A business owner who scaled two companies to eight figures in under 18 months shares what not to do when growing fast. He covers infrastructure, profit margins, and the planning mistakes that slow you down.
All right, guys. So as a business owner that has scaled two businesses to eight figures in less than 18 months, I want to explain to you what the profit looks like of a business as it goes through aggressive scaling. Unfortunately, or at least for me, I haven't figured out how to scale quickly with a lot of profit. Doesn't mean there's not a lot of money. But I'm talking percentage wise. So you might be able to see behind me, right? There's a bit of a, like a bit of an hourglass looking shape. So what happens is we have it down here. So this is a lot of profitability, right? So we have a nice thick profit margin. Depending on your industry could be 5% or it could be 70%, right? Depending on what you're doing. What we need to do is in order to get up here where our revenue is really, really high, we have to have infrastructure, right? Otherwise we're going to break the business, right? We onboard 25 people in a week, right? All of a sudden, all the onboarding processes, the delivery mechanisms, all the things that we to have happy, healthy clients are broken, okay? Because we didn't have the infrastructure. So a lot of people try to scale infrastructure at the same time as they try and scale the business. Now this is why this is a very, very slow way of doing it. It is the safer way, but it's also the pussy way of running a business, in my opinion, because it means that you don't back yourself in order to actually get the job done. So what I do in my businesses and is I figure out what this number is going to be. Let's say I want to get the business to 50 million a year, right? And I go, what infrastructure is required for me to get to 50 million? And we sit down in a planning session, we war game out all the people, all the things, and then we create stages, right? And we go, okay, stages, right? So let's say I'm going, I have a fixed cost of 100k a month down here. I have a 300k a month, I have a 700k a month and I have a million dollars a month, right? Whatever, right? Worth of infrastructure in the business of like hard fixed costings. Right now at Sales Sniper, I have like a $400,000 a month fixed cost. But I have the level, I have a much bigger business, infrastructure wise than what we do, revenue wise, right? Which is on purpose. So what's going to happen, right? We're going to just massively ramp up our fixed costings, which increases our Infrastructure. It also means that we have amazing client delivery, right? Then what's going to happen is that is going to massively constrict my profit, right? Because I'm over infrastructured, right? So as I come up this point, as I start making more money, my profit will actually constrict, right? So I make more money, but I have less profit. Now the numbers are pretty big as it is, so the numbers are fine, but. Okay, but that's kind of what I've had to do because I've over infrastructured well and truly past what my revenue is, right? It puts me in a position where I have to succeed, which I like to be in that position. Then when I hit this critical point here of revenue, it starts to bow back out, right? Because now when I reach my top line point, my infrastructure and my revenue start to reach equilibrium. Then from there your profit will start to expand out. So the hard part, the slug, the hard part to do as a business owner is to get to this level because you're running at a thin profit margin. Like at one stage with Sales Sniper, I intentionally tank the profit margin to 4%, which in like the coaching realm is crazy. I'm not in the coaching realm. I'm in the services industry, right? So services industry, like a 25% profit margin would be like net profit margin would be amazing and coaching would be shit, right? But so we hit this point and then from there we start to sort of, we start to keep growing revenue because we can. Because we can aggressively go after new business. And the reason why we can do it is because we know that we can deliver. So at no stage do we ever have to stop, dial back ads, try and fix delivery, try and fix these things because like, we're over infrastructure, right? And this is how you scale quickly and effectively. But it's just like, it's not for the faint of heart because you have to be willing to spend copious amounts of money not on myself, but on the actual business, right? And on the people in the business and pay good people really well. If you were to see the salaries that we pay some of the people at Sales Sniper, you'd be in gobsmacked. So I've got sales guys on $400,000 a year salaries. All right? So you do the math as we go up here. Now we hit the beautiful, beautiful crescendo point, okay? Where our infrastructure and our revenue have reached the highest that they can go and that's maximum profitability. Until we hit about this point when we're getting close to that level and I'll start to do this again. So it's a never ending game of like, okay, now we've hit the point we need to constantly be doing these planning sessions and having a look at where we're at and what we're doing, right? So that we can constantly keep growing the business right. And then we'll hit a point where we don't want to grow anymore. Or we hit a point where we look at vertical integrations or horizontal integrations, right? Which is kind of what we're doing in Sales Sniper. We're kind of trying to get to a certain point and then we're kind of going to branch out and go to vertical instead of trying to go more businesses about an integration of the current businesses and how we get more revenue from them because we don't want to have a beast where we have 4,000 sales reps. That's my take on how to scale a business quickly and effectively and not like a pussy.
