Let’s expand on that. So a big problem that I see with many entrepreneurs is that they start or try to grow a business or buy a business before they understand the structure of things before they have full.
What you can say, a business plan, any structure, any process to not just grow your business organically and by acquisitions and we’ll get into that, but also have a full structure on. I guess your systems in all of your department internally, so everything from sales and marketing to operations to HR, to customer support to your financial department. You need to first of all, have a full understanding in a picture of how, first of all before that, in the first shift, we had the vision.
But now you need to understand how the vision actually looks like like on the ground right and how you? What your plan for actually executing on that vision, because most people, what they’re doing is, I see them, go out there and they try to raise capital just on an idea which, in my opinion, it’s not enough, especially if you want to buy a business. Unless you have a full understanding of how that business will look like after you go into that and buy that or grow your business internally, it’s going to be really hard and same go for hiring people before you have a full understanding of what each role looks.
Like in your business and have a full, literally system for how the business looks like in is ideal scenario, you can’t feel the gaps in bringing people on board to those structures. Unless you know what are those structures? Who are those people who need to basically fill those roles? First of all, you need to understand what even what roles you even need in that business. So I hope that makes sense and that’s what I want to expand in this article.
So one of the problems – people are doing they’re hiring people and they don’t have systems or processes for those employees to follow. Basically, they don’t have systems in general that everyone can follow and understand what exactly they need to complete every week or every day. In order for them to be successful, and before you know those things you can bring people before, you know what their exact role is going to be.
And again, I don’t care if it’s for your existing business or if it’s for a business that you’re looking to buy you got ta, have a full structure or understanding of how a business need to look like and what are the processes? And you, especially if you want to become the owner investor, the shareholder, the advisor you got ta have a full understanding of how that picture, going to look like from a high-level position and then also to understand with yourself.
What are the KPIs that you need to track? What are the exact numbers and data that you need to get every day and every week to have a full understanding on your vision? Because if you want to have an amended management team running that business? For you, a professional manager or professional managers running those different departments in your business. You need to understand what are those departments, what is going to be in each department who are what are their roles? What are their goals for every day for every week for every quarter for every year, and unless you have that vision and understanding on that structure, you can’t go out and expect to get.
I guess the results because, first of all, you probably don’t even know what KPI is. You need to track with each of those people and unless you know those things you can expect to have a good, profitable business and that’s to begin with, and I’m talking about the little things, the little nuances that you need to understand in each department. So, for example, it looks like the accounting department, most people, most entrepreneurs, that I talked to you own six or seven figure businesses or don’t own a business.
I want to grow other and start one or buy one. They don’t have the business acumen. They don’t know how to even read a P & L or a balance sheet. It looks like Chinese for them. They don’t know how to look for ratios inside their balance sheet or P & L and how to make conclusions from those numbers in order to actually make changes in their business. They don’t know how to even handle those things in those departments or what are their roles and KPIs that they need to track in those departments like tracking accounts, receivables or payables.
In order to make sure that you have a better trading business and a better business that produces producing even more cash flow, so that’s why it’s so important to have that business development process and systems. First, before you bring anything else before you’re bringing the people before you bring in capital, and obviously you can’t build that business development plan before you have the business strategy and the vision for things you want to look like in a year from now.
In a few years, from now, in ten years from now, if you are like most business on our business owners out there, your business probably looks like kind of like your wheel with spokes all over it. Where you are like in the center of that wheel and you’re, basically responsible for almost everything and everything you need to go through, you and everything is dependent on you and you can’t transition yourself from an owner manager, employee operator, to an owner, shareholder, visionary investor.
Unless you removing yourself from those roles and unless you have the structures, so everything is working well without you, it’s going to be really really hard to make that transition. Those things and many more is what creating a bottleneck inside your business and most people or business owners or entrepreneurs. They don’t know what metrics they need to follow, or they don’t even know what metrics are important to follow right.
So when you have those that lack of fundamentals, it’s really hard to scale things in a good way and I’m going to get into more of the details of how to build an organic plan to grow in an acquisition a way to grow. But unless you have those fundamentals you can grow by buying other businesses and there’ll be shitty businesses it’ll be basically these stress businesses they’re just going to take a lot of time from you, and you can’t really make anything from that you want to make.
I know many people who buy many distressed businesses, but then they need they need to liquidate and shut down those businesses after a few months. And is it really worth your time to go and buy a bad business and spend a lot of time and sometimes money to try and turn it around? Because you don’t have the good fundamentals to begin with, because you don’t know if there are some opportunities in those businesses or not, and same goes for going growing organically.
If you don’t have the good fundamentals to begin with, maybe you’re not even getting or trying to get the right client, maybe you can get a better client that will pay you ten times more in a different place and all those different things are literally the small Nuances that will make the distinctions and breakthrough of basically creating the separate decision. If it’s business is going to make it or not it’s pretty simple, I mean many businesses literally grow by lack.
They don’t have a clear market or an understanding of why they’re even more unique than their competitors. They don’t have, even if they personally think that they know why they’re unique they don’t have a full system. That is very, I guess, open to everyone else in their company for everyone else to follow, and unless you know their unique is like many people I know would literally get to 6 or 7 s here literally by luck.
They got some opportunity. They got there, but then what happens is it after a while they don’t understand what happens, they don’t have a full understanding of their processes and then they have to shut down their business because they don’t have those fundamentals. To begin with. Now, let’s talk about plans for growth, so most people that I know own a business or want to get into business. They want to either start from scratch or try to get one client at a time literally hustled their way into getting one client.
At a time doing advertising here, advertising they’re, going to events, doing doing direct marketing and all those different strategies and they’re always looking for the next technology that will help them to give to get the next client at the break-even or a profitable marketing campaign right. So that’s what most people are doing they, and even if they’re doing that, most people don’t even have a full system and process to understand what is exactly the best way to get one client at the time and how to put themselves back from those processes.
So a team can do that for them and that’s the first way. Most people try to grow and pretty much the only way that most business owners try to grow just because most of the books and seminars and retreats out there are on that way of growing business growing organically. By doing more sales and marketing most entrepreneurs don’t even know that they can start their journey in entrepreneurship by buying another existing profitable established business or if they have an existing business.
They don’t even know that they can grow their business by going out there and merging with other companies or by buying other companies in their sectors who are complementary business to theirs, who are either their competitors, and they think that they need to have millions of dollars. In their bank to buy those businesses which far away from being the truth, because you can basically the beauty with buying businesses, unlike many other things, is that you don’t have to have 100 cent of the cash on hand.
Because you can use the acquisition target assets. As a leverage to pay for the business itself, you can literally go to financial institutions and tell them hey. Look. I had this business I want to buy and I have all those assets in that business. Let’s leverage those assets to paid for that business and I’m not even talking about negotiation strategies like puttin, Erin out or future cash flow projections to pay for the acquisition cost and that’s how you can do deals and grow literally by year’s worth of sales.
In an afternoon, by going out there and by those businesses with employees, with managers with access to more products to more cash flow, to more revenues to more operations, so, for example, if you have an existing business, let’s say whatever you have a web design company. You can go out there and buy a marketing agency who’s, doing like Google AdWords for businesses, and you can then do cross selling and seen it in save costs.
For example, if you have a list of clients and your services, you can then sell your services to their list of clients and vice versa, there’s so many cross selling opportunities that will basically save your costs from going out there and cry and quiet try to acquire New clients, because you already have that rapport and Trust with that business that you bought and I’m not even talking about synergies and so much capital that you can save from having synergies.
Because, let’s say you bought another company, you only need one department of each. You only need one HR department. You only need one marketing department, one accounting department, one customer – would support the part. All this depends on the business and all that, for example, if you’re in the same location, you only need one office and you can save so much money by buying other businesses and it’s all going to go down to your bottom line, to your net profit and Most people don’t already it’s even possible that they can grow a business by going out there and buying other businesses, and they don’t need much capital if at all, like we’ve done bills without putting any dollar down.
Just because we had enough assets in that business. To pay for that business itself and there’s so many cool things you can do there like look at the business biggest businesses out there, that’s the way they grow like when you’re, very, very big when you’re big like Facebook, for example, your only way to grow and Meet your shareholders demands is to go out there and buy other companies, there’s only so much internal growth that you can do only so much sales and marketing and optimization of your cost internal that you can do, but what the biggest companies out there are doing.
They’re going out there and they’re buying other businesses. That’s why Facebook, both companies like what’s up and Instagram, because to do all those things internally in their business, it very very different. It’s going to be so much difficult for you! Instead, you can just go out there and buy those businesses, and what Facebook is doing is they’re, basically buying Instagram with their shirts and that’s what you can do with just small businesses.
You don’t have to be a profitable, a huge mega business that it’s trading out there in the public. You can be a small business that will fold those same strategies like the big corporations, but still keep your freedom, not sacrificing your time, but most people don’t even know that it’s possible and again you have to have all those different strategies and structures to begin with. Before you go out there and bring capital and bring the right people and all those things in order to take things again to the next level, so you can become an owner investor owner, shareholder, the visionary, instead of being stuck in a business.
It’s so frustrating to see many people start their business because they want to be their own boss, but then they’re stuck in their own business and don’t get me wrong. I think it’s better to be stuck in your own business than working for someone else, but then is it really why you’ve started the business most people that I know didn’t start their business in order to have less time or to be stuck in something that many Times they don’t even like doing, because the the work is very reputable when you are very involved in the day-to-day.
So that’s the next shift for us next we’re going to talk about some more really really important things for you to check out. So I’m looking forward for you to see that the next article in the series and yeah I’ll see you in a bit.
Starting a business is not easy! Think about who will be working on your digital image. Hiring a good webmaster will help!