How to CEO From $0 to $30M: The Brutal Truth About Small Business Growth (w/5-Stage Framework)

If you're the founder and the CEO and you can't go cultivate relationships and contacts and revenue, then you're probably the wrong guy or gal for the job.

What does it look like in that first, can we get off the Runway stage just to get revenue? And then I don't know if this is what you call the wobble, but there's this like, feast or famine of, oh, my God, we got to push sales. Oh, my God, now we have all the sales. We have to fulfill work, and what do we do?

So launching a company is hard. We know all the statistics. Failure rates high. And I think most companies don't fail because they have a bad idea. They fail because they don't execute. So you either don't know how to execute or they're executing on the wrong thing in the wrong stage. I think there's an idea stage. That's stage one. What is the idea? How have you built out a business plan? Do you understand your target market? Have you gotten your trusted advisors to throw rocks at you? I think most people rush into the I gotta start raising money. And so they're raising money in this idea stage. And I love Depeche because he's always, if somebody won't give you your email, give you an email address, then you probably don't have a pretty good idea. Know what I mean? Test it out like ra. Ask your friends and family whether they would put a dollar into it. And if they said no, why is it me? Is it the idea? Is it not? Is it not vetted? So there's this stage of idea. Then idea goes to launch. Usually while you're vetting idea and you're getting advice on things you might have missed, you're out in the market with your network. I always think if you're the founder and the CEO and you can't go cultivate relationships and contacts and revenue, then you're probably the wrong guy or gal for the job. The speed of the leader determines the rate of the pack. So when you're launching, you're launching and ideating at the same time. But, like, as soon as you get that first customer, you have to be able to deliver the value. And I'm in the services business, so I'm sure it's slightly different in a software company. And I'll just, I am not the give me $150 million guy. Like, I'm scrappy. I want to make a profit as soon as possible. But you go from this launch to, so that's stage two to survival and I think this is the place where people get confused. They either burn through capital or they start thinking about all the things they gotta get right. And there's only three things you need to get right in the survival mode. Sell, deliver, collect, in that order. Like when we launched Copoint, I basically said I'm going to try to invoice my customers at the beginning of every month and say that money's due on receive and sooner or later someone's going to come along says we don't do that. And finally here we are in month 11, we got a new big client and they said we don't do that. So now I'm invoicing weekly and I'm doing their 30 day thing. So it's cash is king, cash flow is king. And you're in survival mode when you're in the red but you're making progress. Just give you a great example. 2025 Q1 was, I don't know, $55,000 and Q2 was $275,000. And Q3 is going to be probably 400 plus. So that's what happens when you move through these stages and hopefully you move through them rapidly because deficit cash flow will kill you. And like in the variable cost business, like the services business, you gotta be cold blooded because every cost is a variable cost. Like when you look at the percentage of our costs that are fixed, it's gotta be less than 1 or 2%. And as we grow it's gonna get minuscule, right? It's rent, which is nothing. And then once you've survived, then you start working on stabilization. So you, this is where we're really gonna dig into eos and make sure that we got our operation operational Christmas done. It's when I look at getting our leverage model from this to this, I know it's broken, right? But I had an opportunity to hire the right people, I just didn't build the right leverage model. So my profitability is lower. And then once you've stabilized the business now you're ready to scale and all that means is grow. Companies are either growing, declining, there's no status quo staying in the same place as death. And I think the thing about scaling in the services business is there are these plateaus where it's like a circular thing. It's scale it, break it, scale it, break it, scale it, break it. You, you had a graph a long time ago when you mapped the survival rate of companies. You go from a million to 4 or 5 million, something broken. When you get to 10 million something else broke. 16 to 20, something else broke. When you get above 35 or 40 million, you need yet another thing. Sometimes those things are new systems, sometimes they are dedicated. Like, you don't need a CFO when you're a million in revenue. We're doing QuickBooks. But when you're 60, 70, 80, 90 million, and you have to ask yourself, what's my highest and best use? I think that the EOS system really helps with that, because I know as a visionary, even in my launch and survival mode, where I'm doing a lot of delivery, I got to get out of that mode really quickly because every 120 days, we're broke, we're out of business. Right. The cliff goes like this. And so it's a reminder that, oh, my primary responsibility is over here, and I got to not get distracted out there. So that's the framework idea. Launch, survive, stabilize, scale. And then scale has breakpoints where you actually have to go back and fix things that aren't working correctly.

I think it. I think there's a misconception, too, that you're going to start on day one and you're going to have all these mature processes and you're going to know exactly how everything's going to shake out. And it's always a little bit of a shiitake show for businesses getting started. And I think that the fact that's true, you know, for some businesses, I mean, you guys. So for everybody listening, this is a company where everybody's been in management and technology consulting for a while. They've been around the block a few times. John started multiple companies, so this isn't the first rodeo. I see a lot of founders get stuck, though, because they never recognize that they should transition out of that. That early stage of just, oh, my God, whatever we need to do, let's get the money in the door. And that caps their growth.

Yeah.

Plotting those transitions.

Yeah.

Sometimes it feels like you're doing it a little early. Not early in a bad way, but I think that's because you've done this before. See people that wait till 3 million to do it.

You heard me six months ago. It's like we had a level 10 meeting. If anybody's doing anything that's not business development, stop. Like, just recruiting, streamlining, expectations, framework, like all these really important things for the business to grow. If you don't get there, it doesn't matter. And. And I, once again, I think this is why having an accountability chart and knowing, like, early on we had the wrong button, the wrong seat. We. We thought we had a guy whose delivery. And really he was kind of like this rainmaker, innovator person that couldn't do a status meeting to save his life. And so we had to recognize that really quickly bring somebody else in. And now we have this stable foundation. And usually you're just one or two deals away from moving from launch to survival. It took us 10 months, but we had. The two founders, had the conversation of, okay, we put this much money in to get here. We knew what our low watermark was in our checking account. We look at that every single day. And if it had gotten below, I don't know, probably 25 or $30,000, we would have. We were looking at each other. Are you ready for another round? And I was like, why? Welded the door behind me. There's no going back. I shut down my connect for life business, which was a very nice business to go do this. And when you do that, there's a little bit of the pucker factor. Geez, what if I forgot how to do this? What if I fail? What if. What will people think if it doesn't work? All these little minions in your head and you just. You have to get very disciplined. You have to have. Whether it's exercise or releases, you. You have to have an amazing partner at home because as it's. You bring a little bit of it home. But survival is awesome. Now we're in our third. Entering our third month, third quarter, third quarter, quarter. So Q2 is 377% ahead of Q1, and I think we'll be 60 or 70% ahead of Q2. So that's a pretty good first year. No guarantees. Like in our business, if we stop selling in 120 days, we're. Our expenses are greater than our cash flow. And I think it's like that. I think it was like that at Accenture. I think it was like that at Party Veda. It's still like that. There are 800 employees, and you got to continue to do the fundamentals day in and day out. And you got to make sure that you're doing the right things and that you get the right people in the right places. I think that's the thing that experience probably taught me more than anything.

Where do you usually see or do you see it? Is it just when it happens, do you find that there's a place where you spot that, okay, the transition has happened? Is it at half a million in monthly revenue? Is it at some annual revenue point.

Where you say, hey, look, we like Every other great business in America, early on, you're running it in a spreadsheet. So we have a very sophisticated model that we put headcount in. We know exactly what our fully loaded cost is. We actually use two different models. One, the model are cash flow and one to model a fully loaded cost so that we are beginning to capture our profiteering plan in our hourly rate. So it's when your collections are above your. That's what I watch.

If you're tracking them. If you're tracking them.

You guys looking at my spreadsheet, my co. My data financial model, it has multiple tabs. I have salary in India, all broken down by level. We have 13 or 14 levels in the company. Same levels in the US, different rates. That drives. I go in there and I put. I need one of the. I have one of these and I got one of these and I got two of those. And then it says, here's what your payroll is going to be. And we set that against actual payroll expenses twice a month. And so I know exactly. And this model is a little more conservative. So if I. If I miss a little, I don't run out of money. So. Yeah, I know exactly. I know in June I'll be over 100 grand and my expenses are going to be like 80. Yeah. Does it get more complicated? Sure. And when do I stop using that? We're building. We've been building a platform for the last four weeks called Rev Ops, which is going to take over our dynamics CRM. And it's going to. It's basically going to be the way we manage the business. You've heard me talk about our cliff view project. Where's the cliff? And in our business, you always want to know where the cliff is. And the cliff is defined by when revenue dips below your burn rate. That crossing of the lines is for us. It's October, so I'm good for June, July, August, September. So if I don't sell anything, I'm out of business in October. No, I'm not actually out of business. I'm just burning cash.

That's a. Humphrey is.

Yes. Thanks, Gary.

You mean it different. You mean it differently.

Everybody's management team's attention. I said, look, man, we're out of business in October. Have you met anybody today?

Yeah. So this is a great insight. I think when you're. At least when I'm looking at the web or talking with folks, there's usually the reserved. Here's this magical thing we did to build our business. And what's interesting for anybody that doesn't know you that's listening to this. So you've done this, as I said, multiple times. You've coached other people to do it.

Yeah.

And I find that services companies don't usually build in public. And this is an example of building in public. You're being totally transparent about how you guys are building out. And also the mindset that it really takes to build a business. Not just build a job and go be a contractor, but actually build a business.

Yeah. So we use the Connect for Life methodology. You can find the book on Amazon. I wrote it after I sold my interest in Par Veda. And it is around three major areas. Connecting with people in your networking and attending events where you can see and be seen creating. So are you creating content, speaking somewhere, commenting on people's content and then engaging is how are you engaging the market? How are you going to. And I believe that everybody in the company, everybody in a company like ours is responsible for our brand. They're responsible for saying smart things in the marketplace. They're responsible for publishing and content writing so that prospective customers raise their hand and say, that's really interesting. Come tell me more about that. I've always believed that and I think today it's more relevant than it was when we started party Veda and oh3. Because content is king and people are looking for knowledge workers and they want to talk to somebody in the first meeting that knows what they're talking about. And if you think about what's happened in the last 20 to 25 years with AI and social media and the buyers today have so much power, right? They have LinkedIn, they have other social media, they have websites that they can do research on you as an individual, your company, your services. They can seek references before you ever show up for the first meeting. And so that's why we track those metrics every week. How many points did you score? How many meetings did you have? How many proposals did you deliver? And it's a very simple business. And you gotta. It gets harder, but it's a very simple business. We sell time for money to solve complex problems with technology. Ours just happens to be AI right now.

What do you see hold founders and CEOs back from being able to continue growing?

Yeah, it's usually. This is going to sound really silly because I'm an introvert. I learned how to become an extrovert because I knew I had to learn how to sell. So I quit Accenture and I went to work in the commercial off the shelf software business for Seven years. Nothing happens without a sale. Sales is such a dirty word with technicians. But at the end of the day, if you don't know how to prosecute a deal and you can't get a lead and interest and turn that into a statement of work and go deliver it, you're going to have a really hard time doing it. And I'll tell you why. You'll think that I just need sales help. And so then you're going to start down this road of hiring and firing and hiring and firing and hiring and firing. You will spend a bloody fortune and get very little. It's. You're looking for a needle in a haystack and needles, you know, really good. And most founders are too cheap to pay for really good rainmakers and they probably wouldn't go work for a startup anyway. So it's a real dilemma. Like you've gotta be able to scale your business to probably 10 or 15 million dollars before you think about how else you might generate leads. I personally think cold calling's dead and I know there's a lot of people that disagree with that, but I don't ever answer my phone. Yeah, nor do I. I've got the ATT Armor thing and it sometimes I don't even know that somebody called. Like one of the things that we're working on is with AI now I can do one to one marketing, I can market to Scott Levy because I can go get enough knowledge about Result Maps and Scott and I can deliver a bespoke communication to him directly and say, and if you click on this I'll send you a white paper. Just give, giving away knowledge. And I think we, we are on the frontier of some really interesting ideas where lead generation and business development will go through a metamorphosis. I think this is why we're building our own platform and AI. Because I'm about to call ABC company if ABC is in my account directory. I've already gone out and scoured the world. I know all about their press, I know what kind of talent they're hiring. I've read their social media, I know their LinkedIn, I've looked at connections in the LinkedIn and I've used AI to do all that with that before I make a phone call. So I have a playbook when I call Scott Levy at Result Maps on what does Scott like to do? He's a cyclist. He posted something about riding something we're living out there in the virtual world and so I think you can use that to create interest if you know who your ideal client is. So I think sometimes we struggle as founders to know what is an ideal client. We struggle to generate leads so that we can have a scale, and we somehow convince ourselves that our idea is so good that we don't need to sell it. On the epitaph of every failed company is read the slogan, this product will sell itself. It won't. There's so much noise out there. If you're not out there using your network and your trusted advisors to find qualified leads and people, that it's not that, it's not that hard. Right. All things being equal, people would rather do business with people they know and trust. So if you're a trustworthy, capable operator and you've surrounded yourself with really talented people, which I have, there's nothing that I can't solve around some of these AI tools. And so whether it's AI driven analytics or AI driven development, when I get into an account and you encounter my team in a sales cycle, you're gonna be like, yeah, I want some of that. Can you guys can help me with that? And that's the magic.

Wow, that's something I was going to ask. And then it's very, it's all thought provoking. Right. I keep thinking of how this applies to us, how it applies to other people. I know, I see, or I see.

Bounders make huge mistakes while you're collecting your thoughts. Like when they get to the 10, $15 million range and then they run into a little headwind, the economy changes on them. They, maybe they're building a practice or maybe they have a piece of technology they just think is game changer and they carry a bench longer than they should. If you get into the consulting industry, you realize that there's ebbs and flows and you better be creating more value than the next guy so that you don't get let go. I, I've seen founders basically spend all of their capital keeping a bench, hoping that the market will come around or the next deal will happen.

I think bench is the services term for it, but it's headcount in, in software companies. Yeah, kind of the same thing.

I like to be like to think that I've created this amazingly loyal business where I'm loyal, I'm as loyal to my employees as they are to me. But I have a responsibility to the greater audience of my employees and really frankly for my clients to make sure I'm running a lean, mean, profitable enterprise. That's my responsibility. And sometimes I have to make really hard decisions.

You were talking about you need something that you can sell up to 10 million. I was thinking about some of the founders I know that are stuck at two for example. And I think there's. There's an important distinction that just because I know you, I know it's there. But people listening may not it's. That doesn't mean you're also doing delivery and everything else. You're not trying to do it all yourself to get it to 10 million. You're just staying out front and continuing to sell that same thing up to that point. I think that's what you were saying.

Yeah. Or you're really risk averse. Going from 1 million to 4 million in a year or two is a lot. There's. You gotta place bets on people cause you've gotta put. You gotta hire people out front of. You can get away with a lot of stuff when you're sub million $. You can sell a deal and then cause it's gonna be somebody say listen I got a guy that is perfect for this but he's joining in two weeks. We'll start on August 15th. Whatever. You can get away with that but you can't get away with that when you're 10 or 15 million in revenue. You gotta know your teams and talent and you gotta be willing to swap people around. And it' about solving. The thing that I love about AI is my pitch way back when at the former company was we got really smart people, we're good at technology. Give us your most complex problems and we can solve it. And that driven that company for the last 25 years. With AI we're going give me your stone age problems. Give me the things that drive you nuts. Like the whole equation on commercial off the shelf software is completely obliterated. If I can build a bespoke solution that's custom for you and your industry and the way you go to market you're going to add so much more value to your employees and your customers by using that solution. Like you're not going to try to shoehorn in a Salesforce or Microsoft or something like that. It's almost like instantaneous technical debt for all of the competitors in the marketplace. And I just don't know how you turn that ship. We're doing things in eight to ten weeks for sub hundred thousand that used to take five to seven people six to nine months and caught three to five hundred thousand bucks. Experience this in your business. I remember when you called me up, you said I just developed and delivered a solution in less than a week. I'm like yeah, but it's not magic. Like you got to have guardrails. You got to know what the tools are capable of.

You have to learn to compartmentalize and be specific just like you would if you were managing people. Except there's no emotional manipulation. Right. It doesn't care. You can cuss out the AI and it will detect you're frustrated but it's not going to get nervous. It's just going to.

Not to lie to you. Tell it not to make up anything. Tell it no to stop. You got to do smaller bites of things like the whole FTE for a fee. Full time equivalent for a fee is totally. I don't know what a full time equivalent is anymore when I have two or three guys using Claude and Cursor to generate really cool solutions that are beautiful and elegant and work in a very short period of time. So we're, we're experimenting with how do we change the pricing game to. To deliver value to our customers at really reasonable prices.

Nice. Anything else you want to make sure we cover?

No, I just, I just like to encourage all the entrepreneurs out there. There's probably more books written on sales than anything else in the world and I'm. Most introverts don't understand what selling is. Selling is a process where you are looking for problems to solve and delivering value. And if you have the right value proposition and you're not just doing work for work, people will pay you for that and that's a sale. It's just not that complicated. Most people don't do enough work like they don't touch enough people go to enough events really put themselves out there and another plug for the EOs or the POs like starting from the beginning and having a visionary and integrator and knowing what those accountabilities are really helps you and knowing like when John is running his spreadsheet model. I know I'm doing the integrator's job but I'm really good at it and so he's knock stuff out. I'm going to go find a customer so you can cross over. As long as you understand most of the problems in an early stage startup are people problems. Right. It's Ms. Expectations. People doing the wrong thing at the wrong time, not self aware. You just gotta. One of our core values is being purposeful and that's all about thinking straight and talking straight and doing the right thing. And we only have three core values so they anchor us in all the things that we do. So that stuff, that mission and Vision and values thing is really important. So get that, spend the time to get that right and test your ideas and your early watch on networks of people. There's so many giving people out there that are willing to listen to you and say, I don't know about that. I think one of our, one of our keys to success this time around is the tools that we've been using. Result Maps is one of those tools and we use that to align our vision and our mission, our core values. We use it on a weekly dashboard to look at our key metrics. We do a readout on our level 10 meetings every Tuesday. So everybody on the leadership team knows exactly where the business is all the time. And I think that you can run this on your own. You don't need the really expensive integrators that I see out there. But it is really helpful to have somebody like you on the payroll. Will we pay you to run that meeting? Because you don't care about hurting one of my colleagues feelings by pointing out that they didn't really prepare for the meeting and so they can't just go off down the rabbit trail. And so I think Result Maps helps us keep track of all that. We're in the process of planning Q3. We got a meeting tomorrow where we'll be looking at all of our targets and rocks and metrics and all of those will go into Result Maps. And when we wake up, you know, next Tuesday, we'll be looking at a new set of metrics and seeing what changed from Q2 to Q3. I think it was. Oh gosh. Who was the old industrialist who said, you cannot manage what you do. You cannot manage what you do. Not measure.

Drucker.

Yeah, Drucker. Peter Drucker. Yeah. That's critical. Know your KPI's manager every week. Know your cash, cash is king. Know how much you got if you're burning it. Know how long you can last. Figure out how to make it last as long as you can. Because he who fights and walks away lives to fight another day.