7 Steps to go from $1M to $5M FAST

In this video, I'm going to walk you through seven steps to go from a $1 million home service business to a $5 million home service business. Over the last eight years, I've worked with high performing seven figure home service businesses that spit off 30% profits annually. And in this video I've dissected everything that they do and broken it down into seven steps so you can replicate that in your business. Step one is to create and stick to a profitable price book. Usually to get to a million dollars, you have some type of a price book that people are working off of. But a lot of times it's outdated and it's not keeping up with your overhead expenses. So what you want to do is analyze all of your expenses. You're going to have two different expenses and then one other thing to add. You have your direct expenses which is going to be like your labor, material, equipment, your normal stuff that you would send a guy out to do work for. Your number two expense is going to be your overhead expense. This is going to be your rent, your CSRs, your marketing, your insurance, all these things that creep up. When you go from 1 million to 5 million, all those overhead expenses start to go up, which is why you need to have a profitable price book in place and you need to be analyzing it at least annually. And then the last piece is once you have those expenses in place, you need your profit on top. So you want to layer in maybe 20, 30% profit on top of those things. Once you have profit as a percentage in place for your business, it now allows you to scale and reinvest back into your business. So once you have profit as a percentage in place, this now unlocks operating your business on percentages, which leads us to step number two. Step number two is building a percentage based budget. Seven figure home service business owners are operating trading on a percentage based budget. Mike Michalowicz in his book Profit first talks about having buckets inside of your business. A lot of times to get to a million dollars, you're going to be running it out of a checking account. All your income comes in and then money goes out. This is great, but I'm sure you've looked at your bank account and seen a hundred thousand dollars and you've seen $10,000 and you make decisions based off of whatever you see in your account. Profit first has a completely different way of looking at things which will help you scale your business on percentages. Basically you have an income account, then you have Payroll, you have OpEx, you have your tax Account, you have profit account, and you start building these accounts. And twice per month, you pull percentages out of those accounts and put them into different buckets. One of those buckets that we see very effectively is a percentage of marketing. So you take 3 to 10% of your revenue, and now you have a marketing budget every single month. This could be $30,000 a year or $100,000 a year, or whatever it looks like in your business. The reason that percentages work so great is because as you make more money, you go from 1 million to 5 million, your percentages increase as well. It's not just a flat amount of $10,000 for this or $20,000 for this. It's allowing you to spend more money as your business goes up and also goes down off percentages. Percentage allocations are great, but most business owners don't know how to manage their resources on a weekly basis to drive growth. Which leads us to step number three. Step number three is implementing a professional operating system in your business. Tommy Mello has a saying that once you go from 1 million to 10 million, the hustler must die and the leader must be born. Basically, what he means is that to get to a million dollars, you gotta be a hustler. You're gonna figure stuff out. I'm sure you're like me. We can figure anything out. We can watch YouTube. We can figure out how to do things. To go from 1 to 5 or 10 million, you have to become a leader and start building processes and systems in your business and delegating. And that is a complete mindset shift from what got you to 1 million, which is why it's hard for people. So in his book, the book's called Traction, Geno Wickman talks about this EOS operating system, entrepreneurial operating system, which basically builds out a structure in your business that looks like this. You have an owner, a coo, an ops manager. You have sales and marketing over here. You have finance and HR over here. You're starting to build out all the seats in your business. You might currently be in all of these seats, but you need to have all these seats because it leads you to one big thing, which is numbers that you can hold these people accountable for. So once you have a sales and marketing seat, well, now you can say, okay, I need to get 100 leads. Which seat is going to be responsible for that number? Or I need to increase my average ticket, so that's going to be my sales seat. Or I need to decrease my number of callbacks. So I need that to Be my operation seat. Basically you're building out this system so that way you have numbers to hold people accountable. So once you have all these different seats and numbers, what they recommend is on a weekly basis you have one to ones with your team members and you're pushing them to get to these numbers and you're holding them accountable. So you have scorecards, you have KPIs, key performance indicators and different benchmarks that you're saying if we hit these things, that's going to help me reach my goal. Once the Hustler dies and the leader is born, it leaves you with one question that you're asking every single day and that's step number four. Step number four, you start asking who, not how. Dan Sullivan has a great book called who not How. This premise of it is that you're asking who instead of ask asking how. Just like the Hustler, you can ask how and you can usually jerry rig something together and figure it out. Now that you have all these different seats, you need to figure out who's going to go into these seats. And a lot of times from 1 to $5 million, you're hiring fractional people to get into these seats. That's going to be a fractional cfo, fractional marketing team, maybe even a fractional salesperson or bringing on sales people that are commission based. And you start filling these seats with things that are not going to cost you full salaries, but they're piecing things in here for people that you can hold accountable, remember who not how. So let's take the example of I need 100 lead going to do that. I could hire a marketing company and say, hey, I need to get this many leads. Let's build out a system to make sure we have this many leads. I need to get an average ticket of this, okay, for my sales team. Who is going to be responsible for that number? And you fill in the benchmarks from there all these numbers. Now you have who's that you can hold accountable in those one to ones or those meetings every single month. Who should be doing these things? Is now your go to questions for most things in your business. But a lot of people say, well, who should I hire first? And that's why we have step number five. Step five, leverage the replacement ladder. Dan Martell in his book Buy Back youk Time has this replacement ladder and it walks you through exactly who you need to hire next to replace yourself. A really big part to this is once you have all those seats and you have these numbers, what you want to be sure of is that you're replacing stuff for growth. A lot of times Dan Martell talks about in his book people start hiring more people for to get growth when they should be hiring to buy back their time. In the book buy back your time, there's this five rung replacement ladder which walks you through who you should be replacing yourself with in order. So number one is an admin. This is going to be, you know, a CSR someone. Usually to get to a million dollars, you already have this covered. Number two is delivery. This is going to be, you know, have techn out in the field. Usually to get to a million dollars you have this covered. Number three rung for replacement is marketing. Many times for business owners, they're the CMO chief marketing officer in their business, they have all these ideas, they don't have anyone to execute and they're just getting cookie cutter marketing which is why they get stuck there. To go from 1 to 5 million, you need to outsource your marketing. And you could still be the person that has the ideas, but you're not the execution of it. The fourth rung in the replacement ladder is sales. A lot of times you're the best salesperson, but to go from 1 to 5 million, you can't be the only salesperson in your business. Which is why he recommends replacing that and then the fifth one which is. And when it comes to management, usually to go to 5 to 10 million, you need to start replacing yourself in management. You know, hire a coo, gm, but that's a little bit more down the line. And by the way, if this is helping you out and you're looking for a who to help you when it comes to marketing, that's exactly what my company does. You can go to flashconsulting.com, set up a meeting to discuss your business. Worst case, you get some best practices and takeaways. Best case, we help you fill some buckets and help you get to $5 million. So many business owners worry about hiring people because they don't know if it's actually going to help them grow their business or not. Which is why step six is so important. Step six, know your numbers. You have to have your numbers doc dialed in at this point. Specifically, if you're going to start replacing your marketing and sales, you have to feel confident that the numbers are not just what you have on your org chart that you're going to hold people accountable for. But how am I going to actually track this number? So it's great to say, hey, I want 100 leads. I hire this marketing company, they're going to give me 100 leads. But how are you going to know if you got 100 leads? Do you have a CRM in place? Do you have a lead management system in place to track this number? It's great to say, hey, I want to close at 60% and I'm going to hire this salesperson to close at 60%. But how are you going to know that they're closing at 60%? And that's why you have to have your numbers dialed in. Some of the numbers to look at is your return on ad spend. So I'm spending all this money on ads. Is it generating leads and is it generating a return? One of the best reports to look at is year over year comparisons. So this January I had this many leads, this many estimates, this many new customers. Last January I had this many leads, this many estimates, this many new customers. Now you can start to benchmark month over month for the year to see if you're actually growing or not. Leads, marketing, sales, all this stuff is great. But if you're not actually growing your business, then it's not working. And that's why you need to benchmark those numbers, specifically to make sure that you're growing. So once you get your numbers dialed in, now you actually have to forecast growth, which this part scares people a lot, which is why I want to highlight this on step number seven. Step seven is adjusting your marketing budget for growth. We had a company that we helped go from 1 million to $3 million in revenue. When they got to $3 million, we had an ad channel that was producing an 8x return. And we're like, okay, cool, we want to go to 5 million, so we need to ramp up the ad channel. And they did the exact opposite. They got scared and said, we need to pull back our marketing budget. This is why percentage base are so important. If you want to go to 5 million, you have to be increasing your marketing budget that 3 to 10% to hit those. You got your numbers dialed in. You have someone that's doing a great job. You know that this is going to work. You're on percentage base now. You increase the percentage base and the marketing budget increases. And now you have a game plan that's going to execute to get you to 5 million. You can't do what you did at 1 million to get to 5 million, which is why you have to have these growth numbers in place that scale with your business and grow. So we actually helped this company generate an additional $100,000 in revenue in four months just by plugging three holes inside of their business. And I made a video all about it here. If that one's not out, you can check this one out.