Scaling Your Business for Sustainable Growth: Part 1

Do you know what gaps might hinder your company’s growth?

Transitioning from a startup with a few employees to a multi-million-dollar business is about more than just scaling operations — it’s about thoughtfully refining processes and building a culture with a growth mind-set.

In this episode of Cracking the Code, Gary Elekes stresses the importance of identifying gaps and reverse engineering them for successful project plans. He also dives into the transformative power of transparency in building productive, accountable teams for long-term growth, so success is shared.

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Audio Transcription (in beta, please be wary of typos)

00:00:00:00 – 00:00:08:22

On today’s show, learn how to scale workbench.

00:00:08:24 – 00:00:29:25

Now, knowing how to plan for scaling can be complicated and a bit overwhelming. But have no fear. Gary, Alex is here and if you’re wanting to scale and expand, you won’t want to miss this two part episode. Take it away, Gary. Always appreciate the opportunity to talk about scaling. So there’s there’s different levels to business. I think we all know.

00:00:29:25 – 00:00:52:15

In fact, I’m sitting in world headquarters for, one of our SGI members today. And, you know, the business was started up, you know, early, and they were about four people. And the conversation today was, man, it sure seemed easier, you know, when was it for people? You know, I didn’t have the complexities. I didn’t have to deal with all the staff, etc..

00:00:52:17 – 00:01:14:03

You know, the scale of the business has all types of things that are complex, considerations that go beyond just the people side. In California, of course. They’ve got lots of things going on here, electrification, and so forth. So as this business grows, which is now, you know, well into the 30 plus million dollar range, it’s a different business.

00:01:14:03 – 00:01:30:02

And so I asked, you know, the owner what what the scale mean to you, like, how big do you want it to go? And, you know, he he paused for just a minute and he thought about that, and he said, well, probably, you know, 50 to 100 million is attainable in this marketplace. And so of course it is.

00:01:30:04 – 00:01:45:03

But that’s his idea of what scale is. And so, you know, we were kind of laughing about the idea that when he was for people, you really only had to worry about yourself. And maybe a couple of the guys in the payroll was small. And, you know, if things didn’t go well, the impact wasn’t as big.

00:01:45:05 – 00:02:01:25

So that brings us to the second agenda point, which is, well, how do I have to think about growth and scaling? How do I plan for that? And I don’t think there’s one right answer to that question. Probably be a little bit arrogant to say, well, hey, this way is the only way. There’s plenty of ways to scale a mountain.

00:02:01:25 – 00:02:22:16

And I think what we want to be talking about is, what are the disciplines that you need to be putting in place as a business owner? Whether you want to sell it, transfer it to the next generation and or, you know, maybe you’ve got, an Esop in your mind. There’s lots of ways, you know, for us to look at how we grow business and scale it and why we would scale it.

00:02:22:18 – 00:02:45:10

And then how do I organize around that? And I think the last point is really building the team and developing the team around you. And, you know, the organization itself is is part of how we’re going to have to think about how do we grow business. So again, just a conversation we had this morning. There was a key person who was a founder here at this business.

00:02:45:12 – 00:03:11:10

And, unfortunately, he’s contracted an illness. And, and it looks like it’s going to be terminal and he’s a key player, like, he’s doing an awful lot of things. And, you know, once we got past the conversation about, you know, how how’s that going to resolve itself? The next question was Will. That brings up bench strength and building the team, meaning that that person is so important to the fabric and the DNA of this business that you have to replace that at some point.

00:03:11:15 – 00:03:31:01

We all have a time when we’re going to retire. And if you’re young, that doesn’t seem like it’s nearby. But if you’re my age, you start thinking about that and you start looking at and say, well, you know, we’re going to have a ten year and it’s going to end at some point whether we do it ourselves, whether we transfer that, you know, by selling it or the next generation comes in.

00:03:31:04 – 00:03:49:12

And so his answer to me was, I don’t really have Ben strength. So we’re in this business that’s, you know, 30 minute pushing $30 million, and we don’t have a plan to do the last bullet points of last agenda, which is how do I build the team to scale it past me? So it’s gotten to this place because of the two owners.

00:03:49:15 – 00:04:05:21

And so now the next question becomes, Will, how do we how do we do that? So I’ve got I’ve got 12 bullet points I’m going to throw at you today. So I always ask this question, you know, what does time it. Well freedom mean to an individual. So time is the one resource that we can’t reproduce. We can reproduce money.

00:04:05:23 – 00:04:22:28

So you can make more money and, but you can’t really create more time. So time becomes the currency that we have to think about, you know, what do we want to do with our time? So work for me is is fun, I enjoy it, the team, it treats me amazing. So it’s fantastic. We get the opportunity to help serve.

00:04:23:01 – 00:04:42:13

So that’s all excellent use of time. But occasionally you might, like, take a vacation. You want to take your family somewhere, so that becomes the ability to be able to make choices. So when we make choices, that gives us the kind of freedom that I think most people would enjoy in life. So a business should be producing that kind of time, availability and freedom.

00:04:42:20 – 00:05:05:07

Time for you to choose how you want to prioritize your own time, your family, time and wealth. Freedom to be able to make the choices that you would like to make. So those 12 bullet points will help deal with that subject. I think the second thing we want to talk about is, most business owners, will say that they will do anything necessary in order to be able to achieve their goals, and I believe that to be true.

00:05:05:10 – 00:05:27:27

What happens is we start pressing into the fabric of the company about changing things, processes, accounting procedures, the disciplines of doing things in a different way. And that raises the question of adaptability. So for me, one of the key areas for scaling a business is that the business owner or the people that are in leadership, they have to be willing to change and they have to be adaptable.

00:05:27:29 – 00:05:49:12

If we’re not willing to accept commentary about what we need to do differently in order to scale that mountain, we can perish. And so the business could suffer. The business could go bankrupt. Certainly. You go back 2007, 2008. I had lots of conversations with folks that were friends of mine that were heavily in the new construction and, and they really didn’t see an end to it.

00:05:49:15 – 00:06:08:11

And my conversation was diversification is probably a good idea. It may not end, but it can. And, you know, sure enough, you know, a year or so later, you know, we ended up in a banking crisis. And obviously that took down a fair amount of contracting businesses because the construction industry stopped. So they were not willing to adapt.

00:06:08:11 – 00:06:30:03

And that’s the problem that we have to discuss is how we want to actually adapt. The third area then becomes the discipline, the desire and the dedication for change, the discipline and self discipline to do things in a particular way that that basically goes hand in hand with the concept of, I’m going to do things that I know are necessary, but maybe are not comfortable.

00:06:30:06 – 00:06:56:10

So that could be budgeting, that could be, you know, looking at the financial side of the business, some companies are really great at marketing, but not great at accounting and finance. Other companies are really great at discipline and finance and accounting, but maybe aren’t so good at marketing. So you have to be thinking about, bringing people around you that create, competencies that maybe you don’t have and building a team around you that allows the business to scale is a form of a discipline.

00:06:56:12 – 00:07:14:06

The desire to change is is something that we talk about on a regular basis. Because if change is necessary in order to be a $20 million company from 10 million, everybody would agree with that. That’s that’s not like a big stretch. But the question becomes what kind of changes and, and how do we go about that process.

00:07:14:06 – 00:07:32:18

So we’ll talk about that here in a few minutes. And then the dedication to your craft. Things are changing in the industry. Things are changing in the world of finance. Things are changing in economics. The consumers are changing online. You know, purchases are changing. So we’ve got all kinds of things that are going around us that are macro environmental issues.

00:07:32:21 – 00:08:03:07

I think today with the software platforms where we are in the consolidation world, we are able to put together a multi state, multi satellite national type company, where we can tie things together and use an operating system where in the 90s we aspired to do that with service experts. Blue Dot Rs Group Mac. You know, those types of original consolidation companies and the difficulty was we just didn’t have the dedication to make things go the way we needed to go.

00:08:03:09 – 00:08:24:20

Well intentioned, but we just didn’t have the systems and processes, so that leads us to, the very first bullet point. So the very first thing that you need to be thinking about is, you know, where do we want the business to be, vision wise, you know, and say, 5 to 10 years. And so Jim Collins talked about that and good to great.

00:08:24:22 – 00:08:45:00

He called that the bag, the very big, hairy audacious goal. It’s sort of that concept of where do we see the company, you know, at its peak, and the vision can certainly change, but we need to have an understanding of where we’re actually flying this airplane. And so that leads us to the core purpose, the culture of the company, the value structure.

00:08:45:02 – 00:09:13:14

Again, I’m happy to share our culture document. It’s about a 13 page document that defines the values past, just the adjective. So the word honesty could mean different things to different people. So we want our culture to be very tight, organized and aligned. And what happens is when I buy a company or when we grow into a satellite operation, we have to be able to have a process to get the culture to take root in the next marketplace or in the next state, or in the next area.

00:09:13:16 – 00:09:34:09

Or if you’re growing a business and you’re adding 15 or 20 people. In one of my companies, I added about 20 people it last year in 2022, and that’s a lot of people to onboard. So when we onboard those folks, we need to make sure their culture, understanding of how we want to do things are organized based on that set of business principles.

00:09:34:12 – 00:09:51:17

They’re going to bring their own belief systems, but we need the company to have a defined belief system. And then the next layer is the strategies. And what I would call the four core elements or the foundation principles of running a business, which are going to be the financial side of the business, the marketing, and sales side, those two go together.

00:09:51:19 – 00:10:16:10

Operations, which is going to be the production side. And really the thought processes, the business processes that support the marketing and sales and then HR or human resources. And so the question is, how are we going to scale this business around those concepts? So I would I would like you to think through the idea that priorities and choices are the focus points for this conversation that we’re having today.

00:10:16:13 – 00:10:32:18

I can’t do everything all at once. I can’t build a startup business into a $100 million entity, and in one year I could I could do it through acquisition. But to organically grow it, it’s going to take some processes. And so in order to execute that, I have to think about how I’m going to execute that through my business plan.

00:10:32:18 – 00:11:05:14

That’s what the company game plan is about. It’s about making the choices of must dos, need to dos and nice to dos. So number one on our list of 12 is you as a business owner. To scale, need to very carefully craft what culture you want. So how we do that is our values are defined. We can’t, constantly have a discussion with, team members, both, the management team, but also just everybody, an entire company on how these values apply to what we do every day.

00:11:05:16 – 00:11:23:17

We have an internal what we call an intranet, where we share core values, stories where people have successfully executed a core value. And I want to make sure everybody understands that core values are not just words on a piece of paper. They have to be based on the principle of, we’re going to hire, and train around that.

00:11:23:17 – 00:11:40:17

And we’re also going to bless and release what we call it. You know, the popular term is, you know, we’re going to we’re going to fire somebody today because of their they’re breaking a core value. So the core value process is about hiring and firing. It’s not about, you know, can they do the work right?

00:11:40:24 – 00:12:02:12

People can absolutely be great technicians, great plumbers, great electricians. But if the core value structure is not there and they’re not understanding how we want to behave, treat each other, treat employees, treat vendors, and that process isn’t defined for them. Then they’re going to do it ad hoc. They’re going to do whatever they do. What we need to do is make sure they understand what we want done as a business.

00:12:02:20 – 00:12:24:02

And so as we build the business and we scale, there’s just a litany of companies that will that will grow around those concepts. And as they grow, the culture is what sustains them. It’s the biggest thing, that I can say is, and this is a quote, by the way, is that, culture eats strategy for breakfast.

00:12:24:04 – 00:12:45:08

And so the concept there is, is that you can have some great strategies, but if you don’t have culture, eventually the company will probably go off the garbage. Hi, I’m Daryl. You shouldn’t ski. Hey, I’m Bob Larkin. Many of our contractors meet with us monthly. And you? Chances are I’ve met with us monthly. We found that members have deeper and greater needs.

00:12:45:12 – 00:13:05:25

So we came up with next level coaching, which is we meet a lot more often. And there is accountability to deal with some of the issues of money growth, finding employees, having an exit strategy to get off this roller coaster. These are the issues the contractors want answers to, and we can provide those answers. The next level coaching.

00:13:05:28 – 00:13:29:05

When you join next level coaching, you’re going to find solutions that are easy to implement and logical. Most importantly, we hold you accountable to specifics. So we’re going to meet twice a month and have specific to do’s. And with those specific to do’s, we’re going to discuss and dive into your financials in a very granular way. You’re going to have a clear budget.

00:13:29:05 – 00:13:54:02

We’ll be able to establish pricing. We’re going to help you create leadership programs to build your people. We’re going to help you find people. You may think of differing ways to engage employees that will keep them more involved by joining next level coaching. So if you’re interested in making more money, growing your company, finding good employees, and developing an exit strategy, give Dale on our call.

00:13:54:09 – 00:14:22:23

We’ll be happy to talk to you about next level coaching, but we’re going to see you on the next level. So our second, process that I want everybody to think about in the scaling and planning side is, you know, having a decision making process. When I do a lot of coaching, the concern that a lot of business owners give me is that my team doesn’t always make the right decision or they can’t come to the conclusion the way maybe I would do it, or they can’t finish the work the way I would finish the work.

00:14:22:25 – 00:14:45:14

And that’s absolutely true. We’re going to be entrepreneurs. We’re we’re Type-A personalities. We took the risk. We are those types of individuals. You know, we’re very wired in that regard. But what we have to do as a business owner is recognize that our job is to turn into a leader, not just an entrepreneur, and that evolution is to create a specific decision making process.

00:14:45:17 – 00:15:06:22

So this is one that we teach. It’s not the only one, but it certainly works for us where we are going to collaborate. And the word collaboration is something that I think you should take away from this discussion. Creating a collaborative decision making environment will make your team a stronger decision making team. So we always discuss things. We come down to options and conclusions.

00:15:06:25 – 00:15:23:00

We don’t exclude any option or any conclusion based on the idea that somebody puts it up on a board as a storyboard. We’re not in that model of arguing about it. We’re just putting it up on the board and talking about what are the options, what what, what are the conditions, what can we do? What are the possibilities?

00:15:23:03 – 00:15:41:29

The conclusions then are arrived at after some level of argument or conversation or dialog. And so you can’t be afraid to mine for conflict. That’s a, that’s a sentence I would write down. And there’s a book, written by Patrick Lincoln, you know, which is, The Five Dysfunctions of a team that talks about mining for conflict.

00:15:42:01 – 00:15:57:21

So it’s okay to have an argument about things. The health of the team needs to be strong enough that you’re allowed to do that and still like each other when you’re done. That allows us to make a commitment to action. And when we do that now, it’s about reverse engineering, how we’re going to get there. And so if we have to create items, we’ll do that.

00:15:57:21 – 00:16:19:24

We’re going to assign, topics and tasks and homework. And that’s a very defined process. And that leads us to project plans. Excuse me. So if Gary is going to take on the project plan, you know, to do something specific like let’s get into the plumbing vertical or let’s get into the electrical vertical, what has to happen is if we have to create things, we need to understand what we need to create.

00:16:19:24 – 00:16:42:22

What are our gaps? The actual project plan itself needs to annotate all that stuff. We use the cloud for this, Microsoft Teams, as an example. Asana would be an example. We’re on, Google Drive G suite. We pair Clickup with that as a workflow process. But what that does is that basically lets everybody see what the project plan is.

00:16:42:25 – 00:17:00:24

And so the key here is that we have transparency. Collaboration occurs at the beginning. And now we’re in to the let’s get off the couch and get it done mode and our driving actions mode. And so execution and project plans are something that we talk about. Now, the very last item on my list is going to be communication and meeting rhythms.

00:17:00:24 – 00:17:24:22

But at the end of the day those project plans are reviewed once a month. So every Monday at the beginning of the next month. So today is this week. This month is April. In May, the very first Monday in May, we will have a all managers meeting. We will review all the project plans, and everybody has to go through an update where they are relative to the measurements and milestones and goals from that project plan.

00:17:24:25 – 00:17:46:09

So if they’re behind, they’re going to have to own that in front of their peers. If they’re ahead, obviously they get praise. And if they are behind, we’re going to have some conversation about how do we get that back on track. So that communication and review process is essential in the decision making process. So what I just said in this slide is we have a decision making process that everybody has been trained on.

00:17:46:09 – 00:18:14:03

Everybody understands this is the behavior system. Everybody knows what’s expected. Everybody has clear transparency. And there will be communication. And if we need to adapt, we will do so based on the idea that, well, we didn’t hit the milestones. So we’ve got to make sure we figure out what we have to do differently. So I would would just suggest to you that in most companies, there there’s a lack of a decision process that has been discussed and defined at the managerial level.

00:18:14:11 – 00:18:41:06

And I think that’s one of the ways that you create bench strength. You create a much smarter group of people if they all understand this is how we’re going to do things relative to making decisions because resources are scarce. This a $30 million company. It’s not a $300 million company. So there are fewer resources in a $30 million company than a $300 million company, and fewer resources still in a $2 million or a $3 million company.

00:18:41:08 – 00:19:04:04

So, you know, adding zeros to that, creates some flexibility. But when you don’t have the zeros, how you get to those zeros is you you create a process like this so that you’re collaborating and you’re smarter as a group. Bullet point three this one is just self-evident. But, hiring and promoting people from within and just really understanding how to hire the right talent.

00:19:04:06 – 00:19:28:10

I think there would be a very strong argument today made that I can’t find people. I do not have a problem finding people. I have a problem finding the right people. So I would certainly agree with that concept. And so what we have found is the better job we do at defining the attributes, the skills, the role that we seek, meaning, does this person actually fit the role?

00:19:28:13 – 00:19:53:23

And that includes things like social styles, their ability to understand personality profiles, the training and development plan, the rewards, the career path, and having a training model that actually develops the individual around the attributes and skills. So we try to hire for attitude and develop the skills. I’m less concerned if they don’t possess the skills, if they have the right attributes, because the training system will be orderly.

00:19:54:00 – 00:20:13:20

And we’ll talk about that here in just a moment. And then the last part of that is having a communication model. What do I mean by that? Well, just the ability to have reviews. We’re doing trimester reviews now. We used do quarterly, so we’ve switched to three times a year. And that’s professional feedback. There’s a actual physical development plan.

00:20:13:20 – 00:20:49:21

Happy to share that with you guys. We have about eight questions that we make sure that every team member answers each trimester at this point. That we’re reviewing them, we’re giving them coaching and feedback. But there’s also a 360 degree feedback on that so that people get an understanding if they’re a manager and you’ve got a bunch of people working for you, you may have some areas that you need to work on, and your review process comes from two directions, comes from obviously your supervisor, which could be a director, or it could be me, but it also comes from your team, which is discussing how well you’re performing towards, you know, some of

00:20:49:21 – 00:21:14:01

the ideas of the core values. So number four, ties back into number three, which is when we hire somebody, having a very well-defined role description is essential to being able to get people to function well. So I need them to understand the values of the company and the belief systems. Of course, we talked about that up in rule number one, but then what am I asking them to do?

00:21:14:02 – 00:21:31:17

What’s the role? How am I going to measure them? What are their activities? The second thing that I always want as part of a role description is an actual development path. What’s the next job in front of them? Or jobs? They can probably go a couple of different pathways. But then also, from a scale point of view, I want to cross-train people.

00:21:31:19 – 00:22:00:22

So I have a service manager, I’d like my service manager who’s an Hvac perhaps maybe he can be cross-trained in plumbing. I have a salesman singer, and she is excellent at sales and sales management, but maybe she doesn’t know a lot about finance and accounting. So part of this development path is to create a well-rounded individual that has bench strength in case something happens in a smaller company, just like the one we’re sitting in today.

00:22:00:25 – 00:22:20:10

That’s a crucial issue, because now we’ve got to figure out how to replace all those years of experience. We’re talking about 40 years of knowledge and wisdom and applications and just the technical trade that that this individual has. And we’ve got to find a way to, to put somebody in place or maybe two people, to be able to deal with that.

00:22:20:10 – 00:22:45:04

So without that development path underneath, this company got into a position where now a key person, is going to stall the scaling capability. We’ve got to fix that problem of bench strength. And that really gets down to the training. The fourth area is KPIs. And so KPIs are different than metrics. KPIs are vetted. We know that they create a pathway to a 20% Ebit business.

00:22:45:04 – 00:23:08:09

If we hit those numbers. That is well defined. It’s documented over decades a metric is something that’s a goal along the continuum. So again, I’m at 500 club agreements per million, the KPIs, 1000 per million, target KPIs 1500. So to get from 500 to 1000 is the goal. So the metric would be maybe 700 this year.

00:23:08:12 – 00:23:28:00

So part of this company’s process I asked is how many clubs do we have. And they’ve put in a defined process and a training and development path for all their technicians, both plumbing and electrical, to be sure that the club agreement program is, is being created. So that’s an example of using KPIs. Part of the role description.

00:23:28:02 – 00:23:49:04

We can tie compensation and rewards to that. And certainly we want to measure that. So that is going on behind me right now actually there’s a manager’s meeting here today which I will be end after this particular webinar. And we will be going through all the measurements of each of the departments that basically tie back to what their goals are.

00:23:49:06 – 00:24:11:14

So there’s an accountability to the measurement process. And I think that’s really important. That has to be part of the role description. If you can’t tell somebody what you expect them to do. It’s difficult to inspect what you expect. And so I think it’s important that they know, number one, what’s expected of them. And number two, we have a process where we communicate and measure that.

00:24:11:16 – 00:24:35:20

Awesome content right there. As always, be sure to share this on Facebook. And if you’re not a member, click the button below to get a free trial. I’ll give you access to all of our amazing content. Well, that’s our show for this week, folks. We’ll see you soon. And till then, bye bye for now.

00:24:35:22 – 00:24:50:02

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