March 13, 2023
There is a lot of different advice and resources out there for entrepreneurs on how to get your first 1 million dollar revenue.
They all say that it’s the hardest and the steepest climb.
But what happens after you get your first million? What can you do next? What’s going to be different?
Can you point out where you are?
If you are unsure, there is a benchmark that can help you gauge what phase your business is currently at based on your revenue.
In this stage, everything depends on the leader – you. You are the most important person in the company and so you end up as a jack-of-all-trades.
At this point, you should be focusing on developing your product. Most businesses that do well end up selling something that the founders didn't think the market needed at first.
Aside from that, you will need to make sure your business model works. Without a proper business model your business will not be sustainable and can be easily replicated by competitors – regardless of how good your product is.
I own a mineral water business called Pelangi Water. At the very start of the business, the main color of our product packaging is blue, very similar to other water brands. My friend told me that my packaging does not stand out at all, so I decided to rebrand my product.
I decided to make pink the signature color of my product. Since then, people started to associate “Pelangi” with the pink water. This was the key to the success of our product development 5 years ago, and still something we continuously work on until now.
At this stage of your business, your focus is on getting your first million dollars.
When you first realize that the success of your business affects not only your clients and partners, but also your employees and their families, it's both humbling and scary. At this point, it's important to hire the right team because you no longer have direct control over the product you're selling.
You can lead with more focus but the company needs more people with specific expertise to fill in the gaps. All of your attention is on sales because you need it to hire the right team.
In my case, I need around 2 years to gain my first million dollar revenue in a year. That’s because I modified the business model: we used to focus on selling directly to consumers, but then we shifted to getting agents/sellers. Due to this initiative, we gained more volume even though we sell at a smaller margin.
Since my team members’ strengths lean more towards catering to direct consumers instead of businesses, the priority in the second phase is to hire the right team. I usually hire people who’ve worked with my competitors. But what I learned from my experience is that you’ll gain more value if you hire people from outside of your industry (with a similar nature, but different products).
The biggest barrier is leadership because the lack of a proper leadership system will lead to silos, drama, and office politics. You also need to develop a rhythm, build, and repeat a system that works.
At this point, you must’ve realized that business growth requires a lot of money. I remember during my transition period, I needed to renegotiate with my suppliers to ensure that there is a healthy cash flow coming in. I need to convince distributors to buy my products and ensure that they can sell to direct consumers, or else they will not be able to pay me.
This is where you will hit your first 1 million dollar mark.
You lead the people who lead your company. Your products have been proven to work, and now you're working to align and simplify processes. Your top priority is to grow, but your main goal is to find your place in the industry.
Before, your competitors had no idea who you were. Now is your chance to start competing with them in the market by putting yourself there. You can only move on to the next level if your infrastructure, people, and processes are ready for growth.
This is where my business is currently at. I have a CEO and a full team who run this business and its functions. I have the time and energy freedom to pursue what I want. I was in this phase for 2-3 years before I decided to step down.
In order to scale, you need the right infrastructure to produce more output. Here, you will face the choice of whether you are willing to spend/how much you’re willing to spend on building better infrastructures for your business to scale up.
After securing proper infrastructure and a lot more people to work for your company, another concern is how can you align your team with your processes?
I don’t have an execution method that I can use and each division has their own ways of executing tasks. Now with the help of Scaling Up, it’s standardized. I use technology to ensure that people are accountable to their KPIs. Now we have a “common language” once we have a proper execution system.
Now this is where the biggest challenge actually lies: what’s next? How can you reach 10 million US dollars? Or 50 million? 100 million?
Now I’m no longer working in the business, but I’m still working on my business.
You start a battle to win the market, and you end up controlling a big chunk of it.
When leaders get to this point, they usually feel like they've done a good job. Everything points to the fact that they'll keep their status if they keep doing what they're doing.
This is how companies slowly lose their power and are eventually put out of business by a newer, smaller, and faster competitor. So it’s important for companies to avoid getting stuck within their comfort zones and constantly improve themselves and innovate.
At this point, you have defined your place within the industry and now need to dominate your industry. Businesses need to focus on these four decisions: team, strategy, execution, cash.
This is also homework that I have to do for my own company. Even though I’m no longer the CEO, I’m still an investor, shareholder, and coach to my team. I need to find ways on how to constantly innovate and become the industry leader.
In order to scale up your business and dominate your industry, you need to have the right Strategy, People, Execution, and Cash.
Firstly, you must develop a strategic plan. This will help you reach your long-term vision for your business, because if you can’t come up with one, you won’t be able to follow through.
Assessing your projected sales while setting feasible targets can be a good starting point. Then, you can list the number of new customers you’ll want to target and how you will get them.
A good starting point would be your projected sales and a target on how to achieve this. Then, you can list the number of new customers you’ll want to target and how you’ll get them.
Furthermore, you can include a timeline in which you will want to achieve these goals. This can act as a benchmark that you’re able to continually evaluate as you progress.
If you were given the option, would you want to rehire everyone in your business? Having doubts about this question means that you’ll need to fix certain aspects.
Scaling up a business can’t be done alone. Your team must be aligned with your company's core values. They must also be competent in their work, and you must be positioned in critical roles within your company.
Once you’ve strategized, it’s time to execute. Are your processes from your plan working without any hiccups? Or is it about getting the results that you want?
Your execution requires you to be disciplined in three areas: first is the need to collect quantitative and qualitative data to give you foresight. Next, you must set priorities. Finally, you need to find ways to get together with your team for feedback to make better and faster decisions.
Growth will burn a lot of your cash. This is where a lot of businesses fail. While scaling up your business, you should focus on better generating cash flow to build up your cash reserve.
A cash reserve acts as a buffer for you to use to fend off unforeseen financial problems. Furthermore, it can also act as funds to help you seize future opportunities.
Related read: Business Made Simple: Your Business Is An Airplane
The overall journey of scaling up your company can feel as though you’re climbing a mountain. Those who are best prepared to undertake the journey often have a plan, establish waypoints to reach the path to the top, and persistently adjust their strategy as conditions change.
It takes time and effort to get things right. However, you don’t have to embark on a journey alone.
Circularity Coach can be your guide to ease your company’s scaling up process. The coaching program provides solutions to overcome the gaps facing your 4 key business decisions: Strategy, People, Execution, and Cash.
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