What Happens When A Serial Entrepreneur Starts His 7th company
I started to prepare to go on The Avanti Entrepreneur Show podcast, so I began to jot down some notes about what I could potentially talk about. I knew that the podcast was geared towards startups and small business owner’s, so I thought back to what it was like when I started my 1st company. I wanted to speak about business lessons that were unique, helpful and different then what everyone reads in the typical entrepreneurial magazines. Here are the top 7 recommendations for business owners trying to build a $5-$20 million company based on 7 companies that I have built over a 25 year period.
Lead Generation is the Key to Your Business Success
Lead Generation was the very first note I jotted down when making my list. It was a subject that I had been blogging about for weeks. Lead generation strategy was by far, one of the most important action items that changed significantly between my 1st and later companies.
In my 1st company, my lead generation was me doing sales and doing countless phone calls by myself to get customers. In my 2nd company, I tried to hire a sales team.
Advertising, direct mail, SEO, SEM, social media, were all things I either didn’t think about, or thought was too expensive. The thought of getting prospects to come to my company never even crossed my mind. But by my 3rd company, lead generation strategies were all I thought about.
Even before we opened the doors, I knew if we could not be effective in generating leads, then this startup was going to be too small of a company. I wanted to build a lead generation system that drove leads to my sales team. So, my first words of advice to any business owner is to build a lead generation strategy that is cost effective that drives leads because 1) you can build a bigger company 2) you do not need to hire the best salespeople and 3) If salespeople leave then it will have little effect on your sales. In general, you will be in control.
Sales, Profits, Take Home Pay, Net Worth
The next thing I wrote down was that sales do not equal profit which does not equal what you bring home which does not equal your net worth. Before I started my 1st company, I was one of the top sales reps for Xerox, and my goal had always been to drive sales. So, when I started my first company all I thought about was driving sales (The top line).
Although I have always been a good salesman, it didn’t take me long to figure out that profits were far more important than sales. With my later companies, I realized that profits didn’t always mean that I could buy whatever I wanted personally. The obvious reason is that those profits either get invested back in the business or get tied up in accounts receivable.
I was lucky enough in my 2nd business to really pull a lot of money out of the company which was enough for me to buy a commercial office building. I moved our offices to it, rented other parts out to other businesses, and I paid myself rent.
I learned a good lesson when I bought that building because it allowed me to reduce my tax burden thus increasing my net worth. This later proved to be my second biggest lesson: building a net worth rather it be through reducing expenses or making investments gives you options. Those options allowed me to start more companies when it was time to move away from a dying business or when the bottom feel out of an industry.
Processes Really Matter
The third lesson came to fruition during the creation of my 6th and 7th companies and was something my business partner and I implemented from day one: Business Processes. There are certain processes that every company has to have such as a billing process, an accounting process, a sales process, and other processes that allow for efficiency.
When I talk about processes, what I am talking about are steps that every business needs to be doing consistently to achieve the best results. Bigger companies are really about processes and making sure employees have what I would call “ best practices”, or guidelines to do their jobs.
Processes allow you as an owner to make sure that everything is being done the way you want it done. It was amazing how quickly my business partner and I were able to get our 7th company up to speed and profitable. This is because we knew what we needed to do to build a company from day one which started with building “best practice” processes.
We also knew we needed accounting software, crm software, and a banking relationship to allow us to get running as quickly as possible. It took us 3 months to build the infrastructure that was required for the 7th company as opposed to the three-plus years it took my earlier companies to reach that same level of excellence. Therefore, the lesson I would recommend is every company should be built on processes, and the quicker you learn, implement, and monitor processes, the faster you will be on your way to a successful, larger business.
Good Hiring Just Makes Your Life Easier
Hiring is often talked about as a key component to success and two of the businesses I had started were staffing businesses, so I was no stranger on how to hire. However, in both of those businesses, it was extremely challenging to hire talented recruiters.
The problem I had was that no one comes out of college or high school and says “I want to be a recruiter”. So, after numerous hiring mistakes, I really studied the subject of how to hire the right people. I read books, I went to seminars, I learned how to be a better manager, and I did everything I could to build a great team.
By my 4th company, I had not only built a fantastic team, but I had built a team of people I really loved working with. That company went on to be in the Inc 500 fastest growing companies list and it was one of the best times in my life.
The tremendous growth at that company started because I really learned that hiring the right people is one of the most important actions a business owner can do. If you hire the right people, then everything falls into place. Now, it is easy to say “hire the right people”, but there is a lot more that goes into it.
This includes having detailed job descriptions with measurements, making sure you are hiring into your defined company culture, making sure you set correct expectations about what your future employees are getting involved with and managing your employees so they want to stay and work hard for you. Hiring and managing is a monumental task and until a business owner realizes how important it is, your company will always struggle.
Finding 90 Min/Day to Work on Projects
I have always loved getting out of my office to work on strategic plans and I was pretty good about taking time to do some deep thinking. However, it took a book called Deep Work by Cal Newport to realize that a business owner can be pulled in so many directions that it’s important to block out time daily to work on bigger projects.
Newport recommends that everyone block out 90 minutes of their day to not check email, not answer the phone, and not be in any meetings, but to work on big projects. Every day I put on my to-do list a 90-minute block and I list a project that I will work on. It might take me several days of those 90-minute blocks to complete the project I am working on, but those projects are often what has made my company significantly better and made me happier. Take 90 minutes every day and chip away at a significant project that will make a major impact on your company.
Entrepreneurship is a Marathon, Not a Sprint
My mentor once said to me that it is hard for a company to close if the owner is still interested in the business. However when the owner is burnt out, then nothing is going to stop the downfall.
The owner of any business, regardless of its size, is the key to its success. After 25 years of building and running companies what I have always done well is to be careful of keeping my energy. The way I have achieved this is by making sure I exercise, eat right, and get enough sleep. Those actions take precedence over anything else. I also always made sure that my personal and work life was in balance because your business can suck all your time and energy out of you if you let it.
The result, I am just as excited about my businesses today then I was when I first started 25 years ago and I have had plenty of very challenging situations that could have burnt me out. I am also lucky enough to say I am still living my dream…of owning my own company.
It wasn’t just my mentor who taught me that lesson, it was also my experience in playing college baseball. I have always been able to outwork anyone, and I viewed that work ethic as a competitive advantage. However, when I played baseball, I realized that if I practiced too long or too hard that it affected how I performed during the game. If I practiced a lot then I thought that it would carry me to a good performance in a game. What I later learned from my coach was that these practices burned me out.
Every time I go to work, I think of it as game time and that I need to be at my best. When I am away from work, I try to make sure I am having fun. This allows me to keep my energy tank full for when I return to work the next day. Guard your energy and take excellent care of yourself, because once that energy is gone, your company is dead.
Improve Your Managing Skills
Entrepreneurs are notoriously terrible managers and I was no exception. Looking back on my first couple of years, I feel so sorry and embarrassed about how I treated my employees. It got so bad that I finally had to go see a psychologist because I felt bad about how I was treating the people who worked for me.
Over time, I slowly became a better manager, but it took a lot of work. It took a good 10 years of reading and coaching to get to the level of managing I feel is necessary to be a good manager. Every business owner must manage someone and if you are a poor manager, then you will see huge amounts of turnover. As human beings, we are all connected and if you treat people poorly, you will pay the price emotionally, physically and even in your companies’ performance. Get better at becoming a good manager because it will pay back huge dividends.
Looking back at all I have learned, things come much easier for me now in business and I just know the right things to do. I also don’t make a lot of mistakes. After 25 years and 7 companies, I still love what I do and life is just as exciting as when I was 30 years old when I started my first company. I hope my lessons help you.
Author, Stephen Halasnik is a serial entrepreneur having built 7 successful businesses in the $5-$20 million revenue per year range over the last 25 years. One of those companies was on the Inc 500 fastest growing list. His latest company is Financing Solutions (www.financingsolutionsnow.com) which provides Lines of Credit to small businesses and nonprofits throughout the United States.