as a ‘scaling business’ and may take the word ‘small’ as an affront. If you have under 500 employees, you are ‘small’ according to the SBA, and Gerber’s wisdom applies to you.
He points out that McDonalds started as a small business, a business of one, when The Founder, Ray Kroc, was 52 years old. It started as one (or perhaps three if you ask the McDonalds brothers), but it did not stay that way because it was designed to be a ‘scaling business.’
Designing for scale works for the committed—just ask Infusionsoft
When the founders of Infusionsoft did a workshop with Michael Gerber in 2007, they went along with the experiment. They opened their minds, reconsidered their approach and were determined to grow on a grand scale. In the years since that time, they've gone from a few dozen employees to over 600 people with more than $100 Million in revenue.
According to Infusionsoft CEO and cofounder Clate Mask, 'It's good to have your assumptions challenged. It's critical to successful entrepreneurship. But assumptions and ideas aside, what makes the difference for success is designing a business for scale and staying focused on the end game. We weren't worried about old versus new thinking, we were interested in 'doing this thing' with a complete commitment to grow.'
Going through the scale exercise did more than simply help Infusionsoft grow the business. It signaled to investors the seriousness of the entrepreneurs and the potential strength of an investment. Bain Capital doesn't invest $55M in Series D funding in just any business, as they did with Infusionsoft in 2014.
Mask and his cofounders are precisely the kind of people that Gerber wants to tap into. He’s not writing books for so-called ‘solopreneurs,’ a label he despises and calls the antithesis of entrepreneurship. Gerber wants the world to scale…starting with you.
I stepped into the Dreaming Room & an awakened entrepreneur stepped out
It was in the spirit of growth, as the owner of a successful business, that I made the trek to Carlsbad, California earlier this month. Gerber had just released his new book and was conducting a new Dreaming Room workshop. I wanted to hear from the man himself, while I still could. (I did mention he's 80...right?)
After 2½ days of watching entrepreneur after entrepreneur (myself included) challenged on their very dreams and aspirations, these are a few takeaways:
- Every business is initially a business of one, and many never get out of that frame of mind. What you do today, in designing your business, can make the difference in how many zeros you can tack on after the 1. A company of 1, 100, 1000+?
- You aren’t in the business of marketing and selling what you do. As the entrepreneur, your primary job is to grow a business you can eventually sell.
- Every owner believes his business idea is unique and worthy. But is your idea—and the outcome of your business—really unique? If not, why would someone eventually buy it from you? Investors buy successful, rapidly scaling businesses, not just worthy ones.
- Nothing happens unless you do. We can read all about the creation of jobs, bull and bear markets and high-growth industries but none of it matters in our sphere unless we create something to scale. It’s funny to hear an author and workshop guru say, ‘Stop reading books. If you’ve read one, you’ve read them all. Steve Jobs never went to a workshop. Just start designing your business and growing it now.’
- Whatever business you have built, it is ‘Oldco.’ Start on ‘Newco’ with a vision for scaling now. Successful entrepreneurs are always working on Newco, that’s how they move markets and take advantage of industry shifts in growth. Lockheed Martin has Skunk Works®. What do you have to ensure you’re innovating in a way that will ensure you are building with a greater purpose or outcome? Your Skunk Works is what leads to your liquidity events.
Beginners mind & a blank sheet of paper
With the New Year upon us, we have an opportunity to open up a blank sheet of paper and design the business that will change the world—and that someone will want to capitalize or buy from us.
If your business plan is a static document, describing a moment in time, start over.
If your plan is a ‘design to scale,’ congratulations. And, as Michael Gerber would say, ‘stop reading and start doing it.’
Best wishes for a prosperous 2017 to you all.
