Transcription
Everyone talks about getting to your first million, but almost no one shows you how to scale from 2 million to 20 million, which is one of the sweetest spots in business. I'll tell you, I've never been more profitable, more exitable, and had more fun than when I was running a $20 million company. Everybody deserves to do it, including you. That's why I want to give you these five steps to going from 2 million to 20 million. I don't want you to have to learn these things the same painful way that I did. Um, and I want to do that starting with step one.
The first step is to double your average customer value. Why, you may be wondering. Well, first, if your unit economics are broken, then scaling will just make you broke faster. But the main reason that you need to increase your average customer value is because you're going to need the added margin to afford to make this $2 million to $20 million leap. And I'll tell you why that is in a minute. But first, I just want to give you three simple plays that you can deploy right now to make it happen. Because wherever you are, let's face it, it's always nice just to have more money.
So, play number one, this one's easy, this one's obvious, just raise your prices. And again, it's obvious, but it's also overlooked cuz the fact is most founders undercharge, and we especially undercharge in the early days. And even a small bump goes straight to the bottom line. So, test raising your prices. It rarely hurts conversions and it always helps margins.
Number two, add a 10x for 10% margin maximizer. This is a premium upsell, a done-for-you service, a skip-the-line VIP access or premium migration. Anything that is going to get your customer or client the result faster with less work, premium access, something big, something expensive, something that isn't going to appeal to everyone but will appeal to some because the math is simple. If you price this at 10 times your current average customer value and even 10% buy, you just doubled your average customer value. And even if it's less, a 30 to 50% bump from just one upsell, it's pretty common and it makes a big difference.
Number three, run an invisible offer survey. If you're not sure what to offer, just ask your customers. Send a one-sentence survey via email or text asking, "What's something that you need that we don't currently offer?" Now, half the time you're going to get a reply where somebody asks for something that you already sell. In which case, yay, free money. You can say, "Good news, we do that. Here's an order link." The other half, you're going to get pre-validated product and service ideas that you can roll out in the future.
Every dollar of margin today is going to buy you more freedom and more opportunity tomorrow. But even with more margin, you cannot do this alone. And that's why step two is all about your first true functional leader. And you're going to need this person in either revenue or fulfillment. And here's how to know which one you're going to need. First, I want you to ask yourself this question right now. If my customers doubled tomorrow, what would break? Now, if fulfillment would break, then you've got a supply constraint. If nothing would break, and in fact, if you would be thrilled beyond belief, then that means that you have a demand constraint.
Now, your next hire depends on the answer to that question. If it's a demand issue, then you're going to need a senior sales or a senior marketing leader, maybe like a head of marketing or a uh VP of sales. If it's a supply constraint, then you're going to need a head of fulfillment, a head of product, or a head of client services, whatever you call them, that is appropriate for your industry. But here's the key. They can't just throw money and bodies at the problem. So, a head of marketing can't just come in and double the ad budget. And a head of fulfillment can't just 10x payroll or 10x the inventory. You don't need to hire somebody just to spend more of your money. They need to show you how they're actually going to broaden your audience to 10 times more people or increase the capacity to serve 10 times more customers without just burning cash. And you don't need every detail during the interview, but it should be clear that they actually have a playbook for pulling this off. And one simple way to confirm this is to ask for what's called a 30-60-90 plan. This plan should cover what they're going to do and what resources they're going to need and also just what success looks like in the first 90 days. And you want this before you formally hire them. Leaders create leverage. They don't light money on fire. And whatever you do, do not do not do not hire a COO at this stage. This role must be a functional leader responsible for generating more revenue or creating more fulfillment capacity, which means they should be able to pay for themselves in the first 60 to 90 days. If they can't do that, then don't hire them.
But even the best leader will fail if the business is still held together with duct tape and bubble gum. And that's why step three is all about upgrading your operating system. Right now, you've basically been building this rocket ship on the way up and it's rattling to pieces and it's barely holding itself together. And if we're being honest, it could rattle apart at any minute. And that's why step three is we've got to upgrade this existing U operating system, this business that is running on your brains and your hustle to a real live custom operating system that can run without you. Here's how we do this. I got three quick steps for you.
Number one, you've got to document the critical 20% of processes that drive 80% of the results. Just document the truly critical tasks and activities that humans are most likely to screw up. In most of our companies, it's literally just six to 10 key workflows. Just six to 10 SOPs and checklists that gets it done.
Number two, you need to build scorecards. Every team should have a scorecard that mirrors their section of the customer journey from first touch to sales to fulfillment to renewal. No vanity metrics allowed. If your scorecards don't map back to some aspect of the customer journey, it is just business arts and crafts.
Number three, install accountability rhythms, also known as meetings. So, every quarter, you should meet with your team to define the major goals and key initiatives for that quarter. Then each team should meet weekly to review the scorecards and discuss which metrics are on track and which metrics are behind so that you know how you're tracking towards those quarterly goals that were set at that previous meeting. But to be truly effective, and this is the key, each metric must have an owner. Without owners and without a consistent meeting rhythm, execution and optimization will always depend on you checking in. And that is not scalable. A business without systems is not a business. It's just chaos on repeat.
But once you have an operating system in place, something really cool and magical happens. Sales magically start to go up and margins magically start to expand. And that's when step four comes in. Step four is when you optimize operating margins and finally give yourself a raise. Now look, if your business can't pay its most important and valuable employee fairly, it will never be able to pay the leaders that you need next. Now, for years, I paid myself last and I paid myself very little. And it sounds noble, but it was actually really, really, really stupid because it starved my family and it signaled to the business that I'm building this on martyrdom, not freedom. And the day that I gave myself a raise was the day that I knew my model actually worked. And it was the day that I had the confidence to bring on the talent that we needed to go from 7 to 8 figures. So here's the target. I want you to target 30% operating margins while also paying yourself a generous salary and distributions out of that 30% operating margin. If you can't pay yourself fairly, you can't hire fairly.
And that leads us straight to step five. Because to get from where you are all the way to 20 million, you're going to need leaders who have already been there and done that. Step five is to uplevel your leadership and then multiply the winners. Now, this one's going to be a little bit painful, but I want you to start by auditing every single role in the company by asking this question. Has this person scaled from 2 million or wherever you are right now to 20 million before? It's really that simple. And if not, you've got three options.
Option one, you can coach them with a clear timeline. If you're actually willing to invest in this person the time, the energy, the outside coaching to get them where they need to go, you can do it, but put a clock on it.
Option two, you can top them by hiring an experienced executive over them. So, they still get to keep the job. They just might get demoted or they maybe they get to keep the same role, just somebody's going to go in above them.
Or option three, maybe you can't afford them and the next person. Maybe they need to be replaced. Now, it sounds harsh, but you will not be able to scale your business from 2 million to 20 million by prioritizing loyalty over competence. You got to get the right people in place or you got to get your people the coaching and support that they need to grow into the right people. And it needs to happen fast because once the right leaders are in place, that's when you can multiply the winners. And that might mean expanding into new channels. That might mean expanding your product or your service line.
Now, here's the good news. If you can make it to 2 million, and I believe you can, good chance you've already done it. If you can make it to 2 million in revenue, the steps that I just gave you will be the seeds, and they're going to provide the structure that you need to grow all the way to 20 million. It is truly, and I mean this, it is truly just a matter of time, and it's a matter of execution.
If you want help mapping your exact $2 million to $20 million playbook, that's what we do. We love working with entrepreneurs. I will drop a link in the description where you can book a strategy call with us and we can figure out what's that next step for you. What's holding you back? What's the bottleneck? How do we debottleneck it? That's kind of what we do. And hey, look, if this video was helpful, hit subscribe because I'm going to be doing deep dives on each and every one of these steps that I covered here in future videos. It's going to be fun. I look forward to seeing you there.